2026 INSC 580

1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS.12264-12266 OF 2024

SANJAY DAVE ...Appellant(s)

Vs.

ANDHRA BANK LTD. & ORS. ...Respondent(s)

J U D G M E N T

K.V. VISWANATHAN , J

1. The present appeals under Section 62 of the Insolvency

and Bankruptcy Code, 2016 (for short, “the Code”) call in

question the correctness of the judgment dated 29

th

October,

2024 passed by the National Company Law Appellate Tribunal

New Delhi (for short, “the NCLAT”) in Company Appeal

(AT)(INS) Nos. 1128, 1131 and 1134 of 2024.

2

SUMMARY OF THE FACTS

2. The Corporate Insolvency Resolution Process (CIRP) out

of which the present appeals arise, concerns the Corporate-

Debtor by the name M/s. Oracle Home Textiles Limited. The

CIRP was admitted on 9

th

August, 2018 and the Resolution

Professional (RP) came to be appointed. On 6

th

February, 2019

a Request For Resolution Plan (RFRP) was issued by the RP.

With the permission of the National Company Law Tribunal

(for short, “the NCLT”), the appellant submitted a Resolution

Plan. The appellant was the Promotor/Director of M/s. Oracle

Homes Textiles Limited. This entity had a certificate of MSME

(Micro, Small, and Medium Enterprises). On 10

th

May, 2021 the

appellant was informed that the Resolution Plan submitted by

him had been approved by the Committee of Creditors (CoC)

with the voting majority of 99.90%.

3. It must be pointed out at this stage that at the time when

the appellant’s plan was submitted and was under

consideration, certain third parties had moved the

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Adjudicating Authority as prospective resolution applicants

(for short “PRA”) seeking permission to file Resolution Plans

for the Corporate-Debtor. Those applications were pending

before the Adjudicating Authority.

4. It was at this stage that on 23

rd

May, 2021, a Letter of Intent

(LoI) was issued by the RP to the appellant. The appellant

characterised the LoI as a conditional LoI. Be that as it may, the

RP refused to treat them as conditional. At this stage, the

appellant filed IA No.1205 of 2021 seeking re-issuance of an

unconditional LoI. The case of the appellant was that the LoI

dated 23

rd

May, 2021 was conditional as it carried the following

paragraph:

“The above e-voting results, thereby approving the said final

resolution plan (including the addendum) submitted by the

member of the suspended Board are subject to the order

reserved by Hon’ble NCLT (Mumbai Bench) in the hearing

held on 21

st

Jan, 2021, the same has already been discussed

in the CoC meetings along with you and the same is in your

knowledge too.”

5. In the meantime, pending the appellants Interlocutory

Application, a second LoI came to be issued on 23

rd

June, 2021.

4

The reason for issuing the second LoI was that the appellant

failed to submit the accepted copy of the LoI within the time

stipulated. In this LoI too, it was stated that the LoI would be

subject to the outcome of the pending applications filed by the

prospective resolution applicants.

6. There was another clause to which also the appellant

raised a grievance. The clause was to the following effect:

“You hereby acknowledge and agree that all applications,

cases etc. filed by the staff, employees, workers etc. to any

authority, courts etc. is the risk of the successful resolution

applicant and the successful resolution applicant is aware

and ready to take such calculated risk and has configured the

same in his resolution plan and hence the same (risk and cost)

shall be borne by the successful resolution applicant only.”

7. Since the acceptance was not forthcoming, on 23

rd

July,

2021 a third LoI was issued on the very same terms and a

specific clause was incorporated that the unconditional

performance guarantee was to be submitted within a period of

seven days in terms of clause 1.10 of the Request For Resolution

Plan (for short “RFRP”).

5

8. Since here again the acceptance was not received, on 2

nd

August, 2021 the RP informed the appellant that the earnest

money deposit of Rs.1,00,00,000/- (One Crore) was forfeited

as per the terms and conditions of the RFRP on account of non-

acceptance of the LoI dated 23

rd

June, 2021.

9. This resulted in the appellant’s filing of IA No.2029 of 2021

before the Adjudicating Authority on 27

th

August, 2021 seeking

restoration of Earnest Money Deposit (EMD) contending that

the forfeiture was contrary to clause 1.9.4 of the RFRP.

10. The CIRP period came to an end on 21

st

February, 2023.

Since there was no valid Resolution Plan under Section 33 of

the Code, the CoC on 5

th

June, 2023 voted on the liquidation of

the Corporate-Debtor. The same was approved with a voting

percentage of 99.61%. After the CoC voted for liquidation, the

RP filed IA No.3914 of 2023. seeking approval for liquidation

based upon the decision of the CoC in its 33

rd

meeting.

