THE RATIO. One judgment, decoded twice: once for anyone, once for the profession.

Case Details

  • Citation: 2026 INSC 1154; Civil Appeal No. 12045 of 2026
  • Court: Supreme Court of India, Civil Appellate Jurisdiction
  • Decided: October 26, 2026
  • On appeal from: Order of the National Company Law Appellate Tribunal (NCLAT) rejecting the resolution professional’s application, filed on behalf of the Committee of Creditors, to withdraw approval of the resolution plan, and reversing the National Company Law Tribunal’s (NCLT) order allowing that withdrawal (date and case number not stated in the judgment)
  • Bench: J.B. Pardiwala, J. and K. Vinod Chandran, J. (author)
  • Representation: Gopal Sankarnarayan, Senior Advocate, for the appellants (six members of the Committee of Creditors, led by Bank of India); Nidhesh Gupta, Senior Advocate, for the successful resolution applicant consortium; Nikhil Nayyar, Senior Advocate, for the holding company of the corporate debtor
  • Governing provisions: Insolvency and Bankruptcy Code, 2016, ss 7, 12A, 30(2), 30(4), 31(1), 53, and 74; Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, regs 18, 30A, and 36A
  • Key precedents applied: Ebix Singapore (P) Ltd v. Committee of Creditors of Educomp Solutions Ltd, (2022) 2 SCC 401; State Bank of India v. Consortium of Murari Lal Jalan and Florian Fritsch, (2025) 4 SCC 354; Kalyani Transco v. Bhushan Power & Steel Ltd, (2026) 6 SCC 431; Glas Trust Company LLC v. Byju Raveendran, (2024) SCC OnLine 3032; Amtek Auto Ltd (CoC) v. Dinkar T. Venkatasubramanian, (2021) 4 SCC 457
  • Key paragraphs: [9]-[14] (the Ebix framework and its application to the CoC), [15]-[18] (Section 12A read with Sections 30 and 31), [19]-[22] (delay and the continuing role of the CoC), [23]-[26] (directions to the NCLT)
  • Outcome: Appeal disposed of without interfering with the NCLAT’s order; the CoC cannot withdraw its approval of the plan; the NCLT is to hear the confirmation application and the promoter’s settlement application together, test the plan against Section 30(2) after verifying the company’s present financial position, and decide as expeditiously as possible

Headnote

A toll road operator in insolvency had its resolution plan approved by its creditors when the pandemic had battered its business. Years of litigation followed, including a stay granted by the Supreme Court in an earlier round, and by the end the company’s cash balance had grown from about Rs 30 crore to about Rs 165 crore. The same creditors then asked to withdraw their approval and invite fresh bids, arguing that the winning bidder would otherwise receive a windfall. The Supreme Court held that the approval binds the creditors and the bidder to each other, and that the Code gives the creditors no route to withdraw it on this ground. It did not order the plan approved. It sent the matter back to the NCLT to test the plan against the statutory requirements in light of the company’s present finances, and to hear the promoter’s rival proposal for a one-time settlement.

Factual Background

The corporate debtor operated a toll collection business on a national highway, and its finances suffered during the Covid-19 pandemic. Bank of India, as a financial creditor, started the corporate insolvency resolution process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code and is one of six members of the Committee of Creditors (CoC). A consortium formed by the first and second respondents submitted a resolution plan offering Rs 172.55 crore at a time when the company’s opening cash balance was about Rs 30 crore, and the CoC approved it by the required majority. The resolution professional then applied to the NCLT for confirmation of the plan.

Confirmation did not follow quickly. The erstwhile promoter, which is the company’s holding company, resisted the plan, and proceedings reached the Supreme Court, which granted a stay in an earlier round and later dismissed the promoter’s petition while directing that the holding company’s request be considered by the NCLT. By the time of that dismissal, the debtor’s opening balance had risen to about Rs 165 crore. According to the CoC, the successful resolution applicant would now need to bring in considerably less fresh money than the plan contemplated.

