The Supreme Court within a span of few months delivered two judgments – State Bank of India & Ors v The Consortium of Mr. Murari Lal Jalan and Mr. Florian Fritsch & Anr (Jet Airways) and Kalyani Transco v M/S Bhushan Steel Power and Steel Ltd & Ors (Bhushan Steel) – where it ordered liquidation of the corporate debtors in question. The common theme of both the judgments was that the Committee of Creditors (CoC) and the National Company Law Tribunal (NCLT) had approved a resolution plan, but its implementation failed. The successful resolution applicants in both cases used delay tactics by repeatedly seeking extensions of time limits provided in the resolution plan, interpreted the conditions relating to payments in a self-serving manner, and overall displayed a lack of credibility to salvage the corporate debtor resulting in the Supreme Court – invoking its powers under Article 142 of the Constitution – ordering liquidation of the corporate debtors. Section 33(3), Insolvency and Bankruptcy Code 2016 (IBC) does envisage liquidation after approval of the resolution plan, but the impugned judgments reveal novel challenges facing the IBC and raise questions that may not have easy answers.
In this article, I identify two major challenges revealed by the impugned judgments: lack of a statutory time limit to implement resolution plans and imprecise role of monitoring committees in ensuring implementation of resolution plans. I argue while under the IBC time is of the essence for the Corporate Insolvency Resolution Process (CIRP), the lack of a statutory time limit to implement a resolution plan works like a double-edged sword: it provides the freedom to customize resolution plans but also offers scope for the successful resolution applicant to seek extensions of timelines agreed upon in the plan. Additionally, after the Supreme Court’s judgment in the Jet Airways case, the Insolvency and Bankruptcy Board of India (IBBI) has proposed to make constitution of monitoring committees mandatory to oversee implementation of the resolution plan. But their composition and lack of precise powers is not an adequate response to the challenge of ensuring timely and full implementation of resolution plans.
No Statutory Timeline for Resolution Plans
In the Jet Airways case, the Supreme Court correctly stated that excessive statutory control regarding implementation phase of the resolution plan may prove to be counterproductive to the corporate debtor. Silence of the IBC as to the ideal timeline for implementation of a resolution plan is prudent because each resolution plan will be different as per the needs of the corporate debtor. And the timelines for different stages of compliance may vary in each resolution plan. This is where paradox of the IBC emerges: it is vital to prescribe an outer time limit for the CIRP to maximize value of the corporate debtor’s assets but a statutory time limit for implementation of a resolution plan may amount to over legislation.
While an approved resolution plan typically contains various time-related and stagewise obligations for the resolution applicant, seeking extensions is par for the course. And the NCLT frequently agrees to the requests delaying the implementation of the resolution plan. If not time-related, resolution applicants can seek other modifications that can cause delays. For example, in the Jet Airways case the successful resolution applicant prayed for adjustment of performance bank guarantee against the first tranche of payment it was required to make under the resolution plan. The request was agreed upon by the National Company Law Appellate Tribunal (NCLAT) until the Supreme Court held otherwise. But the issue was not resolved as the resolution applicant did not adhere to the Supreme Courts’ directions resulting in the next round of litigation which culminated with the Supreme Court finally ordering liquidation.
The absence of a statutory time limit implies that judicial forums must evaluate factual matrix to permit or deny extensions or modifications of the resolution plan while ensuring that excessive leeway is not given to the resolution applicant. Preservation of this judicial discretion is preferable than a statutorily prescribed straitjacket time limit that may limit options to revive the corporate debtor. In fact, a focus on ensuring that the CIRP is completed in a timebound manner may partially address the downside of delays or failure to implement a resolution plan. Too often the outer time limit to complete the CIRP is breached. For example, in the Bhushan Steel case it took one and a half years for the CoC to approve a resolution plan breaching the IBC’s prescribed deadline of 270 days (as applicable then). The CoC approved a resolution plan in February 2019 which was followed by delays and more negotiations. Eventually, the Supreme Court in May 2025 ordered liquidation of the corporate debtor. In the Jet Airways case, the resolution plan became ‘incapable of being implemented’ due to delays and other factors. Delays in the CIRP create a double whammy if liquidation is caused by failure to implement the resolution plan. As evidenced in both the impugned judgments, orders of liquidation in such circumstances not only defeat the primary aim to salvage the corporate debtor but also prevent timely liquidation that may maximize asset value.