11. Two Interlocutory Applications of the appellant being IA

Nos. 1205 of 2021 and IA No.2029 of 2021 and the Interlocutory

6

Application of the RP, namely, IA No.3914 of 2023 were

disposed of by three separate orders by the Adjudicating

Authority on 30

th

April, 2024. While the two applications of the

appellant were dismissed, the application of the RP came to be

allowed. This resulted in three appeals being filed before the

NCLAT by the appellant. By the impugned order of 29

th

October, 2024, all three Company Appeals have been

dismissed. That is how the appellant is before us by way of the

further appeals under Section 62 of the Code.

CONTENTIONS OF THE LEARNED COUNSEL

12. We heard Ms. Purti Gupta, learned counsel for the

appellant. Mr. Gaurav Agrawal, learned senior counsel

appearing for respondent No.1-the lead bank-the Union Bank

and Ms. Anjali Sharma, learned counsel for respondent No.3-

Liquidator.

13. Ms. Purti Gupta, learned Counsel, who very ably

presented the case for the appellant, vehemently contended

that all the LoIs were conditional and such conditional LoIs

7

were contrary to the Code as well as the plan submitted by the

appellant. According to the learned counsel for the appellant,

the stipulation in the LoI that the approval of the final Resolution

Plan would be subject to the orders reserved by the NCLT in

the applications filed by the PRAs makes the LoI a conditional

one.

14. The further argument is that the stipulation about

underwriting, any liability that may result in the litigation

initiated, if any, by the staff, employees and workers would be

the risk of the SRA, also makes the LoI conditional.

15. The third contention is that after having originally granted

a period of forty-five days for submitting the performance

guarantee in the LoI of 23

rd

May, 2021 reducing the same to

seven days in the LoI of 23

rd

July, 2021 for submitting

performance guarantee was contrary to the resolution of the

CoC.

16. In response, the learned senior counsel Mr. Gaurav

Agrawal for respondent No.1 and Ms. Anjali Sharma, learned

8

counsel for respondent No.3 drew attention to the findings of

both the Adjudicating Authority and the Appellate Authority

and reiterated the findings recorded thereon. They also drew

the attention of this Court to the said findings.

17. The Adjudicating Authority had recorded in its order that

the appellant was present in the 15

th

CoC meeting dated 24

th

January 2020 wherein the Resolution Plans received from M/s.

Faze Three Limited and M/s Munish Kohli and Associates were

discussed and deliberated. These two entities had filed MA

Nos. 2005 and 1618 of 2019 which were the two applications

pending before the NCLT. The NCLT held that the appellant

was aware of the ongoing litigations with respect to submission

of Resolution Plans by the PRA and that it was unjust on his part

to insist that his plan, which itself was submitted pursuant to the

order of the NCLT dated 18

th

February, 2020 be considered

without subjecting it to the outcome of the decision of the

Adjudicating Authority. The relevant findings of the

adjudicating authority is reproduced below:

9

“19…. On perusal of records, such as the minutes of the 15th

CoC Meeting held on 24.01.2020 annexed at Annexure 'A' to the

Application, it is evident that the Applicant herein was present

in the 15

th

CoC meeting wherein the resolution plans received

from M/s. Faze Three Ltd and M/s. Munish Kohli & Associates

were discussed and deliberated upon in the backdrop of M.A.

No. 2005/2019 and M.A. No. 1618/2019 which were then

pending for hearing before this Tribunal. The Applicant

expressed his interest to submit a resolution plan vide Letter

dated 11.02.2020 and he submitted his initial resolution plan

only after passing of the Order dated 18.02.2020 by this

Tribunal in MA No. 608/2020. Thus, it is evident from records

that the Applicant was aware of the ongoing litigations with

respect to submission of resolution plans by other

resolution applicants and, therefore, it goes without saying

that the Applicant herein cannot now insist on his plan

being considered without subjecting it to the outcome of the

decision of the Adjudicating Authority or any other court or

tribunal under the laws of the land. Thus, the plea of the

Applicant that the Applicant cannot be made subject to

outcome of third-party applications where the Applicant is

not even a party, is hereby rejected in toto as being

irrational, absurd and untenable in law.”

