The Supreme Court has upheld the liquidation process of M/s Oracle Home Textiles Limited and dismissed appeals filed by its promoter and successful resolution applicant, Sanjay Dave. The Court ruled that once a resolution plan is approved by the Committee of Creditors (CoC), the successful resolution applicant cannot later refuse to comply by describing the Letter of Intent (LoI) as “conditional.”
A bench of Justice K.V. Viswanathan and Justice Vipul M. Pancholi said the Insolvency and Bankruptcy Code (IBC) does not permit endless negotiations after approval of a resolution plan.
“The appellant cannot be permitted to approbate and reprobate,” the bench observed while rejecting the challenge to the forfeiture of ₹1 crore earnest money deposit (EMD).
Background of the Case
The dispute arose from the Corporate Insolvency Resolution Process (CIRP) of Oracle Home Textiles Limited. The insolvency process was admitted in August 2018. Sanjay Dave, promoter-director of the company, later submitted a resolution plan after obtaining permission from the National Company Law Tribunal (NCLT).
In May 2021, the Committee of Creditors approved his plan with a 99.90% voting majority.
However, disagreements began after the Resolution Professional issued a Letter of Intent. Dave argued that the LoI was “conditional” because it stated that the approval of the plan would remain subject to pending applications filed by prospective resolution applicants before the NCLT.
He also objected to another clause making the successful resolution applicant responsible for risks arising from pending litigation involving workers and employees.
When Dave did not accept the LoI and failed to furnish the performance bank guarantee, the Resolution Professional forfeited the ₹1 crore EMD in August 2021.
Eventually, after the CIRP period expired without implementation of the resolution plan, the CoC voted in favour of liquidation with 99.61% voting support.
Court’s Observations
The Supreme Court found no merit in the argument that the LoI was conditional.
The bench noted that the appellant was fully aware of pending litigation involving other prospective resolution applicants and had participated in several CoC meetings where these issues were discussed.
“The stipulation about the LoI being subject to the outcome of pending applications would not make the LoI conditional for the appellant to renege from the plan,” the Court observed.
The judges also pointed out that Sanjay Dave had earlier agreed during CoC meetings that employee-related litigation risks would be borne by the successful resolution applicant.
Referring to past Supreme Court rulings, the bench said a party cannot “blow hot and cold” by first accepting the benefits of a process and later rejecting its obligations.
The Court further stressed that the IBC framework is designed for a time-bound insolvency process and cannot allow successful resolution applicants to delay implementation after obtaining CoC approval.
“If such artifices are allowed to succeed, the entire architecture of the IBC would crumble,” the judgment said.
On Forfeiture of Earnest Money Deposit
The Court upheld the forfeiture of the ₹1 crore EMD, noting that the Request for Resolution Plan (RFRP) clearly allowed forfeiture if the successful resolution applicant failed to submit the performance guarantee or violated the terms of the process.
The bench observed that despite repeated opportunities, the appellant did not accept the LoI or move forward with implementation of the approved plan.
According to the Court, the delay caused by the appellant eventually forced the creditors to opt for liquidation under Section 33 of the Insolvency and Bankruptcy Code.
Liquidation Decision Upheld
The Supreme Court also refused to interfere with the CoC’s decision to liquidate the company.
The bench reiterated that the “commercial wisdom” of the Committee of Creditors enjoys paramount status under the IBC and courts have limited scope to interfere unless there is a clear legal violation.
“The CoC is statutorily empowered to decide on liquidation before confirmation of the resolution plan,” the Court noted.
The judges added that once the creditors decided to liquidate the corporate debtor with overwhelming voting support, judicial review over such commercial decisions remained extremely limited.
Final Decision
Dismissing all appeals, the Supreme Court upheld the orders passed by the NCLT and NCLAT.
The Court directed the liquidator to continue the remaining liquidation process in accordance with the Insolvency and Bankruptcy Code. All interim orders were vacated.
Case Details
Case Title: Sanjay Dave v. Andhra Bank Ltd. & Ors.
Case Number: Civil Appeal Nos. 12264-12266 of 2024
Court: Supreme Court of India
Judges: Justice K.V. Viswanathan and Justice Vipul M. Pancholi
Decision Date: 27 May 2026
