Supreme Court weighs CoC's power to withdraw resolution plan after approval, reserves verdict

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The Supreme Court on Wednesday reserved its judgment on whether the National Company Law Tribunal (NCLT) can permit withdrawal of an application seeking approval of a resolution plan after the Committee of Creditors (CoC) has approved the plan and placed it before the Adjudicating Authority, LiveLaw reported.

A Bench of Justices JB Pardiwala and K Vinod Chandran was hearing Indian Bank’s challenge to the National Company Law Appellate Tribunal’s (NCLAT) April 20, 2026 order in the insolvency proceedings involving TD Toll Road Pvt Ltd.

The NCLAT had set aside the NCLT’s decision that permitted withdrawal of the application seeking approval of the resolution plan. It held that after a plan has received CoC approval and has been submitted to the Adjudicating Authority, the CoC cannot subsequently withdraw it.

The central issue before the Supreme Court was whether the CoC retains the authority to reconsider its decision after approving a resolution plan, particularly when the plan is awaiting approval under Section 31 of the Insolvency and Bankruptcy Code (IBC).

Senior Advocate Gopal Sankaranarayanan, representing Indian Bank, argued that the CoC should be able to reconsider its decision because circumstances surrounding the corporate debtor had changed. He said the plan had been approved during the COVID-19 period, when toll collections were depressed.

Sankaranarayanan said that the CoC held a series of meetings from its 14th to 22nd meetings, during which it observed a substantial improvement in the corporate debtor’s solvency position.

According to the submissions, the corporate debtor’s financial position had subsequently improved substantially, prompting the CoC to seek fresh resolution plans. Sankaranarayanan also argued that the NCLT should be able to take these changed circumstances into account while considering the pending approval application.

Opposing the withdrawal, Senior Advocate Nidhesh Gupta, appearing for the successful resolution applicant, submitted that a CoC-approved plan cannot be viewed merely as a conventional contract between the parties before NCLT approval.

Gupta argued that the resolution plan could not be treated merely as a contract governed by the Contract Act between its acceptance by the CoC and approval by the Adjudicating Authority, as it already has binding effect under the IBC framework during this period.

He relied on the Supreme Court’s decision in Ebix Singapore and observations concerning the binding character of CoC-approved resolution plans. He argued that Section 31 does not make such a plan open to withdrawal or modification before formal approval.

He argued that Section 31 should not be interpreted as allowing a resolution plan to remain open to withdrawal or modification until it receives approval from the Adjudicating Authority.

He further argued that the same principle must apply equally to the CoC and the successful resolution applicant, contending that neither should be allowed to withdraw merely because the corporate debtor’s financial position has subsequently improved or deteriorated.

The Bench also questioned how creditors would recover their dues if the existing plan were abandoned. Justice Pardiwala questioned how the creditors would recover their dues if the Court accepted the argument and the existing resolution plan was not pursued.

The Court examined Regulation 18(2) of the IBBI regulations, which permits CoC meetings to continue until a resolution plan is approved under Section 31 or an order for liquidation is passed under Section 33. It also considered whether the CoC could take a decision affecting a plan already submitted for approval.

The Bench additionally noted that the successful resolution applicants had furnished a performance bank guarantee of approximately Rs 8.62 crore and had acted pursuant to the CoC’s approval. After hearing the parties, the Supreme Court reserved its judgment.