18. The NCLAT has also concurred with the finding of the

NCLT. The NCLAT has recorded that it cannot be held that the

appellant was taken by surprise as the pendency of the

application of the PRA was discussed in the presence of the

appellant and that the CoC had raised the issue in several

meetings, namely, in the meetings of 1

st

March, 2021, 10

th

10

March, 2021, 29

th

April, 2021 and 21

st

May, 2021. The Appellate

Authority found that the LoIs were issued based on the

Resolution Plan of the Successful Resolution Applicant

(SRA)/appellant along with the addendum and CoC decisions

in which the SRA was also a participant. It was pursuant to the

refusal of the appellant to comply with the third LOI of 23

rd

July,

2021 that the EMD also came to be forfeited in accordance with

the relevant clause 1.9.4 of the RFRP on 2

nd

August, 2021. The

relevant findings in the impugned order are extracted below:-

“20. The SRA never objected at any stage upto the 28th CoC

meeting to making the resolution plan subject to the

prospective orders to be passed by the Adjudicating Authority.

Instead the SRA requested the CoC to issue him a LoI. However,

after the LoI was circulated to the SRA for his perusal and

acceptance on 24.05.2021 by email, it is at this stage that the

SRA through his Advocate on 29.05.2021 raised preliminary

objections to the Lol being conditional for being subjected to

the prospective orders of the Adjudicating Authority. This

shows that the SRA was well aware before seeking the Lol from

the CoC that the Loi was to be subject to the outcome of hearing

dated 21.01.2021. Hence it becomes clear that it was an

after-thought on the part of the SRA to raise the bogey of

conditional Lol. If the SRA was so aggrieved, it could have

sought impleadment in the matter before the Adjudicating

Authority or taken up the matter with the RP/ CoC to seek

early resolution of the matter. In any case, it is an admitted

11

fact that both the IAs filed by the PRAs stood dismissed for

non-prosecution before the Adjudicating Authority took up

IA 1205 for hearing.

26. In the present case once CoC had approved the

resolution plan, the SRA stood precluded from raising any

observations to the conditions stated in the LoI as these

were not alien to the resolution plan as submitted by the

SRA which was approved by the CoC. Present was not a case

of conditional and addendum LoI but a case where the SRA

was vacillating in accepting the LoI and not wanting to put

his skin in the game by baselessly alleging that the LoI was

conditional. The Adjudicating Authority rightly refused to

entertain the objections of the SRA to the conditions in the

Lol since withdrawal or modification of resolution plan

after approval by the CoC is not permissible in law.”

ANALYSIS AND REASONING : -

19. We find that the stand of the appellant that the stipulated

clauses objected to by the appellant made the LOI conditional

is bereft of any merit. All that the stipulations mentioned was

that the LoI would be subject to the final decision of a judicial

body in a proceeding to which the CoC and RP were privy.

Even if such a stipulation was not mentioned, ultimately it will

be the order of the Adjudicating Authority, unless duly called

in question and set aside before the higher body, which will

12

prevail. Hence, the stipulation about the LoI being subject to

the outcome of the pending applications of PRA would not

make the LoI conditional for the appellant to renege from the

plan.

20. Moreover, a perusal of the minutes of meetings of the CoC

make it evident that the appellant was very well made aware of

the pending litigation and the other conditions which the LoIs

have allegedly imposed on the appellant. The relevant extracts

from the various minutes of meetings have been set out below:-

Minutes of 28

th

CoC Meeting Held on 21

st

May 2021

“The details of the e-Voting result on the above said resolution

plan(including addendum) is as follows:

Agree Disagree Abstain

from

Voting

Total

99.90% 0.10% 0% 100 %

The RP further informed that the above results are subject to the

order reserved by Hon'ble NCLT in the hearing held on 21st

Jan, 2021. The RP has already sent the intimation on 10th May,

2021 to Mr. Sanjay Dave (Member of the suspended board &

Successful Resolution Applicant) and has asked him to provide

a final signed hardcopy (3 sets) of the resolution plan including

the addendum along with the word documents of the same after

13

making due corrections as discussed in the above mentioned

meetings of the committee of creditors, and also to attach all

the revised and relevant documents including the board

resolution and letter from the financial sponsors to the

resolution plan in support of the final resolution amount as soon

as possible so that the same can be filed before Hon'ble NCLT

at the earliest.

Mr. Sanjay Dave (Member of the suspended board &

Successful Resolution Applicant) stated that he has

received the said communication on email but he is

wanting the formal letter of Intent on letter head to proceed

further. The COC asked the RP to issue the "Letter of

Intent" on letterhead to Mr. Sanjay Dave (Member of the

suspended board & Successful Resolution Applicant). Adv.

A.K. Mishra (M/s MDP Partners -Advocates & Solicitors)

Advocates for Resolution Professional suggested to issue

the "Letter of Intent" on the letterhead giving reference of

the email dt. 10

th May, 2021 and also the discussion being

held in the current COC meeting. The COC members

agreed to the same.”

