NCLAT Rules: CoC Cannot Seek Remittance of Approved Resolution Plan After Submission to Adjudicating Authority
Pranav B Prem
In a significant ruling, the National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, has held that once a resolution plan is approved by the Committee of Creditors (CoC) and submitted to the Adjudicating Authority, the CoC cannot seek to remit it back for reconsideration. The bench, comprising Justice Ashok Bhushan (Chairperson), Barun Mitra (Technical Member), and Arun Baroka (Technical Member), delivered the judgment in State Bank of India v. Santoshi Hyvolt Electricals Pvt. Ltd. & Ors. on March 17, 2025.
Brief Facts
The case arose from insolvency proceedings against Eon Electric Limited. The Adjudicating Authority (NCLT, Chandigarh Bench) admitted a Section 9 application under the Insolvency and Bankruptcy Code (IBC) on 13.10.2020, initiating the Corporate Insolvency Resolution Process (CIRP). During the CIRP, the CoC approved a resolution plan submitted by Santoshi Hyvolt Electricals Pvt. Ltd. (SRA) with an overwhelming 99.26% vote share in its 16th meeting held on 11.08.2022. The resolution professional (RP) then filed IA No. 1629 of 2022 before the NCLT seeking approval of the resolution plan on 01.10.2022. Subsequently, Energy Efficiency Services Limited (EESL) invoked bank guarantees of Rs. 15.84 crores provided by the corporate debtor, significantly increasing CIRP costs. State Bank of India (SBI), a financial creditor, contended that these increased costs made the resolution plan unviable. Consequently, SBI filed IA No. 26 of 2024 before the NCLT, seeking to remit the plan back to the CoC for fresh consideration. The SRA and the RP opposed the application, arguing that the CoC was bound by its approval. On 19.11.2024, the NCLT rejected IA No. 26 of 2024, stating that the CoC lacked the authority to remit a resolution plan after submission to the Adjudicating Authority. SBI then appealed this decision before the NCLAT.
Key Arguments
Appellant (State Bank of India)
SBI argued that although the plan approval application was filed on 01.10.2022, the invocation of bank guarantees by EESL caused CIRP costs to rise to Rs. 23 crores, rendering the plan financially unviable.
The financial creditor claimed that the SRA was obligated to provide a counter bank guarantee only for guarantees still valid on the effective date and not for those already invoked.
It was contended that the CoC had the right to review the feasibility of the resolution plan in light of subsequent developments.
Respondents
The respondents maintained that the CoC had already considered the existence of bank guarantees before approving the resolution plan.
They argued that under Regulation 18(2) of the CIRP Regulations 2016 (as amended w.e.f. 16.09.2022), CoC meetings cannot be convened to deliberate on matters affecting a resolution plan already submitted to the Adjudicating Authority.
The respondents relied on Ebix Singapore Pvt. Ltd. v. Committee of Creditors of Educomp Solutions Ltd. & Anr. (2022), where the Supreme Court held that a CoC-approved resolution plan is binding on both the CoC and the SRA.
NCLAT's Observations
The NCLAT upheld the NCLT’s ruling, reaffirming that: “...the existing insolvency framework does not provide any scope for effecting further modifications or withdrawals of the resolution plan approved by the committee of creditors, at the behest of the successful resolution applicant, once the plan has been submitted to the Adjudicating Authority.” (State Bank of India & Ors. v. Consortium of Murari Lal Jalan & Florian Fritsch & Anr., 2024 SCC OnLine SC 3187)
The Tribunal analyzed Regulation 18(2) of the CIRP Regulations and noted: “...no decision could have been taken by the CoC in any CoC meeting held subsequent to submission of the application for approval before the Adjudicating Authority which may affect the resolution plan submitted.”
The Tribunal also examined the proviso to Section 31(1) of the IBC, which mandates that the Adjudicating Authority must ensure that an approved resolution plan has provisions for effective implementation: “...the Adjudicating Authority shall, before passing an order for approval of resolution plan under this sub-section, satisfy that the resolution plan has provisions for its effective implementation.” Thus, while dismissing SBI’s appeal, the Tribunal clarified that SBI retains the right to argue the resolution plan’s feasibility when the plan approval application is considered by the Adjudicating Authority.
Advocates representing the parties:
For Appellant: Mr. P. Nagesh Sr. Advocate with Mr. Siddharth Sangal, Mr. Akshay Sharma and Mr. Harshita Agrawal, Advocates.
For Respondents: Mr. Aalok Jagga, Mr. Yogesh Mittal and Ms. Mahima Ashikai, Advocates for SRA. PCS G.S. Sarin, (PCS).
Mr. Harshit Khare, Mr. Prafful Saini and RP Ms. Ritu Rastogi Advocates for RP.
Cause Title: State Bank of India vs. Santoshi Hyvolt Electricals Pvt. Ltd. & Ors.
Case No: Company Appeal (AT) (Insolvency) No. 62 of 2025 & I.A. No. 245 of 2025
Coram: Justice Ashok Bhushan [Chairperson], Barun Mitra [Member Technical], Arun Baroka [Member Technical]
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