The CoC then voted unanimously to seek withdrawal of its approval, and the resolution professional applied to the NCLT on that footing, asking for a fresh invitation for expressions of interest (Form G). The holding company supported withdrawal on different grounds. It asked that the CIRP be closed altogether and offered a one-time settlement to the creditors, arguing that the company is now a profitable, cash surplus going concern and that paying the admitted creditors in full was also feasible. The successful resolution applicant opposed both requests. The NCLT allowed the withdrawal. The NCLAT reversed, relying on Ebix Singapore and the Murari Lal Jalan decision, holding that the CoC has no jurisdiction to decide on withdrawal of an approved plan. It revived the resolution professional’s confirmation application, directed the holding company’s application to be considered alongside it, and allowed the successful applicant to raise its contentions. The CoC members appealed.

The Question for Determination

In plain terms, the question was whether lenders who have voted to accept a rescue plan for an insolvent company can take back that approval because the company has since done much better and the winning bidder would now get a bargain.

Framed precisely, the Court had to decide whether a CoC that has approved a resolution plan by the requisite majority may seek its withdrawal before the NCLT, on the ground of delay not attributable to the successful resolution applicant and a considerable improvement in the corporate debtor’s financial position, whether Section 12A of the Code or any other provision supplies that power after approval, and what the NCLT must consider in the confirmation application and the holding company’s settlement application that remain pending before it.

The Court’s Reasoning

The Court built its answer on Ebix Singapore, which divides the resolution process into three stages: the period up to CoC approval, the interval between CoC approval and confirmation by the NCLT, and the period after confirmation. This appeal sits in the middle stage. Ebix held that a plan binds the CoC and the successful applicant to each other during that interval, and that this binding force derives from the Code itself, which displaces the ordinary law of contract. A plan can therefore bind creditors who voted against it, given that Section 30(4) requires only a 66 per cent vote. Ebix also drew attention to the Code’s asymmetry in consequences. An applicant that fails to implement faces forfeiture of its performance bank guarantee and prosecution under Section 74, whereas a CoC that withdraws the CIRP under Section 12A with 90 per cent support pays only the costs of the process. From this, Ebix concluded that neither side may renege on an approved plan, and that the NCLT cannot second guess the commercial wisdom of the parties, direct an unwilling CoC to renegotiate or withdraw, or modify a plan unilaterally. The decision in Ebix concerned a withdrawal sought by the applicant, and the Court here held that its reasoning applies squarely to a CoC as well. Ebix had granted a one time relief under Article 142 in one of its three appeals, where the applicant and the CoC jointly sought a modification. The successful applicant here argued against any such relief, and the order does not invoke Article 142.

The Court then turned to Section 12A, which on a bare reading seems to give an applicant, with 90 per cent of the CoC’s voting share, a wide power to withdraw. Regulation 30A restricts when and through whom that power may be exercised, and Glas Trust identified four stages at which withdrawal may be sought: before admission, after admission but before the CoC is constituted, after the CoC is constituted but before expressions of interest are received, and after they are received, with reasons. The open question was whether the remedy survives CoC approval of a plan. The Court answered that Section 12A cannot be read in isolation. Section 31 requires the NCLT to be satisfied that the plan approved under Section 30(4) meets the requirements of Section 30(2), which include payment of the insolvency process costs in priority and a distribution to creditors at least equal to the higher of their liquidation entitlement and the plan amount. The 2019 explanations on fair and equitable distribution apply to every plan the NCLT has not yet approved or rejected, as here. Read together, the Court held that withdrawal of an application can be sought only until the CoC approves the plan, and that once the plan is placed before the NCLT, neither the application nor the approved plan can be withdrawn.

On delay, the Court acknowledged the warning in Ebix that long delays in confirmation erode the commercial assumptions on which plans are negotiated, and noted the parliamentary committee findings that attributed such delays to slow admission, late and unsolicited bids, and layers of litigation. It recorded that the delay here arose from the stay granted by the Supreme Court itself. It also addressed Kalyani Transco, on which the CoC relied. That decision recognises that a CoC does not become functus officio on approving a plan and keeps a vital interest in it until it is implemented, but it also stresses that the CoC’s later decisions cannot affect the plan before the NCLT. The Court held that the CoC’s continuing existence does not dilute the binding nature of the plan, noting that the plan in Kalyani Transco also contained no provision for withdrawal or modification.