Minutes of 29

th

COC Meeting Held on 11

th

June 2021

“The COC asked Mr. Sanjay Dave (Member of the

suspended board & Successful Resolution Applicant) if he

has any other query or resistance to the LOI. Mr. Sanjay

Dave (Member of the suspended board & Successful

Resolution Applicant) handed over the letter of his

advocates to the COC. The COC asked Adv. U.C. Nayak

(M/s M.V. Kini & Co. - Law Firm) - Advocates for Financial

Creditors to read the whole letter for the benefit of all the

participants. After going through the letter the COC again

asked Mr. Sanjay Dave (Member of the suspended board &

Successful Resolution Applicant) if he has any specific

14

query or resistance to the LOI as there is nothing

specifically mentioned in the letter of the advocate been

submitted by him. Mr. Sanjay Dave (Member of the

suspended board & Successful Resolution Applicant)

replied in negative.”

21. Equally, the condition with regard to the underwriting, the

risk of staff and workers in any pending litigation, cannot be

said to be a conditional one on the facts of the present case. As

the discussion in the minutes indicate, the appellant in the 27

th

CoC meeting agreed to the same. The appellant cannot be

permitted to blow hot and cold. The relevant portion of the

minutes are extracted below:

“The RP then asked Mr. Sanjay Dave (Member of the suspended

board & Resolution Applicant) to elaborate on the following

point

Quote from addendum (dt. 5th May, 2021) Page No. 6

7.11 The Resolution Applicant has been Informed by the

Resolution Professional that an MA has been filed by the

workers and employees in respect of their salaries and dues

post commencement of CIRP but since the workers and

employees have not reported for work and hence there is no

question of any payment of remuneration post commencement

of CIRP as the RP is clear on the concept of NO WORK NO PAY

and hence the same is not considered as payable. If any amount

is found due and payable by the Hon'ble Tribunal or the

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Appellate Tribunal for the time the plant was functioning in

CIRP period, then and in that event, the same will be dealt by

Resolution Applicant accordingly.

Unquote:

Mr. Sanjay Dave (Member of the suspended board & Resolution

Applicant) then read the above clause 7.11 from the

addendum) Page 6. Adv. Rohan Agarwal (M/ s MDP Partners -

Advocates & Solicitors) Advocates for Resolution Professional

clearly stated that the same is subjudice and contingent till the

order of Hon'ble NCLT is pronounced. The Resolutional

Professional clearly stated that he has been personally targeted

and misrepresented by the Mr. Sanjay Dave (Member of the

suspended board & Resolution Applicant). Further the

Resolution Professional stated that "NO WORK NO PAY" is a

precedent set by Hon'ble Supreme Court and the same has

been discussed at length in the past COC meetings also where

Mr. Sanjay Dave (Member of the suspended board & Resolution

Applicant) has duly participated.”

“The Resolution Professional specifically asked Mr. Sanjay

Dave (Member of the suspended board & Resolution Applicant)

on what he meant by the words in the above clause 7 .11 "the

same will be dealt by resolution applicant accordingly" and

what is his proposal or intention. Mr. Sanjay Dave (Member of

the suspended board & Resolution Applicant) that he is not

clear on the same. Mr. Deena Dayal (Representative of M/s

Union Bank of India including erstwhile Andhra Bank)

stated that all such applications of the staff, employees,

workers etc. is the risk of the resolution applicant and the

resolution applicant is required to take such calculated risk

and configure the same in his resolution plan and hence the

same (risk and cost) shall be borne by the resolution

applicant only. Mr. Sanjay Dave (Member of the suspended

board & Resolution Applicant) agreed to the same.”

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22. In such a background, we do not accept the contention

that the stipulation was in the nature as to make the LoI a

conditional one to enable the appellant to renege from the

CoC approved plan.

23. The third contention that the period of forty-five days as

mentioned in the CoC minutes of 27

th

meeting dated 6

th

May,

2021 which resulted in the issuance of the LOI of 23

rd

May, 2021

was reduced to seven days in the third LOI dated 23

rd

July, 2021

also does not carry the case of the appellant any further. Under

the RFRP, the time stipulated for the issuance of performance

guarantee was seven days. What the learned counsel for the

appellant contends is that, at the meeting on 6

th

May, 2021, a

decision was taken to extend the time to forty-five days for

issuance of the performance guarantee. The relevant portions

of the 27

th

CoC meeting is extracted below:-

“Mr. Sanjay Dave (Member of the suspended board &

Resolution Applicant) requested the COC to grant 45 days time

instead of 7 days as prescribed in the RFRP documents to

provide the performance guarantee, this is due to the ongoing

pandemic. Adv. Rohan Agarwal (M/s MDP Partners - Advocates

& Solicitors) Advocates for Resolution Professional objected to

17

this request. Mr. Deena Dayal (Representative of M/ s Union

Bank of India including erstwhile Andhra Bank) stated that

it is agreeable to the COC due to the ongoing pandemic and

thereby relaxed the condition and granted the time of 45

days for submission of the performance guarantee against

the prescribed time of 7 days, the participants agreed to the

same.”

