NCLAT: CoC Cannot Withdraw Resolution Plan After Approval

The National Company Law Appellate Tribunal ("NCLAT") in its recent judgement of Mehar Bhoomi Bhawan Private Limited v. Shashi Bhushan Prasad, Company Appeal (AT) (Insolvency) No. 1876 of 2025 has held that once Committee of Creditors ("CoC") has approved a resolution plan, it becomes binding on the CoC. The CoC has no jurisdiction, even after reconstitution, to withdraw or recall the resolution plan.

BRIEF FACTS

Corporate Insolvency Resolution Process ("CIRP") against Angad Infrastructure Private Limited ("Corporate Debtor"), was initiated vide order dated October 25, 2018 passed by the National Company Law Tribunal ("NCLT").

Accordingly, the CoC of the Corporate Debtor was constituted consisting of: (i) Edelweiss Asset Reconstruction Company Limited with 78.63% (seventy-eight point six three percent) voting share; and (ii) Bank of India with 21.37% (twenty-one point three seven percent) voting share.

Subsequent to the issuance of Form-G, Mehar Footwear Private Limited ("Appellant") submitted its Expression of Interest ("EOI") on April 22, 2019. The Appellant submitted a revised final resolution plan dated October 9, 2019 ("Resolution Plan").

The CoC of the Corporate Debtor approved the Resolution Plan on October 23, 2019 with 100% (one hundred percent) vote share in its 8 (eight) CoC meeting. A Letter of Intent ("LoI") was issued to the Appellant on October 30, 2019.

The Appellant submitted a bank guarantee of Rs. 1,54,00,000 (Rupees one crore fifty-four lac) as performance security. Thereafter, on January 1, 2020, the Resolution Professional filed an application bearing no. CA (IBC)/240/PB/2020 ("Plan Approval Application") before the NCLT seeking approval of the Resolution Plan.

Subsequently, on April 24, 2024, the NCLT passed an order directing the Resolution Professional to re-verify the claims of Omkara Asset Reconstruction Private Limited ("Omkara ARC") as secured creditor and Indo Jatalia Holdings Limited ("Indo Jatalia"), as financial creditor.

Thereafter, the CoC was reconstituted with: (i) Edelweiss Asset Reconstruction Company Limited ("Edelweiss") – 64.97% (sixty-four point nine seven percent); (ii) Bank of India – 17.65% (seventeen point six five percent); and (iii) Indo Jatalia – 17.38% (seventeen point three eight percent).

The reconstituted CoC in its 15 (fifteen) meeting dated August 16, 2024 directed the Resolution Professional to file an application for withdrawal of the Plan Approval Application. The Resolution Professional sent a letter dated June 13, 2025 terminating the LoI, which was objected to by the Appellant.

The CoC in its 20 (twenty) meeting held on August 28, 2025 decided to cancel the LoI and forfeit the performance bank guarantee. The Resolution Professional filed IA No. 4424 of 2024 ("Withdrawal Application") seeking withdrawal of the Plan Approval Application, and Indo Jatalia filed IA No. 5555 of 2024 ("Remand Application") seeking remand of the plan.

Thereafter, the NCLT passed an order dated October 14, 2025 remanding the Resolution Plan to the CoC for reconsideration on 3 (three) primary grounds: (i) the Resolution Plan's failure to provide payments to secured creditors in accordance with the priority set out in Section 53, IBC; (ii) the lack of opportunity for a newly inducted member of the CoC (Indo Jatalia) to deliberate or vote on the proposal; and (iii) alleged eligibility issues and procedural irregularities regarding the Appellant's status as a consortium versus a single entity in the Expression of Interest. These factors led the NCLT to conclude that the proposed plan was non-compliant and required a fresh determination by the CoC.

SUBMISSIONS BY THE APPELLANT

1. The Appellant submitted that it had proposed a maximum infusion of Rs. 15,41,00,000 (Rupees fifteen crore forty-one lac) to settle all claims. The plan specifically acknowledged the pending applications of SICOM Limited and IFCI and provided for dealing with their claims.
2. Furthermore, they argued that the NCLT's reliance on Section 53, IBC was misplaced, as this was a resolution process rather than a liquidation. Indo Jatalia was inducted in the CoC only after the order dated April 24, 2024, and there was no occasion for it to deliberate on the plan that had already been approved.
3. As per Regulation 12(3), IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 ("CIRP Regulations"), the plan having already been approved, there was no requirement to provide any opportunity to the new member.
4. The Appellant clarified that it is a single incorporated entity, not a consortium. Once a plan is submitted for approval, the CoC cannot "take a U-turn," withdraw the plan, or cancel the LoI. The Appellant contended that the CoC's attempts to recall the plan after a delay of 4.5 (four point five) years were not only without jurisdiction but also mala fide.
5. They argued these actions were strategically aimed at harming the Appellant's interests, particularly given that the original major creditors (Edelweiss and Bank of India) still held an 82.62% (eighty-two point six two percent) voting share but were now attempting to reverse their prior 100% (one hundred percent) approval. Edelweiss and Bank of India, who still hold 82.62% (eighty-two point six two percent) voting share, cannot withdraw from the Resolution Plan on any reason.

