No Withdrawal Of Application Or Approved Resolution Plan Once CoC Approves Plan & It Is Placed Before Adjudicating Authority: Supreme Court
The Bench said that the Ebix Singapore dictum applies squarely to Committee of Creditors too; improved profitability alone cannot be reason to refuse approval if plan meets Section 30(2) requirements.
Justice J. B. Pardiwala, Justice K. Vinod Chandran, Supreme Court
The Supreme Court has held that withdrawal of an application under the Insolvency and Bankruptcy Code, 2016 can be sought only until the Committee of Creditors (CoC) approves the resolution plan. Once the plan is placed before the Adjudicating Authority, neither the application nor the approved plan can be withdrawn.
The Court held that the ruling in Ebix Singapore (P) Ltd., delivered in the context of withdrawal sought by a successful resolution applicant (SRA), applies squarely to the CoC as well. It added that improved profitability of the corporate debtor alone cannot justify refusing approval if the plan meets the requirements of Section 30(2).
A Bench of Justice J.B. Pardiwala and Justice K. Vinod Chandran observed, “…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”.
“We have to observe that Ebix Singapore (P) Ltd. though was in the specific context of withdrawal/modification sought of the approved Resolution Plan, by the SRA, which approval was placed before the Adjudicating Authority for confirmation, the dictum applies squarely to the CoC too. It was also noticed in paragraph 223 that, ‘the existing insolvency framework in India provides no scope for effecting further modifications or withdrawals of CoC-approved resolution plans, at the behest of the successful resolution applicant’ (sic) nor does it provide such a framework at the behest of the CoC”, the Bench noted further.
Senior Advocate Gopal Sankarnarayan appeared for the appellants and Senior Advocates Nidhesh Gupta, Nikhil Nayyar appeared for the respondent.
The consortium’s plan offered Rs 172.55 crore when the corporate debtor’s opening balance was Rs 30 crore. By the time the Court dismissed the erstwhile promoter’s special leave petition, the balance had risen to Rs 165 crore. The six-member CoC, which includes Bank of India as the Section 7 applicant, argued that the SRA would enjoy a windfall and sought a fresh Form-G. The SRA opposed this. The promoter’s holding company sought closure of the insolvency process on a one-time settlement.
The NCLT allowed the withdrawal application filed by the Resolution Professional after unanimous CoC approval. The NCLAT set aside that order, holding the CoC had no jurisdiction to withdraw, and relied on Ebix Singapore and Murari Lal Jalan. It revived the application for confirmation of the plan and directed the holding company’s application to be considered. The CoC members appealed.
The Court read Section 12-A together with Sections 30(2) and 31 and held that the withdrawal route ends with CoC approval. It noted that Ebix Singapore held an approved plan binding inter se the CoC and the SRA, and found no framework for withdrawal at the CoC’s behest either. Kalyani Transco, it said, holds that the CoC survives until implementation but does not detract from the plan’s binding nature. It also noted the asymmetry in consequences. CoC withdrawal under Section 12-A attracts only payment of CIRP costs, while an SRA’s failure to implement invites forfeiture of the performance bank guarantee and prosecution under Section 74.
The Court declined to interfere with the NCLAT order, and directed the NCLT to consider all contentions of the SRA and the holding company, and to test the plan against Section 30(2) after verifying the corporate debtor’s present financial position and cash balance. It clarified that its observations other than on the plan’s binding nature are prima facie. The NCLT was asked to hear both applications together and decide them expeditiously. The appeal was disposed of.
Cause Title: Bank of India & Ors. v. S.M. Kamal Pasha & Ors. (Neutral Citation: 2026 INSC 1154)
Appearances:
Appellants: Gopal Sankarnarayan, Senior Counsel.
Respondent: Nidhesh Gupta, Senior Counsel, Nikhil Nayyar, Senior Counsel.