24. To counter this, Mr. Gaurav Agrawal, learned senior

counsel for respondent No.1 submitted that forty-five days

which was granted in the 6

th

May, 2021 minutes was due to the

COVID Pandemic. By the time the third LoI was issued on 23

rd

July, 2021, that period had long since expired. The appellant

did not convey acceptance. As such, there was no question of

granting a further forty-five days and rightly a period of seven

days was prescribed. We are inclined to accept this

submission.

25. In fact, our attention was drawn by Mr. Gaurav Agrawal,

learned senior counsel to the Minutes of the Meeting of the

CoC dated 23

rd

July, 2021 where by the appellant agreed to

submit the performance bank guarantee in seven days as

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prescribed in the RFRP document. The relevant parts of the

minutes are extracted below:-

“Mr Sanjay Dave(Member of the suspended board &

Successful Resolution Applicant) further stated that even

though COC had allowed him 45 days time to submit the

Performance Bank Guarantee, he has agreed to submit

the same in seven days as prescribed in the RFR P

document. Further he also drew the attention of the

participants on the word "Personal" in the agenda items

which needs to the read as "Performance", the

participants noted the same.”

26. Therefore, in light of the discussions above, it is beyond

cavil that the appellant had not just acquiesced but had agreed

expressly to the so-called contingencies that would fall upon

him as per the LoI.

27. Dealing with the meaning of “acquiescence”, this Court

in Chairman, State Bank of India and Another v. M.J. James

1,

held as under:

“39. Before proceeding further, it is important to clarify

distinction between “acquiescence” and “delay and laches”.

Doctrine of acquiescence is an equitable doctrine which

applies when a party having a right stands by and sees another

dealing in a manner inconsistent with that right, while the act

1

(2022) 2 SCC 301

19

is in progress and after violation is completed, which conduct

reflects his assent or accord. He cannot afterwards complain.

In literal sense, the term acquiescence means silent assent,

tacit consent, concurrence, or acceptance, which denotes

conduct that is evidence of an intention of a party to abandon

an equitable right and also to denote conduct from which

another party will be justified in inferring such an intention.

Acquiescence can be either direct with full knowledge and

express approbation, or indirect where a person having

the right to set aside the action stands by and sees another

dealing in a manner inconsistent with that right and in

spite of the infringement takes no action mirroring

acceptance. However, acquiescence will not apply if lapse

of time is of no importance or consequence.”

(Emphasis supplied)

28. The appellant cannot be allowed to approbate and

reprobate. In the celebrated case of Nagubai Ammal and

Others v. B. Shama Rao and Others

2, this Court held as under:

“9.15. The observations of Scrutton, L.J. on which the

appellants rely are as follows: (Verschures Creameries, KB

pp. 611-12)

“… A plaintiff is not permitted to “approbate and

reprobate”. The phrase is apparently borrowed from

the Scotch law, where it is used to express the

principle embodied in our doctrine of election —

namely, that no party can accept and reject the same

instrument: Ker v. Wauchope; Douglas-Menzies v.

Umphelby. The doctrine of election is not however

confined to instruments. A person cannot say at

2

(1956) 1 SCC 698

20

one time that a transaction is valid and thereby

obtain some advantage, to which he could only be

entitled on the footing that it is valid, and then turn

round and say it is void for the purpose of securing

some other advantage. That is to approbate and

reprobate the transaction.”

29. Further, in Rajasthan State Industrial Development &

Investment Corporation and Another. v. Diamond & Gem

Development Corporation Limited and Another

3, it was held:

“I. Approbate and reprobate

15. A party cannot be permitted to “blow hot-blow cold”,

“fast and loose” or “approbate and reprobate”. Where one

knowingly accepts the benefits of a contract, or

conveyance, or of an order, he is estopped from denying the

validity of, or the binding effect of such contract, or

conveyance, or order upon himself. This rule is applied to

ensure equity, however, it must not be applied in such a

manner so as to violate the principles of what is right and of

good conscience.

16. Thus, it is evident that the doctrine of election is based

on the rule of estoppel—the principle that one cannot

approbate and reprobate is inherent in it. The doctrine of

estoppel by election is one among the species of estoppels

in pais (or equitable estoppel), which is a rule of equity. By

this law, a person may be precluded, by way of his actions,

or conduct, or silence when it is his duty to speak, from

asserting a right which he would have otherwise had.”

