Supreme Court Holds That Revised Resolution Plan Cannot Be Approved By The Adjudicating Authority Without Being Placed Before The Committee Of Creditors

The Supreme Court ("SC") in the case of M. K. Rajagopalan v. Dr. Periasamy Palani Gounder & Anr., has held that, while commercial wisdom of the Committee of Creditors ("CoC") must be respected, certain factors having a material bearing on the process of approval of the resolution plan should also be borne in mind. The SC dealt extensively with the objections raised by the Resolution Applicant ("RA") as well as the Resolution Professional ("RP") and held that: a) it could not have been overlooked that the RA was ineligible due to the restriction under Section 88, Indian Trusts Act, 1882 ("Trusts Act") as well as Companies Act, 2013 ("Companies Act"), and b) the revised resolution plan was directly sent for approval of the Adjudicating Authority instead of being placed before the CoC.