Supreme Court balances value maximisation with finality of resolution plans under the IBC
In Bank of India and Others v. S.M. Kamal Pasha and Others, Civil Appeal No. 12045 of 2026, decided on 26.10.2026, the Supreme Court of India examined whether the Committee of Creditors (“CoC”) could seek withdrawal of a resolution plan approved by it, but pending approval of the Adjudicating Authority, on the ground that the corporate debtor’s financial position had substantially improved during the intervening period. The judgment reinforces the binding nature of a CoC approved resolution plan and delineates the limits of the CoC’s commercial wisdom within the framework of the Insolvency and Bankruptcy Code, 2016 (“IBC”).
Background and Issues raised
The CoC had approved a resolution plan proposing a resolution amount of INR 172.55 crore. However, owing to delays in the approval process, including proceedings before the Supreme Court, the corporate debtor’s cash balance reportedly increased from approximately INR 30 crore to INR 165 crore. The CoC contended that implementing the plan in these circumstances would confer an unintended windfall on the Successful Resolution Applicant (“SRA”), while potentially depriving creditors of a more favourable recovery.
The CoC unanimously sought withdrawal of the resolution plan pending before Adjudicating Authority and proposed issuing a fresh Form G and inviting new expressions of interest. Separately, the corporate debtor’s holding company sought to bring the withdrawal of the Corporate Insolvency Resolution Process (“CIRP”) through a one-time settlement (“OTS”) with creditors.
The Adjudicating Authority permitted the withdrawal of resolution plan as sought by the CoC. The National Company Law Appellate Tribunal (“NCLAT”), however, rejected the proposition that the CoC could withdraw its approval of the resolution plan and directed the Adjudicating Authority to consider the pending applications for approval of the plan. The said order was challenged by the CoC.
Supreme Court’s Analysis
- A CoC-approved resolution plan is binding on the CoC and the SRA
The Supreme Court placed substantial reliance on Ebix Singapore (P) Ltd. v. Committee of Creditors of Educomp Solutions Ltd. 2021 INSC 468, reiterating that a resolution plan, once approved by the CoC, binds both the CoC and the SRA even before the NCLT grants approval under Section 31 of the IBC.
The Court emphasised that a resolution plan is not an ordinary commercial contract governed exclusively by principles of contract law. Drawing on Ebix Singapore, it reiterated that ability of the resolution plan to bind even those who have not consented to it, by way of a statutory procedure, indicates that it is not a typical contract. Consequently, neither the CoC nor the SRA can unilaterally withdraw from the commitments undertaken under an approved plan merely because subsequent developments make the transaction less advantageous.
Importantly, the Court rejected the proposition that the CoC’s commercial wisdom confers an unrestricted power to revisit an approved plan. Commercial wisdom operates within the statutory framework; it does not create an independent power of withdrawal that the IBC does not recognise.
- Section 12A does not provide a route out once the plan is before the Adjudicating Authority
The Court examined Section 12A, which permits withdrawal of an admitted insolvency application with the approval of 90% of the CoC’s voting share, read with Regulation 30A of the CIRP Regulations.
It held that these provisions cannot be interpreted in isolation from Sections 30 and 31. While the statutory framework permits withdrawal of the insolvency application at specified stages as detailed in the Glas Trust Company LLC v. Byju Raveendran & Others 2024 INSC 811, the position changes once the CoC-approved resolution plan has been placed before the NCLT for approval.
The Court concluded that withdrawal of the insolvency application or the approved resolution plan is not permissible after that stage. Section 12A cannot be used as a mechanism to circumvent the binding effect of a resolution plan or to reopen the resolution process merely because the CoC subsequently considers an alternative arrangement more beneficial.
- The CoC’s continuing role does not permit it to alter the plan
The judgment also considered Kalyani Transco v. Bhushan Power & Steel Ltd. 2025 INSC 1165, which recognised that the CoC retains a vital interest in the resolution plan until its implementation is completed.
The Court clarified that the CoC’s continued existence and involvement in implementation-related matters do not confer a power to withdraw or modify the resolution plan contrary to the statutory framework. The distinction is between exercising legitimate oversight over implementation and reopening a commercial arrangement that has already become binding. The Supreme Court reaffirmed that the CoC’s commercial wisdom remains circumscribed by the statutory framework of the IBC, and cannot be invoked to justify withdrawal or modification of a resolution plan contrary to the provisions thereunder.
- Improved financial performance is not, by itself, a ground to reject the plan
The Supreme Court declined to interfere with the NCLAT’s order, which required the Adjudicating Authority to consider the pending applications together. It directed that the Adjudicating Authority examine compliance with Section 30(2), including the relevant financial position and cash balance of the corporate debtor, against the terms of the resolution plan.
Significantly, the Court clarified that improved profitability alone cannot justify refusing approval if the resolution plan otherwise satisfies Section 30(2). The financial improvement must be considered in the statutory assessment; it does not automatically invalidate the plan or entitle the CoC to withdraw from it. It also noted that the delay in approval of the application for approval of the resolution plan was not attributable to the SRA.
The Court also acknowledged the competing considerations, i.e., maximisation of value for creditors, the SRA’s legitimate expectations, and the consequences of delay in obtaining approval. It left the ultimate determination of the pending applications to the Adjudicating Authority, expressly treating its observations on those issues as prima facie.
Conclusion
The decision reinforces certainty and finality in the CIRP. Resolution applicants formulate bids based on commercial assessments undertaken during a defined process. Permitting the CoC to withdraw an approved plan whenever the corporate debtor’s financial position improves could undermine transactional certainty, encourage opportunistic reconsideration and diminish confidence in the insolvency resolution framework.
The judgment also highlights the consequences of delayed adjudication. Although delay may materially alter the economics of a resolution plan, it does not automatically confer a right to renegotiate or withdraw from it. Parties must therefore account for implementation risks and pursue timely adjudication rather than assume that subsequent changes in value will reopen an approved arrangement.