Having settled that the CoC cannot withdraw, the Court declined to interfere with the NCLAT’s order and shaped the directions for the NCLT. It recorded the appellants’ contention that the NCLT is barred from second guessing the CoC’s commercial wisdom, and that this should apply with equal force where the CoC unanimously favours a fresh Form G, together with their point that value maximisation is the bedrock of the Code. It set against this the successful applicant’s response that the improvement in finances was contemplated by the plan, that income from operations would have gone to the applicant had the company been handed over within the statutory timelines, and that the CoC’s change of position is opportunistic and falls outside what the Code treats as commercial judgment. It also noted that the applicant has kept its performance guarantee alive at considerable expense, which the Code does not reimburse if approval is denied. The NCLT must now decide the confirmation application and the holding company’s application together, with the plan tested against Section 30(2) after verifying the company’s present financial position and cash balance against the plan’s terms. Improved profitability alone cannot justify refusing approval if the plan meets Section 30(2). Apart from the binding nature of the plan as between the CoC and the successful applicant, the Court described its observations as prima facie only, and asked the NCLT to proceed as quickly as it can given the delay already incurred.

Critical Assessment

The Court’s handling of the statute is its strongest feature. Reading Section 12A together with Sections 30 and 31 gives a coherent account of where withdrawal stops being available. Locating the binding effect of the plan in the Code removes the argument that a change in circumstances can unwind an approval. The comparison between the costs a CoC pays on a Section 12A exit and the guarantee forfeiture and prosecution risk the applicant carries explains why the Code leaves no exit for either side, and extending Ebix from the applicant to the CoC is a short and logical step.

The disposition leaves a seam, though. The Court holds that no withdrawal of the application or the approved plan is available after the CoC approves, and then directs the NCLT to consider the holding company’s application to bring the CIRP to an end. The judgment does not say through which legal route that application could succeed after approval. It also directs the NCLT to verify the company’s present finances and cash balance against the plan’s terms for the purposes of Section 30(2), without explaining how that verification differs from the second guessing that Ebix forbids. The prima facie caveat in paragraph 25 accounts for the reticence, but the tribunal inherits a question the Supreme Court chose not to answer.

The commercial wisdom point is also left open. The Court calls the CoC’s contention compelling and the applicant’s contention one that cannot be ignored, and resolves neither. The doctrine attaches deference to the CoC’s approval of the plan. A later, unanimous reversal of that judgment is a second exercise of the same body’s discretion, and the judgment does not say whether that reversal earns any deference, or whether the answer depends on the reasons for it.

Finally, the case shows how delay redistributes value. The windfall the CoC complains of is a product of the years that passed, and the judgment attributes those years to a stay granted in earlier proceedings and not to the applicant. The applicant carries its guarantee at its own cost, the creditors wait for their distributions, and the confirmation application, which bears a 2021 number, returns to the NCLT. A request for expedition is a modest tool against that kind of drift, and Ebix’s own warning about systemic delay applies with some force to the facts here.

Implications

If you’re not a lawyer: When lenders vote to accept a rescue plan for an insolvent company, the vote ties both the lenders and the winning bidder to the plan. Later good news about the company does not give the lenders a right to take their vote back. Here, the company’s cash grew while the legal process dragged on, which made the winning bid look cheap, and the lenders wanted out. The Supreme Court refused to let them withdraw, but it did not declare the plan approved either. The tribunal that must approve it will look at the company’s current finances and the legal tests, and will also hear the promoter’s separate offer to settle with the creditors. The case is a reminder that long delays in insolvency proceedings move value between the parties in ways nobody planned for.

For the profession: The judgment extends the Ebix no-withdrawal rule from the successful applicant to the CoC, and places the outer limit of Section 12A withdrawal at the point of CoC approval. It confirms that the continuing role of the CoC recognised in Kalyani Transco does not weaken the binding effect of an approved plan. For the confirmation stage, it signals that the NCLT will look at the corporate debtor’s present financial position when testing a plan against Section 30(2), while stating that improved profitability alone is no reason to refuse approval of a compliant plan. Counsel appearing in the pending applications should treat everything in the judgment other than the binding effect of the plan as prima facie observation and not as settled law, and should expect the contest to turn on the factual record of present cash and on the route, if any, by which the holding company’s settlement proposal can proceed at this stage.