He submitted a hotel rescue plan in two hats. The court said: not allowed.

He was the man who would save the hotel — and also the trustee who would own it. The Supreme Court said: you can't be both. On a May morning in 2023, two judges in New Delhi killed a rescue plan for Le Meridian Coimbatore, not because the plan was bad, but because the man who wrote it wore two hats — and one of those hats was illegal.

Could a resolution applicant submit a plan as an individual, then revise and file it as a trustee, without ever going back to the creditors for a fresh vote? The Supreme Court had to decide whether fiduciary duty (the legal obligation to act in someone else's interest) and commercial rescue could coexist — and whether a creditor committee's approval could cure a process broken from the start.

When the hotel stopped paying

Appu Hotels Limited ran Le Meridian Coimbatore. It was a going concern — rooms, banquets, business travellers. But the loans from a consortium of banks piled up. By May 2020, the company had defaulted, and a financial creditor knocked on the doors of the National Company Law Tribunal (NCLT — the special court that handles insolvency cases) under Section 7 of the Insolvency and Bankruptcy Code (IBC — the law that lets creditors force a defaulting company into a rescue-or-liquidation process).

The NCLT admitted the case. The Corporate Insolvency Resolution Process (CIRP — the formal rescue procedure where a company is run by a professional while a buyer is found) began. A resolution professional was appointed. The clock started ticking.

Into this process stepped M.K. Rajagopalan. He submitted a resolution plan — a detailed proposal to revive the hotel, pay off creditors, and keep the business alive. The Committee of Creditors (CoC — the group of banks and financial institutions that hold the company's debt) voted. 87.39% approved the plan. It looked like a done deal.

The revised plan nobody voted on

But then something happened. The plan was revised. The revision addressed concerns raised by dissenting creditors — those who had voted against the original plan. But here's the catch: the revised version was never placed before the CoC for a fresh vote. Instead, it was filed directly with the NCLT, which approved it anyway.

The promoter of Appu Hotels, Dr. Periasamy Palani Gounder, and others challenged this approval before the National Company Law Appellate Tribunal (NCLAT — the appeals court for insolvency cases). The NCLAT reversed the NCLT order. It found two fatal problems: first, that Rajagopalan was ineligible under the Indian Trusts Act because he had submitted plans in two capacities — as an individual and as a managing trustee of a trust. Second, that skipping the creditor vote on the revised plan was a material irregularity (a procedural mistake so serious it invalidates the entire process).

Rajagopalan and the resolution professional appealed to the Supreme Court.

The dual-hat problem

The Supreme Court bench — Justice Dinesh Maheshwari and Justice Vikram Nath — had to untangle a knot of legal questions. The first was about Section 88 of the Indian Trusts Act, 1882. This section says that a trustee cannot gain any advantage from their position as a trustee. If you manage a trust, you cannot use that role to cut a deal that benefits you personally.

Rajagopalan had submitted resolution plans in two capacities: as an individual, and as the managing trustee of a trust. The court held that this dual role violated Section 88. A fiduciary (someone who acts for another's benefit, like a trustee) cannot profit from that position. By submitting a plan both as an individual and as a trustee, Rajagopalan had put himself in a position where his personal interest and his fiduciary duty conflicted.

The court was clear: "A resolution applicant who submits resolution plans in dual capacities — individually and as managing trustee of a trust — is ineligible under Section 88 of the Indian Trusts Act, as a fiduciary cannot gain advantage from such position."

The vote that never happened

The second problem was procedural. The IBC requires that a resolution plan be approved by the CoC before it is filed with the NCLT. Section 30(6) of the IBC says the resolution professional must submit the plan as approved by the CoC. If the plan is modified after approval, that modified version must go back to the CoC for a fresh vote.

In this case, the revised plan was filed without that vote. The NCLT approved it anyway. The Supreme Court said this was an incurable material irregularity. "If a modified resolution plan, carrying however minor a modification, is not finally approved by CoC, then presenting such modified plan before the Adjudicating Authority for approval is an incurable material irregularity. No concept of post facto approval exists."

In plain English: you cannot fix a broken vote after the fact. The creditor committee's commercial wisdom (their business judgment about what's best for the company) cannot override a clear procedural requirement. The court said: "The principle of commercial wisdom of CoC cannot brush aside shortcomings where decision-making was done in contravention of law in force. CoC's commercial wisdom is not a shield against procedural illegality."

The disqualification question that didn't stick

The NCLAT had also found Rajagopalan disqualified under Section 164(2)(b) of the Companies Act, 2013 — which disqualifies a person from being a director if they have not filed financial statements for five years. The Supreme Court disagreed on this point. It held that there is no concept of "deemed disqualification" under the IBC. A person cannot be rendered ineligible unless a competent authority passes a categorical order disqualifying them from acting as a director.

So the disqualification under the Companies Act did not apply. But it didn't matter. The Trusts Act violation and the procedural irregularity were enough to kill the plan.

What happened to the hotel

While the appeal was pending before the Supreme Court, something else happened. The promoter, Dr. Periasamy Palani Gounder, submitted a settlement proposal. All the creditors unanimously accepted it. The Supreme Court noted this development and, while dismissing Rajagopalan's appeal, allowed the matter to be remanded back to the NCLT for further proceedings in light of the settlement.

The hotel would survive — but not through the plan that had been approved without a proper vote.

THE PLAY: Never file a revised resolution plan with the NCLT unless the Committee of Creditors has voted on it — even a minor change requires a fresh vote, and no court can fix that gap after the fact.

The court ended where it began: with a man who wore two hats, and a process that required only one.