CoC Is Not a Litigating Entity — Commercial Wisdom Ends With Plan Approval: Supreme Court Rejects Post-Facto Claim for CIRP Profits

“Permitting the CoC to Raise a New Stand at This Stage Will Be Totally Inconsistent With the Avowed Object of the IBC” — In a powerful declaration of finality and statutory discipline, the Supreme Court refused to entertain the CoC’s retrospective demand for a share in profits (EBITDA) earned by Bhushan Power & Steel Ltd. (BPSL) during its Corporate Insolvency Resolution Process (CIRP). The Court held that such claims — made after the resolution plan was approved and implemented — violate both the letter and spirit of the Insolvency and Bankruptcy Code (IBC).

The Bench led by Chief Justice B.R. Gavai, and comprising Justices Satish Chandra Sharma and K. Vinod Chandran, came down heavily on the CoC’s attempt to modify or supplement its commercial decision years after the resolution plan had become binding under Section 31 IBC.

The Court observed that IBC is not a tool to reopen closed negotiations or permit institutional flip-flops. It categorically held:

“Permitting the CoC to raise a new stand at this stage will be totally inconsistent with the avowed object for which the IBC was incorporated. The resolution plan does not provide for the distribution of EBITDA during CIRP. That is the end of the matter.”

CoC’s Belated Attempt to Claim CIRP Profits Defeated by Finality Doctrine

The dispute arose in the context of BPSL’s CIRP, where JSW Steel had been declared the Successful Resolution Applicant (SRA) after the CoC approved its ₹19,700 crore resolution plan. The plan did not provide for distribution of profits (EBITDA) generated during the CIRP period. Still, nearly five years later, the CoC attempted to claim a share in the EBITDA, citing equitable considerations and alleged past discussions.

The Supreme Court firmly held that once the CoC exercises its commercial wisdom to approve a plan, its role ends, and it cannot be permitted to retrospectively impose new financial liabilities or revisit settled terms.

An Afterthought From the CoC

The CoC’s demand for EBITDA share was not part of the original Resolution Plan, nor was it raised before the NCLT at the stage of approval. It first surfaced years after implementation, in a writ petition before the Delhi High Court, and later as an independent claim before the Supreme Court.

The Court found the CoC’s shifting positions deeply problematic, stating:

“There is no clause in the RfRP requiring distribution of EBITDA. The CoC has not passed any resolution to that effect. The claim is an afterthought, inconsistent with their own commercial decision.”

Can the CoC Raise New Claims After Resolution Plan Is Approved Under Section 31?

The Supreme Court answered this emphatically in the negative. It reiterated the position laid down in Essar Steel India Ltd. v. Satish Kumar Gupta and Ghanshyam Mishra & Sons v. Edelweiss Asset Reconstruction, where the Court had held that:

“A successful resolution applicant cannot suddenly be faced with undecided claims after the resolution plan has been accepted. This would amount to a hydra head popping up, which would throw into uncertainty amounts payable by a prospective resolution applicant.”

Applying that principle, the Court ruled that CoC’s attempt to seek profit distribution after implementation is barred, both by the IBC and by judicial precedent.

Commercial Wisdom Ends With Plan Approval

The Court underlined the statutory architecture of IBC, where the CoC’s role is confined to evaluating and voting on resolution plans, based on feasibility and viability. Once a plan is approved and binds all stakeholders under Section 31(1), the CoC cannot re-enter the arena with fresh demands.

The Bench observed:

“Such a course of action would defeat the whole purpose of the IBC and reduce the finality of the plan to a farce. It would jeopardize investor confidence and defeat the timeline-driven process envisioned by the legislature.”

The Court noted that even the rationale behind the CoC’s belated claim was vague, lacking any resolution, documentation, or express term in the RfRP or the Resolution Plan. There was no CoC resolution mandating such distribution at the relevant time.

CoC Cannot Have ‘Second Thoughts’ in a Statutory Framework Bound by Time and Finality

The judgment clarified that IBC’s efficiency lies in predictability and certainty. Once the CoC chooses to approve a resolution plan, it cannot claim the liberty to go back and reopen settled negotiations or economic calculations.

The Court stated:

“The CoC’s commercial wisdom is paramount while the plan is being considered. But after approval under Section 31, its wisdom cannot turn into prolonged litigation. IBC does not permit institutional indecision.”

The Supreme Court Shields Resolution Applicants From Shifting Goalposts

By rejecting the CoC’s claim for post-facto distribution of EBITDA, the Supreme Court has fortified one of the central pillars of the IBC — the finality of a resolution plan and the non-justiciability of post-approval commercial demands. The Court made it clear that even the CoC, being a statutory body, must exercise its powers responsibly and conclusively within the legal framework and prescribed timelines.

In doing so, the Court has ensured that resolution applicants like JSW Steel are not subjected to unforeseen liabilities or institutional uncertainty after taking over distressed companies.

As the Court cautioned:

“Litigation must end. Commercial closure must be respected. The sanctity of the resolution plan is not negotiable.”

Date of Decision: 26 September 2025