CoC Cannot Withdraw Approved IBC Resolution Plan Before NCLT Confirmation Even If Company's Profitability Improves: Supreme Court (2026 INSC 1154)
Court category: Supreme Court
Court / details: Supreme Court of India
Location: New Delhi
In Bank of India & Ors. v. S.M. Kamal Pasha & Ors. (2026 INSC 1154), the Supreme Court held that once the Committee of Creditors approves a resolution plan and places it before the NCLT, neither the CIRP application nor the approved plan can be withdrawn merely because the debtor's finances improved.
CASE DETAILS AT A GLANCE
Case Title: Bank of India & Ors. v. S.M. Kamal Pasha & Ors.
Court: Supreme Court of India
Bench: Justice J.B. Pardiwala and Justice K. Vinod Chandran
Case Number: Civil Appeal No. 12045 of 2026
Neutral Citation: 2026 INSC 1154
Date of Judgment: 26 October 2026
1. Executive Overview
Reinforcing commercial certainty under the Insolvency and Bankruptcy Code, 2016 (IBC), the Supreme Court of India in Bank of India & Ors. v. S.M. Kamal Pasha & Ors. (2026 INSC 1154) ruled that once the Committee of Creditors (CoC) formally approves a resolution plan and submits it to the National Company Law Tribunal (NCLT) under Section 31, the CoC cannot later backtrack and seek withdrawal of either the insolvency application or the approved plan—even if the corporate debtor's financial position or cash balance improves during the pendency of NCLT proceedings.
2. Background of the Dispute
During the Corporate Insolvency Resolution Process (CIRP), the CoC approved a resolution plan submitted by the Successful Resolution Applicant (SRA), and the Resolution Professional placed it before the NCLT for statutory approval. While the plan awaited NCLT confirmation—delayed in part by intervening stay orders—the corporate debtor's financial performance and cash reserves improved, alongside a One-Time Settlement (OTS) proposal from the holding company. Seeking to capitalise on the improved valuation, the CoC unanimously voted to withdraw the CIRP application under Section 12A of the IBC. The NCLT permitted the withdrawal, but the National Company Law Appellate Tribunal (NCLAT) reversed that order, prompting the lenders to appeal to the Supreme Court.
3. Key Legal Issues
- Whether an insolvency application under Section 12A IBC or a CoC-approved resolution plan can be withdrawn after the plan has been placed before the Adjudicating Authority (NCLT) for approval under Section 31.
- Whether improved profitability or cash balances of the corporate debtor during intervening litigation constitute a valid ground to reject or pull back a compliant resolution plan.
4. Judicial Reasoning and IBC Principles
A. Binding Effect Between CoC and SRA
Writing for the Bench, Justice K. Vinod Chandran relied on Ebix Singapore Pvt. Ltd. v. Committee of Creditors of Educomp Solutions Ltd. and Glas Trust Company LLC to hold that the statutory scheme of the IBC does not permit Section 12A to be read in isolation. Withdrawal of a CIRP application is permissible only up to the stage before the CoC approves a resolution plan. Once the CoC votes to approve a plan and places it before the NCLT, a binding commitment crystallises between the CoC and the Successful Resolution Applicant.
B. Limits of NCLT Scrutiny Under Section 31(1)
The Court clarified that when considering approval under Section 31(1), the NCLT must verify whether the plan satisfies the mandatory requirements of Section 30(2) alongside the debtor's current financial position and cash balance. However, improved profitability alone cannot justify refusing approval or allowing lenders to repudiate a valid, compliant plan.
5. Practical Takeaways for Creditors and MSMEs
The Supreme Court directed the NCLT to take up the pending resolution-plan approval and OTS applications together and decide them expeditiously. For banks, resolution applicants, and corporate promoters in Tamil Nadu, this ruling confirms that post-approval commercial regret or rising asset values will not reopen a concluded CoC vote.
Citation: Supreme Court judgment dated 26 October 2026 in Civil Appeal No. 12045 of 2026 (2026 INSC 1154). For corporate insolvency, NCLT Chennai representation, and debt recovery advisory, visit https://sklawhouse.com/practice or https://sklawhouse.com/contact-us.