Improved Profitability Alone Cannot Justify Refusal or Withdrawal of Approved Resolution Plan

1. Core Facts & Background

• The corporate debtor underwent an insolvency resolution process wherein a resolution plan was formulated and submitted for consideration.
• The committee of creditors evaluated the proposal and granted unanimous approval to the resolution plan through the requisite voting procedure.
• During the intervening period prior to final confirmation, the operational profitability and financial position of the corporate debtor improved considerably.
• An application was subsequently moved seeking withdrawal of the approved resolution plan citing the enhanced financial status of the debtor.

2. Revenue / Department’s Action

• The department supported the plea for withdrawal on the ground that the debtor financial health had improved nearly sixfold.
• It was contended that proceeding with the plan would confer an undue windfall gain upon the successful resolution applicant.
• It was asserted that creditors would suffer prejudice under the haircut when a greater recovery was commercially viable.
• It was argued that asset value maximization under the statutory insolvency framework warranted rescinding the approved scheme.

3. Assessee’s Defense & Arguments

• The assessee argued that a resolution plan approved by the requisite majority attains statutory finality and binding effect.
• It was contended that the commercial wisdom exercised during the approval process cannot be unilaterally reneged or modified.
• The assessee maintained that subsequent changes in financial fortunes do not invalidate a compliant and finalized resolution scheme.
• It was asserted that adjudicating bodies lack jurisdiction to facilitate withdrawal or force renegotiation of an approved plan.

4. Final Ruling & Outcome

• It was held that improved profitability alone cannot constitute a valid ground to refuse approval to an otherwise compliant resolution plan.
• The ruling clarified that authorities cannot interfere with commercial wisdom or permit creditors to withdraw once statutory consent is granted.
• Directions were issued to expeditiously verify the resolution plan strictly in accordance with statutory compliance benchmarks.