The Supreme Court has held that a creditors’ committee (CoC) cannot withdraw from a resolution plan it has already approved, merely because the company’s finances later improved. It has refused to interfere with the NCLAT’s order sending the matter back to the NCLT, which must now decide on approving the plan and on the promoter’s one-time settlement (OTS) proposal.
A resolution plan approved by the CoC is binding on the CoC and the SRA once approved, and neither can withdraw from it or seek its modification. The NCLT cannot direct an unwilling party to renegotiate or withdraw an approved plan. Section 12-A allows withdrawal of the insolvency application only until the CoC approves the plan, and not after it. An improvement in the corporate debtor’s finances after approval is not by itself a ground to refuse approval, if the plan meets the requirements of Section 30(2) and Section 31(1).
Bank of India and five other lenders, who form the CoC of a toll-road company, approved a resolution plan by a majority, which offered about Rs 172.55 crore when the company’s cash balance was about Rs 30 crore. While the plan was awaiting approval by the NCLT, the promoter’s challenge was stayed by the Supreme Court. The delay was not caused by the successful resolution applicant (SRA), and by the time the Supreme Court dismissed the appeal, the company’s cash balance had risen to about Rs 165 crore. The CoC unanimously asked the NCLT to allow withdrawal of the plan and to issue a fresh invitation for bids, saying that the SRA would get a windfall. The promoter’s holding company opposed this and offered an OTS. The NCLAT held that the CoC has no power to do this and revived both applications for the NCLT’s consideration, and the lenders came to the Supreme Court. Justices J.B. Pardiwala and K. Vinod Chandran relied on Ebix Singapore, which held that a plan approved by the CoC binds the CoC and the SRA from approval, not from NCLT confirmation, and that the NCLT cannot second guess the commercial wisdom of the parties or order modification or withdrawal. They said that this applies equally to the CoC and the SRA. Section 12-A permits withdrawal of an insolvency application only until the CoC approves the plan, and after that Section 30(2) and Section 31 govern, and the CoC’s continuing interest in the plan (Kalyani Transco) does not allow it to withdraw an approved plan. They also noted that withdrawal under Section 12-A requires only costs, while an SRA that fails to implement is penalised, which is unbalanced. The court said that improved profitability alone is not a reason to refuse approval if the plan meets Section 30(2), and that the NCLT should hear both applications together and decide quickly. It made clear that, apart from the binding nature of the plan, its observations are only prima facie.
Note: The court did not approve the plan or decide the promoter’s OTS plea, and left both to the NCLT, with its observations on those points only prima facie. The court also said that the SRA’s contention that the CoC changed its mind out of “shortsighted opportunism” cannot be ignored, which is not a finding. The SRA is a consortium formed by respondents 1 and 2, and the judgment does not name the company.
Citation: Bank of India & Ors. v. S.M. Kamal Pasha & Ors., Civil Appeal No. 12045 of 2026, Supreme Court (Justices J.B. Pardiwala and K. Vinod Chandran), decided on 26.10.2026 | 2026 INSC 1154
Leave a Reply