Supreme Court to Examine Whether CoC Can Reallocate ₹195 Crore Reliance Bhutan Loan After RCIL Plan Approval
Introduction
The insolvency proceedings of Reliance Communications Infrastructure Ltd. (RCIL) have now reached the Supreme Court, with Bank of Baroda challenging the National Company Law Appellate Tribunal’s decision that the Committee of Creditors (CoC) cannot revisit the distribution mechanism of an approved resolution plan. The dispute specifically concerns the treatment of the ₹195 crore Reliance Bhutan Loan, which the CoC had later sought to reallocate in favour of dissenting financial creditors.
Factual Background
The RCIL insolvency commenced in September 2019, and a resolution plan submitted by Reliance Projects & Property Management Services Ltd. was approved with 67.97% voting share of the CoC. Under the approved plan, the Reliance Bhutan Loan was originally earmarked for assenting financial creditors.
Subsequently, pursuant to directions issued during implementation, the CoC convened another meeting and passed a resolution to reallocate the proceeds of the Reliance Bhutan Loan in favour of dissenting financial creditors. This later redistribution was supported by Bank of Baroda, which was itself an assenting financial creditor.
IDBI Bank, which had earlier opposed the plan, challenged this reallocation, contending that once a resolution plan is approved, the Code does not permit any alteration in the financial distribution mechanism. This objection was accepted both by the NCLT Mumbai and later by the NCLAT.
Procedural Background
After the NCLT held that the CoC could not alter the entitlement structure under the already approved resolution plan, Bank of Baroda filed an appeal before the NCLAT. The appellate tribunal affirmed the NCLT’s view and held that commercial wisdom cannot be invoked to modify a plan once it stands approved under Section 30(4) of the IBC.
Aggrieved by this, Bank of Baroda has now moved the Supreme Court, where the matter is expected to be heard on 14 April 2026 by a Bench of Justices Manoj Misra and Manmohan.
Issues
1. Whether the Committee of Creditors can alter the distribution mechanism of an already approved resolution plan.
2. Whether the ₹195 crore Reliance Bhutan Loan can be reallocated in favour of dissenting financial creditors after plan approval.
3. Whether the NCLAT correctly restricted the CoC’s power post approval under Section 30(4) of the IBC.
Contentions of Parties
Bank of Baroda’s challenge is based on the position that the later CoC resolution reallocating the Reliance Bhutan Loan was valid and within the committee’s commercial discretion, especially since the tribunal had directed reconsideration of the distribution issue.
On the other hand, IDBI Bank’s case, which found favour with both forums below, is that once the plan has been approved, the distribution matrix crystallises, and no creditor group can subsequently alter entitlements to the detriment of other creditors.
Reasoning and Analysis
The NCLT and NCLAT both proceeded on the principle that the approved resolution plan is final and binding in its distribution architecture. While the CoC undoubtedly has wide commercial powers before approval, the tribunals held that such powers cannot survive in a manner that rewrites creditor entitlements after the plan has attained finality.
The appellate tribunal specifically observed that the commercial wisdom doctrine cannot be used as a shield to justify post-approval modification of creditor payouts, because this would undermine certainty, finality, and the sanctity of the resolution process.
The Supreme Court proceedings are therefore likely to examine the outer limits of CoC authority during implementation of an approved plan, particularly where a subsequent reallocation affects dissenting creditors.
Decision
The matter is presently pending before the Supreme Court, with Bank of Baroda seeking reversal of the NCLAT ruling that barred post-approval redistribution of the ₹195 crore Reliance Bhutan Loan in the RCIL insolvency.