Case Note & Summary
The dispute arose from the appeal filed by the Committee of Creditors (CoC) against the National Company Law Appellate Tribunal's (NCLAT) decision which denied their request to withdraw an approved Resolution Plan under the Insolvency and Bankruptcy Code, 2016 (IBC). The CoC had initially approved the Resolution Plan, but later sought to withdraw it, citing improvements in the financial position of the Corporate Debtor (CD) and potential windfall gains for the Successful Resolution Applicant (SRA). The NCLAT ruled that the CoC lacked jurisdiction to withdraw the plan, emphasizing the binding nature of the Resolution Plan once approved. The appellants argued that the improved financial position of the CD warranted a reconsideration of the plan, while the SRA contended that the CoC was bound by its earlier approval. The Supreme Court upheld the NCLAT's decision, reiterating that the CoC's authority does not extend to withdrawing an approved plan after it has been submitted for confirmation to the Adjudicating Authority. The court highlighted that the IBC framework does not allow for such withdrawals and that the CoC's commercial wisdom cannot be exercised to the detriment of the binding nature of the Resolution Plan. The court directed that the applications pending before the NCLT be considered expeditiously, taking into account the delay already experienced. The appeal was disposed of, and any pending applications were rejected.
Headnote
A) Insolvency Law - Authority of Committee of Creditors - Withdrawal of Resolution Plan - Insolvency and Bankruptcy Code, 2016, Section 12A - The court held that the Committee of Creditors does not have the jurisdiction to withdraw an approved Resolution Plan once it has been submitted to the Adjudicating Authority, as the binding nature of the plan is established under the IBC framework. The court emphasized that the commercial wisdom of the CoC is paramount, but it cannot unilaterally withdraw its approval post-approval by the Adjudicating Authority (Paras 1-25).
Issue of Consideration
Whether the Committee of Creditors can withdraw approval of a Resolution Plan after it has been approved by a majority.
Final Decision
The Supreme Court upheld the NCLAT's decision, ruling that the Committee of Creditors does not have the jurisdiction to withdraw an approved Resolution Plan once it has been submitted to the Adjudicating Authority. The court directed that the pending applications be considered expeditiously by the NCLT.
Law Points
- Insolvency and Bankruptcy Code
- 2016
- Committee of Creditors
- Resolution Plan
- Adjudicating Authority
- commercial wisdom
- withdrawal of Resolution Plan
