CoC Cannot Withdraw Approved Resolution Plan Once It Reaches NCLT, Even If Debtor’s Finances Improve: Supreme Court

The Committee of Creditors (CoC) approved a resolution plan for the corporate debtor, providing for a resolution amount of ₹172.55 crore.

While the plan awaited adjudication, the corporate debtor’s cash balance increased from approximately ₹30 crore to ₹165 crore.

The delay followed a stay granted by the Supreme Court in earlier proceedings and was not attributed to the successful resolution applicant (SRA).

The CoC unanimously sought to withdraw the plan, arguing that the corporate debtor’s improved financial position would give the SRA a windfall.

The corporate debtor’s holding company separately sought to end the CIRP through an OTS.

The NCLT allowed the withdrawal application; the NCLAT set that order aside, revived the plan-approval application, and directed consideration of the holding company’s OTS application.

The CoC members appealed to the Supreme Court.

Section 12A of the Insolvency and Bankruptcy Code, 2016 (IBC), read with Regulation 30A of the CIRP Regulations, provides a mechanism for withdrawal of a CIRP application, subject to the prescribed procedure and CoC approval; it does not provide an exit route for withdrawal of a CoC-approved resolution plan after it is placed before the Adjudicating Authority.

Under Sections 30(2) and 31, the NCLT must determine whether the plan meets the statutory requirements, including the prescribed treatment of insolvency resolution costs and creditors.

Ebix Singapore (P) Ltd. v. Committee of Creditors of Educomp Solutions Ltd., (2022) 2 SCC 401, establishes that a CoC-approved resolution plan is binding inter se the CoC and the SRA, and neither may withdraw or modify it outside the IBC framework.

Glas Trust Company LLC v. Byju Raveendran, 2024 SCC OnLine SC 3032, addresses the stages and procedure for withdrawal under Section 12A.

Kalyani Transco v. Bhushan Power & Steel Ltd., (2025) 4 SCC 354, recognises the CoC’s continuing interest in implementation but does not displace the binding nature of an approved plan.

The Court held that the CoC’s continuing interest in implementation, recognised in Kalyani Transco, does not confer a power to withdraw a plan that it has approved and submitted to the NCLT.

Section 12A concerns withdrawal of the CIRP application and cannot be used to withdraw an approved resolution plan at that stage.

Although the CoC relied on the improved cash position and the objective of maximising value, the SRA contended that the plan had contemplated improved financial performance and that the delay was caused by the earlier stay, not by the SRA.

The Court left the NCLT to assess the corporate debtor’s present financial position and cash balance alongside the plan, while making clear that improved profitability alone cannot justify refusing approval if the plan satisfies Section 30(2).

It declined to interfere with the NCLAT’s order and directed the NCLT to consider the plan-approval application and the holding company’s OTS application together, as expeditiously as possible, applying Section 30(2) and considering the corporate debtor’s current financial position.

The appeal was disposed of.