Supreme Court: Committee of Creditors cannot withdraw a resolution plan once it reaches the NCLT

The Supreme Court has held that once the Committee of Creditors (CoC) approves a resolution plan under the Insolvency and Bankruptcy Code, 2016 (IBC) and the plan is placed before the Adjudicating Authority, the National Company Law Tribunal (NCLT), the CoC cannot thereafter withdraw either the plan or the resolution application — even by a unanimous vote — merely because the corporate debtor's finances have since improved. In this case, the NCLT had allowed the Resolution Professional to withdraw an approved plan at the CoC's instance, over the objection of the successful resolution applicant. Justices J.B. Pardiwala and K. Vinod Chandran held that Section 12A of the IBC permits withdrawal of a resolution application only before the CoC's approval, and that Sections 30 and 31, read together, show that a plan approved by the requisite majority and placed before the NCLT must be tested only against the statutory requirements for confirmation, such as fair and equitable distribution to creditors under Section 30(2).

An improved financial position of the corporate debtor is not, by itself, a ground to refuse confirmation if the plan otherwise meets those requirements. The Court did not interfere with the finding that the CoC lacked jurisdiction to withdraw its approval, but directed the NCLT to decide, expeditiously, the pending applications on confirming the plan and on ending the insolvency proceedings.