Imprecise Role of Monitoring Committees
The Supreme Court in the Jet Airways case recommended that there should be a statutory provision for constitution of a monitoring committee to ensure smooth implementation of the resolution plan. At that time, Regulation 38(4), IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations) provided that the CoC may consider appointment of a monitoring committee for implementation of the resolution plan. The IBBI has since amended Regulation 38(4) which now states that the CoC ‘shall’ consider appointment of a monitoring committee making its constitution mandatory. Monitoring committees may be comprised of the resolution professional, representatives of the CoC, and representatives of resolution applicant. The mandatory constitution of monitoring committees is a step in the right direction, but will it prove to be a meaningful step?
In the Bhushan Steel case, the Supreme Court noted that the resolution professional and CoC both acted in contravention of the statutory provisions of the IBC and the CIRP Regulations. In such situations, where two entities key for success of the CIRP act in blatant disregard of the law, their conduct is unlikely to be any different as part of the monitoring committee. One can argue that the Bhushan Steel case is an outlier, and the entities involved will not always take decisions that contravene the law. Perhaps. But even previously the monitoring committees created under the resolution plan were trying to achieve similar objectives. Albeit they will now perform their role under the aegis and as part of a more formal body.
The Supreme Court in the Jet Airways case observed that the monitoring committee should monitor and supervise the resolution plan, ensure statutory compliances are obtained timely and report the progress of implementation to adjudicating authorities and creditors on a quarterly basis. The aim, as suggested by the Supreme Court is to ensure that a formal body oversees the implementation, and that the implementation happens in a collaborative manner. The Supreme Court clarified that the duty to implement the resolution plan is not solely of the successful resolution applicant, but it is shared with the creditors. And the latter should not be obstructive but facilitative in the process of implementation of the resolution plan. The emphasis on collaboration and shared responsibility of implementation of the resolution plan is welcome, but monitoring committee is also supposed to consist of representatives of financial creditors: how will they effectively prevent or address any misconduct by the creditors themselves?
Monitoring committee may not be able to alter the status quo significantly if the resolution applicant doesn’t intend to implement the resolution plan in its true form. Even in the Jet Airways case there was a monitoring committee headed by the resolution professional as part of the terms of resolution plan. Did it prevent any delays or the resolution plan going off the rails? A statute backed monitoring committee maybe be able to make timely recommendation of liquidation of the corporate debtor or bring disagreements to the notice of the NCLT/NCLAT. But it is unlikely that a monitoring committee can contribute and make a more substantial change to the current situation. Agreed that the monitoring committee will have a narrow focus and a legal mandate, but the latter cannot provide insurance against irresponsible conduct of either the creditors or the successful resolution applicant. Neither can a monitoring committee prevent any extensions that the NCLT/NCLAT may grant, correctly or otherwise.
Way Forward: Re-Emphasize Existing Elements of the IBC
There should be a meaningful attempt to emphasize some of the existing elements in the IBC to address the issue of implementation of a successful resolution plan. The IBC repeatedly enjoins the need to consider the feasibility of a resolution plan before its approval. Regulation 38(3), CIRP Regulations enlists the mandatory contents of a resolution plan and requires that a resolution plan must demonstrate that it is feasible and viable and has provisions for its effective implementation. Section 30(2)(d), IBC enjoins the resolution professional to examine that each resolution plan provides for its implementation and supervision. Section 30(4), IBC mandates that the CoC to approve a resolution plan after considering its feasibility and viability. Section 31, IBC in turn requires the NCLT to satisfy itself that the resolution plan approved by the CoC under Section 30(4) satisfies the requirements referred in Section 30(2). If that is not sufficient, the proviso to Section 31 states that:
Provided that 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.
If all the three entities – resolution professional, CoC, and the NCLT – re-emphasize on the feasibility, viability, and provisions for implementation of the resolution plan, it is likely that the situations that arose in the impugned judgments can be avoided. If not avoid altogether, possibly address similar situations in a time and manner that does not set at naught the CIRP.
[A version of this post was first published on irccl.in, in July 2025. ]
