NCLAT Sets Aside NCLT Order Allowing Withdrawal Of CoC-Approved Resolution Plan

The National Company Law Appellate Tribunal (NCLAT) at Delhi has recently set aside an order of the NCLT Mumbai that allowed withdrawal of a resolution plan in the insolvency of TD Toll Road Pvt. Ltd., holding that the Committee of Creditors (CoC) had no authority to undo a plan once it had been approved and placed before the tribunal.

Reaffirming the scheme of the Insolvency and Bankruptcy Code, the appellate tribunal said a resolution plan, once cleared by the CoC, binds both the creditors and the successful resolution applicant, even before formal approval by the adjudicating authority.

A bench of Chairperson Justice Ashok Bhushan and Technical Member Indevar Pandey observed. 

“We are of the view that adjudicating authority committed error in permitting withdrawal of the resolution plan on oral request of the RP as authorised by the CoC. The CoC has no jurisdiction to take any decision to withdraw the resolution plan.”

The appeal was filed by S.M. Kamal Pasha and another, the successful resolution applicants, against S. Rajendran, the resolution professional of the corporate debtor.

TD Toll Road Pvt Ltd entered insolvency in November 2019. The resolution professional sought an expression of interest from eligible bidders on July 3, 2020 and the applicants' plan was unanimously approved by the CoC in May 2021. They furnished a performance bank guarantee of about ₹8.62 crore, following which the resolution professional moved the NCLT for approval.

That process did not move forward. The admission of insolvency itself was challenged by the suspended management, and the matter traveled up to the Supreme Court. Proceedings remained stalled for nearly three years before the challenge was dismissed in December 2024, with liberty granted to all sides to press their claims before the NCLT.

Once the matter returned, the CoC revisited the plan. In meetings held in late 2025, members discussed withdrawing the already approved proposal, pointing to the passage of time and a change in the company's financial position.

When the case was taken up, the resolution professional made an oral request to withdraw the application for approval, stating that CoC members representing a 74% voting share supported the move. The NCLT allowed it.

Before the appellate tribunal, the applicants argued that once a resolution plan is approved and submitted, the CoC cannot take any decision that would affect that plan. They relied on Regulation 18(2) of the CIRP Regulations and said the delay was the result of litigation initiated by the suspended directors, not any lapse on their part.

The resolution professional and lenders took a different view. They said the company, run as a going concern during the intervening years, had accumulated a cash surplus of over Rs. 120 crore. Against that backdrop, a plan valued at Rs.172.5 crore no longer reflected the company's position, and restarting the process could yield better value for creditors.

The NCLAT was not persuaded. Referring to the Supreme Court's ruling in Ebix Singapore Private Limited, it reiterated that a CoC-approved plan is binding between the creditors and the successful applicant and cannot be revisited.

It also pointed to Regulation 18(2), noting that while CoC meetings may continue, they cannot result in decisions that affect a plan already submitted for approval.

The tribunal drew a clear distinction from earlier cases cited by the lenders, observing that those turned on breaches by resolution applicants. No such breach was alleged here.

What weighed with the bench was the manner in which the NCLT had acted. The withdrawal was permitted on an oral request, without examining whether the plan remained viable or feasible.

Setting aside the order, the appellate tribunal restored the application for approval of the resolution plan and directed the NCLT to consider it afresh. It also said that a separate application filed by the holding company could be examined in accordance with law.