SUBMISSIONS BY OMKARA ASSET RECONSTRUCTION PRIVATE LIMITED

1. Omkara ARC's predecessor IFCI's claim was accepted by the NCLT on April 24, 2024 as a secured creditor. The Resolution Plan did not provide for any pay-out to the secured creditor, which is contrary to Section 30(2) of the Code.
2. Reliance was placed on the Supreme Court judgment in Greater Noida Industrial Development Authority v. Prabhjit Singh Soni, (2024) 6 SCC 767, where a Resolution Plan was remanded for reconsideration as it did not meet the requirements of Section 30(2). Based on the above, it was argued that the NCLT rightly remanded the plan for reconsideration.

SUBMISSIONS BY INDO JATALIA HOLDINGS LIMITED

1. It was argued that as a newly inducted member of the CoC, it had been unfairly deprived of its statutory right to deliberate and vote on the Resolution Plan. Indo Jatalia acquired the debt of SICOM Limited vide an assignment deed in February 2024.
2. Further, it was contended that the "commercial wisdom" of the CoC should be exercised by the current members of the CoC, not a version of the CoC that existed 5 (five) years prior. Excluding a member holding a 17.38% (seventeen point three eight percent) voting share was a procedural impropriety.
3. Indo Jatalia alleged that Appellant originally submitted its EOI as a consortium, but the final plan was submitted by a single entity, violating RFRP conditions.

SUBMISSIONS BY THE RESOLUTION PROFESSIONAL

1. The Resolution Professional submitted that the CoC, in its 15 (fifteen) meeting held on August 16, 2024, passed a resolution with 100% (one hundred percent) votes directing for filing of the Withdrawal Application.
2. These actions were predicated on the necessity of a fresh determination by the newly reconstituted CoC, given the significant passage of time and changed circumstances.

FINDINGS

Jurisdiction of the CoC to recall the application seeking approval of the resolution plan

NCLAT noted that the explanation to Regulation 18(2) of the CIRP Regulations clarifies that the CoC meeting may be convened till the resolution plan is approved under Section 31(1), and the CoC can decide on matters "which do not affect the resolution plan".

Both decisions taken in the 15 (fifteen) and 20 (twenty) CoC meetings to recall the plan approval application and cancel the LoI clearly affected the Resolution Plan and were in excess of authority. After approval of the plan by the CoC, the Resolution Plan is binding, and the CoC cannot be allowed to withdraw it in any manner.

Reliance was placed on the Supreme Court judgment in Ebix Singapore Private Limited v. Committee of Creditors of Educomp Solutions Limited, (2022) 2 SCC 401, which held that a plan approved by the CoC is binding between the CoC and the resolution applicant. Once the CoC has already approved the plan, it has no jurisdiction, even if reconstituted subsequently, to take a U-turn.

Non-Payment to Secured Creditor under Section 53

The Resolution Plan clearly provided for payment to all creditors, including secured creditors, with a total liability of Rs. 15,41,00,000 (Rupees fifteen crore forty-one lac).

The NCLAT distinguished the present case from Greater Noida Industrial Development Authority and Vistara ITCL (India) Limited v. Dinkar Venkatasubramania, (2023) 7 SCC 324, NCLAT held that the Resolution Plan adequately provided for payment to Omkara ARC on a pro-rata basis and Section 53 is not applicable to resolution.

Indo Jatalia's right to Deliberate

Indo Jatalia was inducted in the CoC only after the order dated April 24, 2024, more than 4 (four) years after the plan was approved on October 23, 2019.

Relying on Regulation 12(3) of the CIRP Regulations and Jatinder Pal Builders Private Limited v. Sandeep Goel, 2023 SCC OnLine NCLAT 1829, NCLAT concluded there was no requirement to provide any opportunity to Indo Jatalia to deliberate on the already approved plan.

Change in Constitution of the Appellant

There was no change in the constitution of the company at the time of filing the plan. The shareholding pattern showed that Mr. Dharmendra Narula and Mr. Amit Narula each held 50% (fifty percent) shareholding.

CONCLUSION

The RP did not have the jurisdiction to file the Withdrawal Application. Indo Jatalia could not have filed the Remand Application for reconsideration, as it had no right to challenge a plan already approved before its induction.

Once a Resolution Plan is approved by the CoC with requisite majority, it becomes binding, and the CoC loses the power to subsequently withdraw, recall, or cancel the plan or the LoI.

Please find attached a copy of the judgement, here.

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