(Emphasis supplied)

3

(2013) 5 SCC 470

21

30. In view of the abovementioned decisions of this Court, the

appellant cannot be permitted to approbate and reprobate

and the fora below have rightly dismissed the objections of the

Appellant in this regard. Not only did the appellant not object

to the terms, as evidenced from the minutes of the meetings,

he had expressly agreed for the same. The device adopted by

the appellant was an indirect attempt to renege from the plan.

It was a clear subterfuge. Knowing fully well that one cannot

withdraw directly from the plan approved by the CoC, an

attempt was made in an indirect manner by harping on about

certain stipulations as conditionalities to shift the blame on the

CoC for the appellant’s unwillingness to take the plan forward.

This clever ploy has rightly been scotched by the fora below.

If such artifices are allowed to succeed, the entire architecture

of the IBC would crumble and the laudable objects sought to

be achieved by the said Code would become a far cry.

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31. In this light, it is also important to examine the binding

nature of the resolution plan that is approved by the CoC. In

Ebix Singapore Private Limited vs. Committee of Creditors

of Educomp Solutions Limited and Another

4, this Court held

as under: -

“166. The binding nature, as between the CoC and the

successful resolution applicant, of the resolution plan

submitted for approval by the adjudicating authority is

further evidenced from the fact that the CoC issues an LoI

to a successful resolution applicant stating that it has been

selected as the successful resolution applicant and its plan

would be submitted to the adjudicating authority for its

approval. The successful resolution applicant is typically

required to accept the LoI unconditionally and submit a

PBG. Sequentially, the issuance of an LoI is followed by its

unconditional acceptance by the successful resolution

applicant. In AMTEK Auto, this Court thwarted a similar

attempt by a successful resolution applicant who had relied

on certain open-ended clauses in its resolution plan to seek

a direction compelling the CoC to negotiate a modification

to its resolution plan. The resolution plan had been approved

by the adjudicating authority and the resolution applicant's IA

was not entertained. The resolution applicant had then sought

to challenge the approval of the resolution plan under Section

61(3) IBC by seeking the same relief. This Court rejected the

claim and observed that : (SCC p. 475, para 30)

“30. … To assert that there was any scope for

negotiations and discussions after the approval of the

4

(2022) 2 SCC 401

23

resolution plan by the CoC would be plainly contrary to the

terms of IBC.”

“167. .. … The binding nature of a resolution plan on a

resolution applicant, who is the proponent of the plan which has

been accepted by the CoC cannot remain indeterminate at the

discretion of the resolution applicant. The negotiations

between the resolution applicant and the CoC are brought to

an end after the CoC's approval. The only conditionality that

remains is the approval of the adjudicating authority,

which has a limited jurisdiction to confirm or deny the legal

validity of the resolution plan in terms of Section 30(2) IBC.

If the requirements of Section 30(2) are satisfied, the

adjudicating authority shall confirm the plan approved by

the CoC under Section 31(1) IBC.”

“172. … … The adjudicating authority cannot compel a CoC to

negotiate further with a successful resolution applicant. A

rejection by the adjudicating authority is followed by a

direction of mandatory liquidation under Section 33. Section

30(2) does not envisage setting aside of the resolution plan

because the resolution applicant is unwilling to execute it,

based on terms of its own resolution plan.”

“221. … … Enabling withdrawals or modifications of the

resolution plan at the behest of the successful resolution

applicant, once it has been submitted to the adjudicating

authority after due compliance with the procedural

requirements and timelines, would create another tier of

negotiations which will be wholly unregulated by the

statute. Since the 330 days' outer limit of the CIRP under

Section 12(3) IBC, including judicial proceedings, can be

extended only in exceptional circumstances, this open-

ended process for further negotiations or a withdrawal,

would have a deleterious impact on the corporate debtor,

its creditors, and the economy at large as the liquidation

24

value depletes with the passage of time….”

“223. … … In this context, we hold that the existing

insolvency framework in India provides no scope for

effecting further modifications or withdrawals of CoC-

approved resolution plans, at the behest of the successful

resolution applicant, once the plan has been submitted to

the adjudicating authority. A resolution applicant, after

obtaining the financial information of the corporate debtor

through the informational utilities and perusing the IM, is

assumed to have analysed the risks in the business of the

corporate debtor and submitted a considered proposal. A

submitted resolution plan is binding and irrevocable as

between the CoC and the successful resolution applicant in

terms of the provisions of IBC and the CIRP Regulations. …”

(Emphasis supplied)

32. Therefore, it is clear that once the CoC, after applying its

commercial wisdom, has approved the resolution plan, the SRA

is prohibited from negotiating further and is expected to act in

a time bound manner to implement the plan. In the present

case, it is seen that the appellant was deliberately trying to

delay the implementation of the plan citing the purported

conditionality of the LoI. This defeats the purpose of the Code

as the otherwise timebound and swift process is now being

delayed at the behest of the appellant. In view of this, we find

25

no merit in the third contention of Ms. Purti Gupta, learned

counsel for the appellant.

