Supreme Court Holds CoC Cannot Withdraw Approved Resolution Plan Citing Improved Financial Position Of Corporate Debtor, upholding the NCLAT and directing the NCLT to decide the pending plan and settlement applications together.
New Delhi: The Supreme Court on October 26 held that a Committee of Creditors (CoC) cannot withdraw its approval of a resolution plan once the plan has been placed before the adjudicating authority, even where the corporate debtor’s financial position has improved in the meantime, and dismissed the creditors’ appeal against the NCLAT order [Bank of India and Others v. S.M. Kamal Pasha and Others].
A Bench of Justice J.B. Pardiwala and Justice K. Vinod Chandran disposed of the appeal, with the judgment authored by Justice Chandran. Senior Advocate Gopal Sankarnarayanan appeared for the appellants, and Senior Advocates Nidhesh Gupta and Nikhil Nayyar appeared for the respondents.
How the case reached here
The appellants are six CoC members led by Bank of India, the financial creditor that initiated the insolvency process under Section 7 of the Insolvency and Bankruptcy Code, 2016. The corporate debtor collects toll on National Highway 45 and was hit by the Covid-19 pandemic. The CoC approved a resolution plan by majority, with a resolution amount of Rs 172.55 crore at a time when the debtor’s opening balance was Rs 30 crore.
The appellants said that, with the passage of time, the opening balance rose to Rs 165 crore, giving the successful resolution applicant a windfall. The CoC and the Resolution Professional therefore sought to withdraw the plan, and the NCLT allowed the withdrawal application.
The NCLAT reversed that view, holding that the CoC has no jurisdiction to withdraw an approved plan. It revived the Resolution Professional’s application seeking confirmation of the plan and directed consideration of an application by the debtor’s holding company, which offered a one-time settlement and sought closure of the insolvency process. The creditors then approached the Supreme Court.
The legal position
The Bench relied on the earlier ruling in Ebix Singapore v. Committee of Creditors of Educomp Solutions, which held that the Code leaves no scope for further modification or withdrawal of a CoC-approved plan, and said that reasoning “applies squarely to the CoC too”. Reading Section 12A with Sections 30 and 31 of the Code, it held that withdrawal is possible only until the CoC approves the plan and it is placed before the adjudicating authority.
“withdrawal of an application can only be till the CoC approves the plan”
The Court added that the adjudicating authority cannot second-guess the commercial wisdom of the parties, and that improved profitability alone cannot be a reason to refuse approval of a plan that meets the requirements of Section 30(2).
The directions
The Court did not interfere with the NCLAT order. It directed the NCLT to consider all contentions of the resolution applicant and the holding company while deciding the confirmation application and the holding company’s application, after verifying the debtor’s current financial position and cash balance against the plan. It requested the NCLT to take up both applications together and decide them expeditiously, given the delay already caused. The Court clarified that its observations beyond the binding nature of the approved plan are prima facie and need not govern the final adjudication.
Why the judgment matters
The ruling extends the finality that the Court has attached to approved plans from resolution applicants to creditors. A CoC that approves a plan cannot reopen the bargain because the debtor has since done better, which protects the certainty on which bidders rely when they submit plans.
At the same time, the directions leave the NCLT free to test the plan against Section 30(2) on the debtor’s present finances, so the decision does not shut out scrutiny at the confirmation stage.
Case Title: Bank of India and Others v. S.M. Kamal Pasha and Others [Civil Appeal No. 12045 of 2026]
Bench: Justice J.B. Pardiwala and Justice K. Vinod Chandran, Supreme Court of India
Date of Judgment: October 26, 2026
Appearances: Senior Advocate Gopal Sankarnarayanan for the appellants; Senior Advocates Nidhesh Gupta and Nikhil Nayyar for the respondents