The Supreme Court has definitively ruled that a Committee of Creditors (CoC) cannot withdraw an approved Resolution Plan after it has been submitted to the Adjudicating Authority, affirming that the plan becomes binding inter se the CoC and the Successful Resolution Applicant (SRA) upon CoC approval. The Court upheld the NCLAT's finding that the IBC framework provides no exit route for the CoC at this stage, while directing the NCLT to expeditiously adjudicate the pending confirmation application and a competing One-Time Settlement proposal by the corporate debtor's holding company.
Background & Facts
The Dispute
The appeal arose from a Corporate Insolvency Resolution Process (CIRP) initiated against a corporate debtor (CD) engaged in toll collection on National Highway 45. The CD's business suffered severely during the Covid-19 pandemic, leading to the initiation of CIRP by Bank of India under Section 7 of the IBC. A consortium of two entities (the 1st and 2nd respondents) submitted a Resolution Plan, which was approved by the CoC with a resolution amount of Rs. 172.55 crores when the CD had an opening balance of Rs. 30 crores. The plan was submitted to the NCLT for confirmation under Section 31(1).
Key Facts
- Date of CoC approval of Resolution Plan: Not explicitly stated in judgment, but plan approved by CoC and submitted to NCLT
- Resolution Plan amount: Rs. 172.55 crores
- CD's opening balance at time of plan submission: Rs. 30 crores
- CD's opening balance by time of Supreme Court's earlier proceedings: Rs. 165 crores (reflecting significant improvement during RP's management)
- Performance Bank Guarantee (PBG): Furnished by SRA "long back" and continued at considerable expense
- CoC composition: Six financial creditors, with Bank of India as the 1st appellant and Section 7 applicant
- SRA: Consortium of 1st and 2nd respondents
- RP: 3rd respondent
- Holding company of CD: 4th respondent, sole promoter
Procedural History
- CIRP initiation: Bank of India filed Section 7 application; CIRP commenced
- Resolution Plan submission and CoC approval: Plan approved by CoC with requisite majority (66% under Section 30(4))
- Submission to NCLT: RP filed Resolution Plan for confirmation under Section 31(1)
- Stay by Supreme Court: Earlier SLP filed by erstwhile promoter resulted in stay, causing delay in implementation
- Withdrawal application: RP filed withdrawal application on behalf of CoC (approved unanimously by CoC) before NCLT
- NCLT order: Allowed withdrawal application
- NCLAT appeal: SRA appealed; NCLAT reversed NCLT, held CoC has no jurisdiction to withdraw after approval, revived confirmation application (IA No. 1505 of 2021)
- Holding company application: IA No. 1679 of 2025 filed by holding company for OTS and closure of CIRP
- Present appeal: CoC members filed Civil Appeal No. 12045 of 2026 against NCLAT order
- Judgment date: October 26, 2026
The Parties' Positions
Appellants (CoC members): Argued that commercial wisdom of CoC is paramount under IBC; improved financial position of CD (opening balance rising from Rs. 30 crores to Rs. 165 crores) would confer windfall gain on SRA; creditors would benefit from withdrawal as they would receive more than the haircut in the Resolution Plan; relied on Kalyani Transco v. Bhushan Power & Steel Ltd. for proposition that CoC survives till implementation.
Respondents (SRA): Contended that Ebix Singapore categorically binds CoC and SRA upon CoC approval; CoC cannot renege due to improved financial position; improvement was contemplated in Resolution Plan; timely handover would have benefited SRA, not CoC; CoC's request reflects opportunism, not commercial wisdom.
Holding Company (4th Respondent): Argued OTS would benefit all stakeholders; CD is now profitable cash-surplus going concern; CIRP should be closed; Supreme Court had earlier directed consideration of their proposal.
Relief Sought
- Appellants: Uphold withdrawal of Resolution Plan, direct fresh Form-G and new EoI process
- SRA: Confirm Resolution Plan, reject withdrawal and OTS applications
- Holding Company: Approve OTS, close CIRP
The Legal Issue
The central question was whether the Committee of Creditors, after approving a Resolution Plan by the requisite majority under Section 30(4) of the IBC, can seek its withdrawal before the Adjudicating Authority on grounds of delay (not attributable to the SRA) and substantial improvement in the corporate debtor's financial position during the RP's management.
Arguments Presented
For the Appellants (CoC Members)
Mr. Gopal Sankarnarayanan, Senior Counsel, argued that the commercial wisdom of the CoC is given primacy under the IBC and this is a fit case for withdrawal. The original Resolution Plan contemplated Rs. 172.55 crores infusion when the CD had Rs. 30 crores opening balance; by the time the Supreme Court dismissed the promoter's SLP, the balance had risen to Rs. 165 crores, conferring a windfall gain on the SRA. Since fresh infusion would be considerably reduced, this violates the IBC's core principle of maximization of asset value for creditors' benefit. Reliance was placed on Kalyani Transco v. Bhushan Power & Steel Ltd. to contend that the CoC's existence and vital interest continue throughout implementation till disbursals fructify.
For the Respondents (SRA)
Mr. Nidhesh Gupta, Senior Counsel, heavily relied on Ebix Singapore (P) Ltd. v. Committee of Creditors of Educomp Solutions Ltd. to contend that the CoC is bound by its approval and neither party can renege - the SRA cannot wriggle out due to deterioration, nor can the CoC withdraw due to improvement. The financial turnaround was contemplated in the Resolution Plan, and timely handover would have channelled revenue to the SRA. The CoC's request reflects "shortsighted opportunism revealing institutionalized rapacity," not commercial wisdom. The SRA specifically opposed invocation of Article 142 for one-time relief.
