INTRODUCTION
The Hon’ble Supreme Court of India recently delivered a significant Judgment reaffirming the binding nature of Resolution Plans approved by the Committee of Creditors (CoC) under the Insolvency and Bankruptcy Code, 2016 (IBC). In the case of Bank of India & Ors. v. S.M. Kamal Pasha & Ors. (Civil Appeal No. 12045 of 2026), a Division Bench comprising Hon’ble Mr. Justice J.B. Pardiwala and Hon’ble Mr. Justice K. Vinod Chandran, on October 26, 2026, addressed whether an approved Resolution Plan could be withdrawn before the Adjudicating Authority (NCLT) due to a subsequent improvement in the financial health of the Corporate Debtor. The Apex Court held that once a Resolution Plan is approved by the CoC by the requisite majority, it creates a binding legal framework inter se between the CoC and the Successful Resolution Applicant (SRA). The Court ruled that the CoC cannot unilaterally seek to withdraw its approval or reissue a fresh invitation for Expression of Interest (Form-G) merely because the Corporate Debtor’s financial position improved during the intervening period of litigation delay. Furthermore, the Court affirmed that improved profitability alone does not entitle the CoC or NCLT to derail the statutory resolution process.
BRIEF FACTS
The dispute centered upon the Corporate Insolvency Resolution Process (CIRP) initiated against a Corporate Debtor engaged in the business of toll collection on National Highway 45. The company’s financial standing had originally suffered severe distress due to the Covid-19 pandemic, leading Bank of India (Financial Creditor) to trigger Section 7 proceedings under the IBC. A consortium of resolution applicants submitted a Resolution Plan offering ₹172.55 crores, which was duly approved by the CoC.
At the time of plan submission and approval, the Corporate Debtor held an opening cash balance of ₹30 crores. However, implementation of the approved plan faced significant operational delays owing to prolonged litigation and stay orders in earlier proceedings initiated by the erstwhile promoter/holding company. During this interim period while the Resolution Professional (RP) managed the corporate entity as a going concern, the financial condition of the Corporate Debtor improved substantially, with its cash balance accumulating to ₹165 crores.
Following this financial turnaround, the RP, acting on a unanimous vote of the CoC, filed an application before the National Company Law Tribunal (NCLT) seeking to withdraw the approved Resolution Plan and issue a fresh Form-G. The CoC asserted that the SRA would reap an unintended “windfall gain” since the cash infusion required from the SRA would be drastically lower relative to the surplus cash now available with the Corporate Debtor. Concurrently, the holding company of the Corporate Debtor filed an application seeking to exit the CIRP altogether by offering a One-Time Settlement (OTS) to settle creditor balances. The SRA opposed both requests, pointing to the binding statutory contract created upon CoC approval. The NCLT initially allowed the withdrawal, but on Appeal, the National Company Law Appellate Tribunal (NCLAT) set aside the NCLT’s decision. Aggrieved by the NCLAT’s refusal to permit withdrawal, the financial creditors led by Bank of India approached the Supreme Court.
ISSUES OF LAW
The Supreme Court was called upon to resolve two primary legal questions:
- On the Authority of the CoC to Withdraw an Approved Plan: Whether the Committee of Creditors, after approving a Resolution Plan by the requisite statutory majority under Section 30(4) of the IBC, possesses the jurisdiction or legal right to seek withdrawal of the plan before the Adjudicating Authority on the ground that the Corporate Debtor’s financial position has substantially improved?
- On the Interplay Between Section 12A, Commercial Wisdom and Plan Confirmation: Whether the “commercial wisdom” of the CoC or the mechanism under Section 12A of the IBC can be invoked post-approval to scrap a compliant Resolution Plan in favor of a fresh bidding process or a One-Time Settlement (OTS) proposed by the erstwhile promoters?
ANALYSIS OF THE JUDGMENT
The Supreme Court thoroughly evaluated the statutory scheme of the IBC, relevant CIRP regulations and binding precedents, notably Ebix Singapore (P) Ltd. v. CoC of Educomp Solutions Ltd. (2022) 2 SCC 401 and Kalyani Transco v. Bhushan Power & Steel Ltd. (2026) 6 SCC 431, arriving at several foundational conclusions:
(a) Binding Nature Inter Se Between CoC and Resolution Applicant: The Bench emphasized that a Resolution Plan approved under Section 30(4) is not a standard common-law contract governed strictly by the Indian Contract Act. Its binding force is generated by the statutory framework of the IBC itself. Relying on the doctrine laid down in Ebix Singapore, the Court held that during the interim period between CoC approval and NCLT confirmation under Section 31, the plan creates a binding statutory obligation inter se between the CoC and the SRA. Neither the SRA can wriggle out due to financial deterioration, nor can the CoC renege on its approval due to subsequent financial appreciation.
(b) Temporal Scope of Section 12A and Withdrawal Limits: Analyzing Section 12A read alongside Regulation 30A of the IBBI (CIRP) Regulations, 2016, the Court clarified the exact procedural contours for withdrawal. While Section 12A allows withdrawal of the main insolvency application with a 90% voting share, this remedy remains available only up to the point when the CoC approves a Resolution Plan. Once a plan is voted upon, approved and submitted to the NCLT under Section 31, no exit route or unilateral withdrawal is contemplated for either the CoC or the Resolution Applicant under the statutory architecture.
(c) Boundaries of Commercial Wisdom Versus Institutional Rapacity: Addressing the Appellants’ argument regarding the primacy of the CoC’s “commercial wisdom,” the Court drawn a firm line between legitimate commercial assessment during negotiations and post-approval opportunism. The Court observed that financial risks and prospective operational turnarounds are inherently built into the bidding process. Allowing the CoC to alter its stance whenever a company becomes profitable during judicial delays would introduce unpredictability, destroy time-bound resolution incentives and encourage “shortsighted opportunism”.
(d) Ongoing Role of CoC and Scope of NCLT Scrutiny: Referencing Kalyani Transco, the Court acknowledged that the CoC does not become functus officio upon plan approval and maintains an interest until actual implementation. However, this ongoing existence is limited to supervisory implementation and does not empower the CoC to destroy the plan submitted before the NCLT. When deciding approval applications under Section 31(1), the NCLT’s mandate is restricted to verifying compliance with Section 30(2). The Court explicitly clarified that improved profitability alone cannot serve as a ground for the NCLT to reject a Resolution Plan that otherwise meets statutory parameters.
CONCLUSION
Holding that the CoC possesses no statutory jurisdiction to withdraw its approval of a Resolution Plan post-submission to the Adjudicating Authority, the Supreme Court disposed of the Appeal while upholding the core principles laid down by the NCLAT. The Apex Court directed the NCLT to expeditiously hear the pending applications for plan confirmation under Section 31 alongside the holding company’s OTS application. The Judgment firmly establishes that statutory certainty, predictability and strict adherence to IBC timelines supersede post-approval financial revisions, ensuring that approved resolution processes cannot be derailed by shifting commercial preferences.
ANIKET KUMAR PARCHA
Legal Associate
The Indian Lawyer & Allied Services
EDITOR’S COMMENT
The Prevention of Corruption Act, 1988 is clearly a legislation to prevent corruption by government officials. The Supreme Court while dismissing the matter was very clear that illegal gratification is a criminal conduct and cannot be validated or used as a shield for corrupt practices. The Court has reinforced that prior sanction is not necessary when a person is caught in the act of taking bribe that is committing an offence.
SUSHILA RAM VARMA
Advocate & Chief Consultant
The Indian Lawyer & Allied Services
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