CoC Barred from Recalling Resolution Plan Once Submitted for Approval Under IBC Framework

NCLAT held that the Committee of Creditors (CoC) is barred from recalling or remitting a resolution plan once it has been submitted to the Adjudicating Authority for approval under the IBC framework.

The National Company Law Appellate Tribunal (NCLAT), Principal Bench comprising Justice Ashok Bhushan (Chairperson) and Technical Members Mr. Barun Mitra and Mr. Arun Baroka, while reviewing a company appeal and a connected interlocutory application, held that once a resolution plan is approved by the Committee of Creditors (CoC) and submitted to the Adjudicating Authority under Section 30(6) of the IBC, the CoC cannot seek to recall or modify it. The Tribunal further clarified that any subsequent CoC decisions that affect the resolution plan are legally impermissible in view of Regulation 18(2) of the CIRP Regulations and binding precedents laid down by the Supreme Court.

The National Company Law Appellate Tribunal (NCLAT) dismissed an appeal filed by the State Bank of India, a financial creditor of Eon Electric Limited, challenging the order of the Adjudicating Authority (NCLT, Chandigarh Bench) dated 19.11.2024, which had rejected IA No. 26 of 2024. The application sought to remit the CoC-approved resolution plan back for reconsideration in light of alleged post-approval unviability due to the invocation of bank guarantees amounting to approximately ₹15.84 crores by EESL, thereby substantially escalating the CIRP costs.

The background involved the CoC approving the resolution plan of Santoshi Hyvolt Electricals Pvt. Ltd. with a 99.26% vote share in its 16th meeting on 11.08.2022. The plan was then submitted for approval to the NCLT via IA No. 1629 of 2022 on 01.10.2022. After the subsequent invocation of performance guarantees by EESL, CIRP costs surged from the planned ₹2 crores to over ₹4.3 crores, making the plan allegedly unimplementable. Consequently, SBI filed IA No. 26 of 2024 based on resolutions passed in the 20th CoC meeting dated 18.11.2023, seeking directions to remit the plan back to the CoC and issue a fresh Form G.

The Adjudicating Authority rejected the application, holding that once a resolution plan is submitted to the NCLT, the CoC cannot seek to remit it back for reconsideration. The Tribunal relied on Supreme Court rulings in Ebix Singapore Private Limited v. Committee of Creditors of Educomp Solutions Limited and Another, REEDLAW 2021 SC 09523 and State Bank of India and Others v. The Consortium of Mr. Murari Lal Jalan and Mr. Floran Fritsch and Another, REEDLAW 2024 SC 11515, which held that a CoC-approved resolution plan, once submitted, is binding and irrevocable and cannot be withdrawn or modified either by the CoC or the successful resolution applicant.

Further, the NCLAT concurred with the Adjudicating Authority’s reliance on Regulation 18(2) of the CIRP Regulations (as amended on 16.09.2022), which restricts CoC meetings post-plan submission from taking decisions that affect the resolution plan. It dismissed the argument that this amendment was inapplicable due to its prospective nature, noting that any CoC meeting held after the amendment must comply with it.

Although the appeal was dismissed, the NCLAT clarified that the rejection of IA No. 26 of 2024 would not preclude the appellant from raising issues regarding unviability or ineffective implementation of the resolution plan at the time of consideration of IA No. 1629 of 2022. The Tribunal emphasised that the Adjudicating Authority remains duty-bound under the proviso to Section 31(1) of the IBC to satisfy itself regarding the effective implementation of the resolution plan and compliance with Section 30(2). Accordingly, the appeal was dismissed with these observations.

Mr. P. Nagesh Sr. Advocate, with Mr. Siddharth Sangal, Mr. Akshay Sharma and Mr. Harshita Agrawal, Advocates, represented the Appellant.

Mr. Aalok Jagga, Mr. Yogesh Mittal and Ms. Mahima Ashikai, Advocates, appeared for the SRA. PCS G.S. Sarin, (PCS).

Mr. Harshit Khare, Mr. Prafful Saini and Ms. Ritu Rastogi, Advocates, appeared for the RP.

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