The Supreme Court of India has reiterated that the Committee of Creditors (CoC) cannot withdraw its approval of a resolution plan after the plan has been submitted to the National Company Law Tribunal (NCLT) for approval. The Court held that an improvement in a financially distressed company's position cannot, by itself, justify refusing approval to a resolution plan that satisfies the requirements of the Insolvency and Bankruptcy Code, 2016 (IBC).
Background
The dispute arose after the CoC approved a resolution plan involving a proposed payment of ₹172.55 crore. The corporate debtor's financial position subsequently improved during the period when the resolution plan remained pending, partly because of delays associated with earlier proceedings before the Supreme Court.
The CoC argued that the improved financial position could give the successful resolution applicant an unintended financial advantage because it would need to contribute substantially less than originally anticipated relative to the company's improved position.
The erstwhile promoter's holding company also sought to end the corporate insolvency resolution process (CIRP), proposing a one-time settlement with creditors. However, the successful resolution applicant opposed withdrawal, maintaining that the CoC's approval was binding.
The NCLT had allowed the withdrawal request, but the National Company Law Appellate Tribunal (NCLAT) rejected the CoC's attempt to withdraw its approval and directed the NCLT to consider the pending applications concerning the resolution plan and the proposed settlement.
Justice K. Vinod Chandran, writing the judgment, examined whether the CoC could withdraw an approved resolution plan before the NCLT decided whether to confirm it. The Court relied on the principles laid down in Ebix Singapore (P) Ltd. v. Committee of Creditors of Educomp Solutions Ltd., which recognises the binding nature of a CoC-approved resolution plan.
The Court explained that the IBC does not provide an unrestricted right to withdraw a resolution plan once it has received the CoC's approval and been placed before the adjudicating authority.
It observed:
“Read together, we are of the opinion that the withdrawal of an application can only be till the CoC approves the plan and after it is placed before the Adjudicating Authority, there can be no withdrawal either of the application or the approved Resolution Plan.”
The Bench also considered the CoC's continuing role during implementation. Although the CoC retains an interest in the resolution process, that continuing role does not permit it to disregard the binding nature of an approved plan.
The Court further noted that delays in judicial approval can affect the subsequent implementation of resolution plans. In this case, the delay had occurred because of a stay granted by the Supreme Court in earlier proceedings.
The Supreme Court declined to interfere with the NCLAT's order. It directed the NCLT to consider the pending applications together, including the application seeking approval of the resolution plan and the holding company's application seeking to end the CIRP through a one-time settlement.
The NCLT must examine the corporate debtor's current financial position and cash balance alongside the terms of the resolution plan and determine whether the plan satisfies Section 30(2) of the IBC.
The Court clarified:
“The improved profitability alone cannot be a reason to refuse approval if the Resolution Plan meets the requirements under sub-section (2) of Section 30.”
The Bench emphasised that its observations on the pending applications were prima facie and should not determine the NCLT's final decision.
The appeal was disposed of, and the NCLT was requested to decide the pending applications as expeditiously as possible.
Case Details
- Case Title: Bank of India & Ors. v. S.M. Kamal Pasha & Ors.
- Case Number: Civil Appeal No. 12045 of 2026
- Judges: Justice J. B. Pardiwala and Justice K. Vinod Chandran
- Decision Date: October 26, 2026
