IBC | CoC Cannot Withdraw Approved Resolution Plan From NCLT Merely Because Corporate Debtor's Financial Position Improved: Supreme Court

"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." Supreme Court, in an authoritative ruling on October 26, 2026, held that once a Committee of Creditors (CoC) approves a Resolution Plan by the requisite majority under the Insolvency and Bankruptcy Code, 2016 (IBC), it cannot subsequently seek to withdraw the approved plan or the Corporate Insolvency Resolution Process (CIRP) before the Adjudicating Authority on the ground that the Corporate Debtor’s financial health has improved.

A bench comprising Justice J.B. Pardiwala and Justice K. Vinod Chandran affirmed that the binding nature of an approved resolution plan operates equally against the creditors as it does against the Successful Resolution Applicant (SRA), emphasizing that "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 dispute arose after the CoC unanimously approved a Resolution Plan submitted by a consortium (SRA) for the revival of the Corporate Debtor, a toll collection concessionaire whose business had suffered during the Covid-19 pandemic. Due to protracted litigation and interim stay orders, implementation was delayed, during which the cash reserves of the Corporate Debtor grew from Rs. 30 crores to Rs. 165 crores under the management of the Resolution Professional. Citing this turnaround, the CoC sought to withdraw the approved plan before the National Company Law Tribunal (NCLT) to issue a fresh Form-G, while the erstwhile promoter holding company sought an exit through a One-Time Settlement (OTS). The National Company Law Appellate Tribunal (NCLAT) set aside the NCLT order permitting withdrawal, holding that the CoC lacked jurisdiction to retract an approved plan, prompting the financial creditors to appeal to the Supreme Court.

The primary question before the Supreme Court was whether the CoC, after approving a Resolution Plan by statutory majority, can seek withdrawal of the plan or the CIRP application before the Adjudicating Authority on grounds of delayed implementation and substantial improvement in the Corporate Debtor's financial position. The court was also called upon to determine whether the commercial wisdom of the CoC extends to reneging from a plan placed before the NCLT under Section 31 of the IBC.

Approval By CoC Creates Statutory Binding Effect Between Parties

The Supreme Court examined the legal framework governing resolution plans between the stage of CoC approval and final confirmation by the Adjudicating Authority under Section 31(1) of the IBC. Relying extensively on its landmark ruling in Ebix Singapore (P) Ltd. v. Committee of Creditors of Educomp Solutions Ltd., the bench reiterated that an approved resolution plan is not a run-of-the-mill contract governed by ordinary contract law rules of frustration or renegotiation. The court observed that the statutory mechanism under the IBC binds the parties unequivocally once the plan secures the requisite voting threshold under Section 30(4).

"The binding effect of the resolution plan has the consequence of preventing the CoC or the resolution applicant to renege from its terms after the plan has been approved by the CoC through a voting mechanism."

Ebix Singapore Dictum Applies Equally To Creditors As To Resolution Applicants

Addressing the CoC's plea that Ebix Singapore had only precluded resolution applicants from seeking withdrawal, the court firmly dispelled any such one-sided interpretation of the insolvency regime. The bench observed that the existing insolvency framework provides no scope for effecting unilateral modifications or withdrawals at the behest of either the resolution applicant or the CoC. Creditors cannot be permitted to adopt shifting stances or turn turtle merely because a delayed turnaround provides an opportunity to extract higher commercial recovery.

Section 12A Mechanism Cannot Be Invoked Once Plan Reaches Section 31 Stage

Interpreting the scope of Section 12A alongside Regulation 30A of the CIRP Regulations and the ruling in Glas Trust Company LLC v. Byju Raveendran, the bench scrutinized whether a CIRP application can be withdrawn after plan approval. The court held that Section 12A cannot be read in isolation from Section 31, which mandates the Adjudicating Authority to verify whether the plan complies with Section 30(2) priority payments. The bench held that while Section 12A allows withdrawal with 90 percent voting share at earlier stages, such an exit route is no longer permissible once the plan has been approved by the CoC and placed before the NCLT for sanction.

Asymmetrical Consequences For Plan Default Weigh Against CoC's Plea

The bench highlighted the profound asymmetry between the statutory consequences faced by a defaulting resolution applicant and a retracting CoC. While an SRA faces performance bank guarantee (PBG) forfeiture and criminal prosecution under Section 74 of the IBC for failing to implement a plan, Section 12A merely obligates the CoC to bear the CIRP costs. The court noted that the SRA had furnished and kept alive substantial bank guarantees at significant continuous expense during the pendency of the proceedings, making any belated withdrawal by creditors fundamentally inequitable.

"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."

CoC's Continued Existence Under Regulation 18 Does Not Allow Plan Derogation

The appellants had relied on Kalyani Transco v. Bhushan Power & Steel Ltd. to argue that the CoC remains functional until final implementation and can therefore reconsider its decisions. The Supreme Court clarified that while Kalyani Transco recognized that the CoC does not become functus officio upon plan approval, it simultaneously carved out an express limitation under Regulation 18(2) of the CIRP Regulations. The court underscored that any decision taken by the CoC in subsequent meetings cannot affect or alter the Resolution Plan already submitted before the Adjudicating Authority.

Commercial Wisdom Cannot Be Invoked To Justify Opportunistic Plan Scrapping

Rejecting the argument that the NCLT cannot question the commercial wisdom of a unanimous CoC seeking a fresh invitation for expressions of interest, the bench observed that commercial wisdom cannot serve as an umbrella for institutionalized opportunism. If the enterprise had been timely handed over to the SRA, the revenue accrued would have rightfully inured to the SRA's benefit as contemplated in the plan. The court upheld the NCLAT's decision declining the CoC's withdrawal plea, directing the NCLT to decide the pending plan confirmation application (IA No. 1505 of 2021) and the holding company's OTS plea (IA No. 1679 of 2025) strictly in accordance with Section 30(2) and Section 31(1).

Disposing of the appeal, the Supreme Court confirmed that the CoC possesses no jurisdiction to unilaterally withdraw an approved resolution plan awaiting NCLT sanction merely because the corporate debtor's financials improved during litigation delays. The Adjudicating Authority was directed to examine the pending approval application along with the promoter's OTS proposal expeditiously, judging the plan strictly on statutory compliance under Section 30(2) of the IBC.

Date of Decision: October 26, 2026

Case Title: Bank of India & Ors. v. S.M. Kamal Pasha & Ors. | Civil Appeal No. 12045 of 2026