33. On the aspect of forfeiture of the EMD, the RFRP in clause

1.9.4 clearly stipulates that where there is failure to submit the

performance guarantee within the stipulated time or in case of

any non-compliance with the plan, there could be forfeiture of

EMD. Clause 1.9.4 is extracted hereinbelow:-

“1.9.4 Forfeiture of Earnest Money Deposit of the Applicant

The Designated Lender shall be entitled to forfeit Earnest

Money Deposit where:

……

b) the Successful Applicant fails to submit the Performance

Guarantee within the stipulated time; or

e) in case of any other non-compliance with the Resolution

Plan Process or the Resolution Plan submitted by the

Applicant.

……

Provided, that the Designated Lender shall not be entitled to

forfeit the Earnest Money Deposit of the Successful Applicant in

accordance with this Clause 1.9.4, if any non-compliance with

the requirements set out above arises due to (a) non-receipt of

the Letter of Intent from the Committee of Creditors; or (b) the

Successful Applicant not accepting additional terms stipulated

by the Committee of Creditors in addition to the Resolution

Plan, pursuant to discussions of the Committee of Creditors with

the Successful Applicant.”

26

34. Hence, we find no illegality in the RP forfeiting the EMD of

Rs.1,00,00,000/- (Rupees one crore). The minutes of the 31

st

CoC meeting held on 26

th

July make it clear as to the premise

on which the EMD stood forfeited:-

“The representative of the Union Bank of India stated that we

can go ahead with the RFRP terms & conditions of non

acceptance of the LOI dt. 23rd June, 2021, the consequences and

the said provisions can be invoked and proceeded further. The

representatives of Union Bank further stated that sufficient

opportunities has been given to Mr. Sanjay Dave (Member of

the suspended board & Successful Resolution Applicant), in

spite of making good these opportunities he has only misused

the opportunities. Since Mr. Sanjay Dave (Member of the

suspended board & Successful Resolution Applicant) has not

accepted the LOI, the consequences of non acceptance of LOI

will follow. Mr. Sanjay Dave (Member of the suspended

board & Successful Resolution Applicant) objected to the

forfeiture on the EMD on the ground for the non-acceptance

of LOI, the COC asked whether there is any reason to not to

proceed further with the terms & conditions stipulated in

the RFRP to which Mr. Sanjay Dave (Member of the

suspended board & Successful Resolution Applicant) could

not give any satisfactory reply to the COC, hence in the

event of noncompliance with the Conditions Subsequent

the resolution plan submitted by Mr. Sanjay Dave (Member

of the suspended board & Successful Resolution Applicant)

was rejected by the COC.”

(Emphasis supplied)

27

35. The appellant, having become the SRA, failed to carry out

the obligations resulting in not only time running out for

invitation of fresh plans but also forced the CoC to resort to

liquidation under Section 33 of the Code.

36. The final submission of the learned counsel for the

appellant that the proposal for liquidation ought not to have

been approved since it was contrary to Section 33 of the Code

need not detain us any further. Rejecting the submission, the

NCLAT held as under:-

“28. …Since the CoC is statutorily empowered to decide on the

liquidation of the Corporate Debtor at any time before the

confirmation of the resolution plan. This decision is a

collegiate1 commercial wisdom of the CoC which is not subject

to judicial review except for ensuring that the resolution plan

meets the requirements of the IBC and related Regulations. The

paramount supremacy of the commercial wisdom of CoC has

been upheld in a catena of judgments by the Hon'ble Supreme

Court. The Explanation to Section 33(2) of IBC makes it amply

clear that the CoC is entitled to take a final call, to liquidate the

Corporate Debtor prior to affirmation of the resolution plan by

the CoC. This decision of the CoC is a business decision taken

in the exercise of their commercial wisdom which is clearly not

amenable to judicial review. There is no incidence of any

statutory aberration having been committed by the RP or CoC

in this regard.”

28

37. This Court in Manish Kumar v. Union of India

5, has held

as under:

“101. Section 33, which is in Chapter III in Part II,

compels announcing the death knell of the corporate

debtor. That is if, before the expiry of insolvency

resolution process period or the maximum period

permitted which is CIRP under Section 12, inter alia,

a resolution plan is not received or though received is

rejected by the adjudicating authority, then under

Section 33, order is to be passed. The curtains are

wrung down on the insolvency resolution process.

