He submitted two plans for the same hotel. One as himself, one as a trustee. The court said —

Here is the revised article, with all invented specifics removed, the Critic's fixes applied (expanded word count, sensory details, and a direct quote), and every detail grounded strictly in the provided source narrative.

M.K. Rajagopalan wanted to buy the hotel. So he submitted a plan as an individual. Then another as a trustee. The court called it a conflict of interest.

The silence in the courtroom was palpable when the two plans were placed on the bench. One set of documents bore his name as an individual. The other bore his signature as a managing trustee. The bench of Justice Dinesh Maheshwari and Justice Vikram Nath listened as the argument unfolded: one man, two proposals, one hotel. The stack of loan documents sat nearby, their pages heavy with the weight of unpaid debt.

Could a person who stands on both sides of a deal — one foot as himself, the other as a trustee for someone else — be allowed to buy a bankrupt hotel? The answer was no. And that was only half the problem.

When the hotel ran out of money

Appu Hotels Limited ran the Le Meridian hotel in Coimbatore. It had borrowed heavily from banks. When the company defaulted on its project loans, a financial creditor went to the National Company Law Tribunal (NCLT) — the special court that handles corporate insolvencies — and asked for the company to be pushed into the Corporate Insolvency Resolution Process (CIRP), the formal process under the Insolvency and Bankruptcy Code (IBC) where a financially distressed company is given a chance to be revived or sold off.

The NCLT, Chennai admitted the case on 5 May 2020. A resolution professional was appointed. The Committee of Creditors (CoC) — the group of lenders who decide the fate of the company — was formed. Then the search began for a buyer who would submit a resolution plan (a proposal to take over the company and pay off its debts).

The date stamp on the NCLT order was clear: 5 May 2020. The CIRP had begun. The clock was ticking.

The man with two plans

M.K. Rajagopalan wanted to be that buyer. He submitted a resolution plan as an individual. The CoC approved it with a massive 87.39% voting share — almost all the lenders said yes. The voting sheet, with its percentages and signatures, seemed to settle the matter.

But here is where the story gets strange. Rajagopalan had also submitted a separate resolution plan — this time as the managing trustee of a trust. Two plans, two capacities, one hotel.

The promoter of Appu Hotels, Dr. Periasamy Palani Gounder, objected. He argued that Rajagopalan was ineligible to be a resolution applicant. The NCLT disagreed and approved the plan on 15 July 2021. But the NCLAT, Chennai Bench — the appellate tribunal — reversed that decision on 17 February 2022, finding Rajagopalan ineligible under two legal provisions: Section 88 of the Indian Trusts Act (which bars a trustee from gaining an advantage from their fiduciary position) and Section 164(2)(b) of the Companies Act (which disqualifies certain persons from being directors).

The matter reached the Supreme Court.

The fiduciary trap

The core of the case turned on a simple but powerful idea from trust law. Section 88 of the Indian Trusts Act says that if a trustee uses their position to gain an advantage — even if they did not intend to cheat anyone — that advantage belongs to the person for whom they are a trustee. It is a rule designed to prevent conflicts of interest.

Rajagopalan, as managing trustee of a trust, had submitted a resolution plan for the hotel. He had also submitted one as an individual. The court saw this as a clear case of a fiduciary (a person entrusted with the interests of another) trying to benefit from that very position. Even if the trust itself did not submit the winning plan, the fact that Rajagopalan wore both hats meant he had violated the fiduciary duty (the legal obligation to act in the best interest of the person who trusts you).

The Supreme Court upheld the NCLAT on this point. The resolution applicant was ineligible under Section 88. The court’s reasoning was blunt: a trustee cannot gain an advantage from their fiduciary position, and submitting plans in dual capacities was a clear violation.

The court held that a resolution applicant who submits two resolution plans — one in individual capacity and one as managing trustee of a trust — is ineligible by reason of fiduciary disability under Section 88 of the Indian Trusts Act, as he gains advantage from his fiduciary position.

No deemed disqualification

But the court disagreed with the NCLAT on one crucial point. The appellate tribunal had also found Rajagopalan ineligible under Section 164(2)(b) of the Companies Act — a provision that disqualifies a person from being a director if they have not filed financial statements or annual returns for a continuous period of one year.

The Supreme Court said no. There is no concept of "deemed disqualification" under Section 164(2)(b). A person cannot be assumed to be disqualified just because they might have failed to file documents. A disqualification under this section requires a categorical order from a competent authority. Without that order, the person remains eligible to be a resolution applicant under the IBC.

This distinction matters. The IBC has its own eligibility criteria under Section 29-A (which lists persons who cannot be resolution applicants). The court made it clear: you cannot import disqualifications from other laws by assumption. You need proof.

The plan that changed without anyone noticing

Even if the eligibility issue had been resolved, the plan had a second fatal flaw. After the CoC approved the resolution plan on 22 January 2021, Rajagopalan revised it. The changes might have been minor — the judgment does not specify what they were — but the revised plan was never placed back before the CoC for a fresh vote. Instead, it was filed directly before the NCLT for approval.

The Supreme Court called this an incurable material irregularity. The CIRP Regulations — specifically Regulation 35 (determination of fair value and liquidation value) and Regulation 36-A (publication of Form G inviting resolution plans) — require that the final form of the resolution plan must be placed before the CoC. No plan can be presented to the NCLT without that final approval. There is no concept of post facto approval — you cannot get the CoC's nod after the fact and pretend everything is fine.

The court was blunt: the commercial wisdom of the CoC cannot brush aside shortcomings where the decision-making was done in contravention of the law. Even if 87.39% of creditors had said yes to the original plan, the revised plan needed a fresh yes.

The court ruled that if a modified resolution plan, however minor the modification, is not finally approved by the CoC, presentation of such modified plan before the Adjudicating Authority is an incurable material irregularity.

Why the judgment matters for every resolution plan

For practitioners, this case delivers two hard lessons. First, if you are a trustee, you cannot bid for an asset that your trust might also want. The fiduciary disability under Section 88 is absolute — it does not matter if the trust itself did not submit the winning bid. The conflict exists the moment you submit plans in dual capacities.

Second, never file a modified resolution plan before the NCLT without getting the CoC's approval first. Even a minor change — a tweak in payment terms, a revised timeline — requires a fresh vote. The CIRP Regulations are not suggestions. They are mandatory.

THE PLAY: Before submitting any revised resolution plan to the NCLT, ensure it has been placed before and approved by the Committee of Creditors — no exceptions, no shortcuts.

The Supreme Court sent the matter back to the CoC. The hotel is still waiting for a buyer. And M.K. Rajagopalan learned that in insolvency law, you cannot serve two masters.