For the Holding Company
Mr. Nikhhil Nayyar, Senior Counsel, submitted that the sanctioned OTS, if implemented, would benefit all stakeholders and the CD would remain a profitable going concern. The company's current financial position supports exit from CIRP with full discharge of admitted creditors' balances plus OTS. The Supreme Court had previously directed consideration of this proposal, now pending as IA No. 1679 of 2025 before the NCLT.
The Court's Analysis
The Court's reasoning centred on the binding nature of a CoC-approved Resolution Plan under the IBC framework, drawing extensively from Ebix Singapore and Kalyani Transco.
"The resolution plan even prior to the approval of the adjudicating authority is binding inter se the CoC and the successful resolution applicant. The resolution plan cannot be construed purely as a 'contract' governed by the Contract Act, in the period intervening its acceptance by the CoC and the approval of the adjudicating authority. Even at that stage, its binding effects are produced by IBC framework."
The Court elaborated that the IBC creates a statutory binding effect distinct from contract law: Section 30(4) requires only 66% voting share for approval, yet even dissenting creditors are bound. Section 74 imposes penal consequences for non-compliance, and forfeiture of PBG follows failure to implement. In contrast, Section 12A withdrawal entails only CIRP costs, not damages to the resolution applicant - an asymmetry confirming the Plan's binding force post-approval.
The Court examined the three stages of CIRP identified in Ebix Singapore: (i) pre-approval, (ii) post-CoC approval but pre-AA confirmation, and (iii) post-AA confirmation. The present case falls in stage (ii). The judgment held that Section 12A and Regulation 30A permit withdrawal only before CoC approval or EoI issuance. Once the Plan is placed before the AA, no withdrawal is permissible - either of the application or the approved Plan.
"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 Court reinforced this with Section 31(1) read with Section 30(2): the AA must satisfy itself that the Plan meets Section 30(2) requirements, including that creditors receive the higher of liquidation value (Section 53) or Plan distribution. Explanation I to Section 30(2) mandates fair and equitable distribution; Explanation II extends these requirements to all Plans not yet approved or rejected by the AA.
Addressing Kalyani Transco, the Court clarified that while the CoC continues till implementation (Regulation 18(2) permits meetings till Section 31(1) approval or Section 33 liquidation), its decisions cannot affect the Resolution Plan submitted before the AA. The CoC's vital interest continues, but this does not detract from the Plan's binding nature.
The Court acknowledged systemic delays noted in Ebix Singapore (paragraph 224) and the Standing Committee Report (2020-21), but held that delay occasioned by a Supreme Court stay does not create a withdrawal right. The improved profitability alone cannot justify refusing approval if the Plan meets Section 30(2) requirements.
The Verdict
The Supreme Court disposed of the appeal, upholding the NCLAT's core finding that the CoC has no jurisdiction to withdraw the approved Resolution Plan. However, it declined to interfere with the NCLAT's direction that the NCLT consider all contentions - including the SRA's confirmation application (IA No. 1505 of 2021) and the holding company's OTS application (IA No. 1679 of 2025) - together. The NCLT must verify the CD's current financial position and cash balance juxtaposed with the Resolution Plan terms, and render a decision expeditiously. The Court made clear its observations are prima facie and do not govern final adjudication. Pending applications, if any, stand rejected.
What This Means For Similar Cases
No Withdrawal After CoC Approval
The judgment definitively closes the door on CoC-initiated withdrawal once a Resolution Plan is approved and submitted to the AA. Practitioners must advise financial creditors that commercial wisdom is exercised at the voting stage - not after. A unanimous CoC resolution for withdrawal carries no legal weight post-submission. The statutory scheme (Sections 12A, 30, 31; Regulations 30A, 36A) creates a point of no return at CoC approval.
- CoC voting is the decisive moment for commercial assessment
- Post-approval buyer's remorse (whether from improvement or deterioration) is irrelevant
- Section 12A is exhausted once EoI is issued and CoC approves a Plan
Binding Effect Is Statutory, Not Contractual
The Court's emphasis on the IBC framework as the source of binding effect (not the Contract Act) has profound implications:
- Dissenting creditors are bound - no separate consent needed
- Penal provisions (Section 74) and PBG forfeiture apply for non-implementation
- No damages claim for SRA if CoC withdraws pre-approval; but post-approval, SRA's remedies are statutory, not contractual
- Article 142 relief available only in exceptional consensus scenarios (Uttara Foods), not at behest of one party
AA's Role: Verification, Not Renegotiation
The NCLT's mandate under Section 31(1) read with Section 30(2) is to verify compliance - not to second-guess commercial wisdom or permit renegotiation. However, the AA must assess current financials to ensure Section 30(2) thresholds (higher of liquidation value or Plan distribution) are met. Improved profitability per se is not a ground to reject a compliant Plan.
- NCLT must juxtapose current cash balances with Plan terms
- Fair and equitable distribution (Explanation I) is a live consideration
- Competing OTS proposals can be considered but cannot override a compliant Plan
- Expeditious disposal is mandatory given systemic delay concerns