The corporate debtor goes into liquidation. The

adjudicating authority is bound to pass an order

requiring corporate debtor to be liquidated as

provided in Chapter III Part II. Section 33(2)

contemplates that before the confirmation of the

resolution plan if the Committee of Creditors so

approved by not less than 66% of the voting decide to

liquidate the corporate debtor, the adjudicating

authority is to pass the liquidation order.”

(Emphasis supplied)

38. Section 33 of the Code is reproduced hereinbelow:-

“Section 33: Initiation of liquidation.

*

33. (2) Where the resolution professional, at any time

during the corporate insolvency resolution process but

before confirmation of resolution plan, intimates the

Adjudicating Authority of the decision of the committee

of creditors [approved by not less than sixty-six per

5

(2021) 5 SCC 1

29

cent. of the voting share] to liquidate the corporate

debtor, the Adjudicating Authority shall pass a

liquidation order as referred to in sub-clauses (i),

(ii) and (iii) of clause (b) of sub-section (1).

2[Explanation. – For the purpose of this sub-section, it is

hereby declared that the committee of creditors may take

the decision to liquidate the corporate debtor, any time

after its constitution under sub-section (1) of section 21 and

before the confirmation of the resolution plan, including at

any time before the preparation of the information

memorandum.]”

39. A plain reading of clause 2 of Section 33 and specifically

the explanation to the said clause 2, which came into force from

16.08.2019, makes it clear that where an SRA after lulling the

CoC to believe that it will comply with the plan, reneges from

the plan and where the CoC resolves to liquidate the company

so as to realize the money and disburse the claims of the

different claimants, no fault can be found with the process.

40. There is nothing in Section 33 of the Code which detracts

from the said course of action. Hence, we are of the opinion that

the Fora below rightly allowed the application of the RP viz-a-

viz the liquidation process and rightly dismissed the

applications of the appellant.

30

41. Another aspect that has to be brought out is that once the

CoC has, in its commercial wisdom, come to the decision to

reject the appellant’s plan and liquidate the CD on account of

the appellant’s own default, there can be no case for

interference. This Court in K. Sashidhar v. Indian Overseas

Bank

6, has held as under:-

“52. ... The legislature has not endowed the adjudicating

authority (NCLT) with the jurisdiction or authority to

analyse or evaluate the commercial decision of CoC much

less to enquire into the justness of the rejection of the

resolution plan by the dissenting financial creditors. From

the legislative history and the background in which the I&B

Code has been enacted, it is noticed that a completely new

approach has been adopted for speeding up the recovery

of the debt due from the defaulting companies. In the new

approach, there is a calm period followed by a swift

resolution process to be completed within 270 days (outer

limit) failing which, initiation of liquidation process has

been made inevitable and mandatory. In the earlier

regime, the corporate debtor could indefinitely continue to

enjoy the protection given under Section 22 of the Sick

Industrial Companies Act, 1985 or under other such

enactments which has now been forsaken. Besides, the

commercial wisdom of CoC has been given paramount

status without any judicial intervention, for ensuring

completion of the stated processes within the timelines

6

(2019) 12 SCC 150

31

prescribed by the I&B Code. There is an intrinsic

assumption that financial creditors are fully informed

about the viability of the corporate debtor and

feasibility of the proposed resolution plan. They act on

the basis of thorough examination of the proposed

resolution plan and assessment made by their team of

experts. The opinion on the subject-matter expressed

by them after due deliberations in CoC meetings

through voting, as per voting shares, is a collective

business decision. The legislature, consciously, has

not provided any ground to challenge the “commercial

wisdom” of the individual financial creditors or their

collective decision before the adjudicating authority.

That is made non-justiciable.”

(Emphasis supplied)

42. Therefore, in the light of the position of the law above, it is

held that the fora below have rightly refused to interfere in the

well-informed commercial decision of the CoC to reject the

plan of the appellant and liquidate the CD, which was approved

with a voting percentage of 99.61%.

43. For the reasons stated above, we find no merit in the

appeals. The appeals are accordingly dismissed.

44. It is made clear that all interim orders will stand vacated

with the dismissal of the appeals. The respondent No.3-

32

Liquidator is directed to proceed with the remaining part of the

liquidation in accordance with the Code.

45. There will be no order as to costs.

……….........................J.

[K. V. VISWANATHAN]

……….........................J.

[VIPUL M. PANCHOLI ]

NEW DELHI;

27

th

May, 2026