The Insolvency and Bankruptcy Code, 2016 (‘IBC’) provides the Committee of Creditors (‘CoC’) a central role in corporate insolvency resolution proceedings (‘CIRP’). The IBC prescribes the CoC’s role in broad terms and specific boundaries are still being delineated through judicial decisions. For example, while courts have consistently endorsed that commercial wisdom of the CoC is non-justiciable, precise extent of judicial oversight over the CoC’s decisions remains uncertain. This article focuses on two aspects of the CoC’s working that have emerged exclusively by judicial innovation and examines whether The Insolvency and Bankruptcy Code (Amendment) Act, 2026 (‘IBC Act, 2026’) succeeds in its attempt to provide them a statutory basis.
Firstly, the IBC did not expressly confer authority on the NCLT to refer resolution plans back to the CoC for reconsideration. Previously, Section 31 of the IBC provided a binary option to the NCLT: approve or reject a resolution plan. Equally, neither Section 61 nor Section 62 of the IBC envisaged that the NCLAT or the Supreme Court can mandate the CoC to reconsider resolution plans. And yet resolution plans were often sent to the CoC for re-examination on various grounds enunciated by the Supreme Court. The IBC Act, 2026 amends the IBC to empower the NCLT to return a resolution plan. The IBC Act, 2026 has inserted a proviso to Section 31(2) and empowered the NCLT to give notice to the CoC ‘to rectify any defects in the resolution plan’ before rejecting the resolution plan. Notes on clauses to the IBC Bill, 2025 – which is pari materia to the IBC Act, 2026 – clarified that the NCLT should provide an opportunity to the CoC when defects are ‘procedural, non-material’ and can be rectified by the CoC. But use of ‘any’ in the proviso, prima facie, provides the NCLT broad powers contrary to intent expressed in notes on clauses.
Secondly, the IBC’s silence ‘as regards the phase of implementation’ of the resolution plan was noted by the Supreme Court in SBI v The Consortium of Mr. Murari Lal Jalan (‘Jet Airways case’). To overcome the IBC’s silence, the Supreme Court in Kalyani Transco v M/S Bhushan Power and Steel Ltd and Others (‘Bhushan Steel case’) held that the CoC is not functus officio after the NCLT approves the resolution plan. The Supreme Court added that since the CoC has a vital interest in implementation of the resolution plan it will continue to exist until the resolution plan is implemented, or an order of liquidation is passed by the NCLT. The IBC Act, 2026 – to correct statutory oversight on implementation of the resolution plan – proposes to replace Section 30(2)(d) to state that every resolution plan must necessarily provide for constitution of a committee to implement and supervise the resolution plan. I suggest that the IBC Act, 2026 should have ideally clarified role of the CoC vis-à-vis implementation committee. And only left other procedural details for the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (‘CIRP Regulations’). Else, implementation phase of the resolution plan may face further uncertainties about role of the CoC. Supreme Court’s judgment in Bhushan Steel case and the IBC Act, 2026 together ensure that the CoC and the implementation committee will co-exist during implementation of the resolution plan. How will the two entities interact? Will the implementation committee operate under supervision of the CoC? Clarity on these procedural aspects may emerge from the CIRP Regulations. But it was vital that the statute provided, in clear terms, the CoC’s role during implementation of the resolution plan.
The IBC Act, 2026 has missed an opportunity to provide legislative clarity on both the above aspects. And leaves ample room for ad hoc judicial solutions that may hamper timely completion of CIRP.
Reconsideration of a Resolution Plan by the CoC
The Supreme Court in CoC of Essar Steel India Ltd v Satish Kumar Gupta & Ors (‘Essar case’) correctly held that while the NCLT cannot interfere with commercial decision of the CoC, it can exercise judicial review if the CoC has not taken into account key features of the IBC. For example, the NCLT is permitted to examine if a resolution plan approved by the CoC maximises the value of corporate debtor’s assets and balances the interests of all stakeholders. However, the Supreme Courts’ conclusion that the NCLT can send back a resolution plan to the CoC if key features of the IBC are amiss in a resolution plan is not supported by a plain reading of Section 31 of the IBC.
Section 31(1) of the IBC states that the NCLT, ‘shall’ by order approve the resolution plan if it is satisfied that the resolution plan approved by the CoC meets requirements enlisted in Section 30(2). And if the resolution plan does not conform to above stated requirements, the NCLT under Section 31(2) ‘may’ by an order reject the resolution plan. I suggest that interpreting may as directory in this context defeats the IBC’s objective of completing CIRP in a time bound manner. Under Section 31, the NCLT must determine if the resolution plan approved by the CoC satisfies the requirements enlisted under Section 30(2). If the answer is in affirmative, the NCLT must approve the resolution plan or else reject it. The NCLT directing the CoC to reconsider the resolution plan instead of rejecting it, expands time required for CIRP and defeats the aim of maximising the value of corporate debtor’s assets. One can argue that if the prescribed time limit for CIRP has not expired, the NCLT can send the resolution plan to the CoC for reconsideration. But, silence of Section 31 about grounds on which the NCLT ‘may’ send the resolution plan to the CoC for reconsideration suggests that such a possibility was not contemplated by the legislature. The Supreme Court, instead of paying attention to silence of Section 31 on powers of the NCLT to send back resolution plan has created its own parameters to permit reconsideration by the CoC. A legal position that suffers from multiple frailties.
The Supreme Court has bifurcated judicial role vis-à-vis the CoC in two spheres: commercial decisions of the CoC and legality of resolution plans under the IBC. In Essar case and later in Jaypee Kensington Boulevard Apartments Welfare Association v NBCC (India) Ltd. the Supreme Court reiterated that the NCLT’s jurisdiction in approving the resolution plan cannot extend to altering commercial terms of the resolution plan. But in both cases, the Supreme Court observed that the NCLT can send the resolution plan back to the CoC for re-submission if key parameters of the IBC were amiss – such as those listed in Section 30(2) of the IBC. In both cases, flaw in the Supreme Court’s approach was in equating the NCLT’s power to review legality of the resolution plan with the power to send back resolution plan to the CoC. Section 31 empowers the NCLT with only the former and envisages a rejection of the resolution plan on failure to meet the parameters of Section 30(2). The Supreme Court by equating scope of the NCLT’s judicial review with power to send back resolution plan committed judicial overreach and introduced an additional step in CIRP which contributes to delay in its timely completion.
Equally, the Supreme Court has not canalized the grounds on which the NCLT can send back the resolution plan. The NCLAT and the Supreme Court – have sent resolution plans for reconsideration on various grounds. Resolution plans have been returned for not providing that dissenting financial creditors must be paid in cash, the resolution professional wrongly rejecting the claim of financial creditor, and that dissenting financial creditors were paid less than stipulated under Section 30(2)(b). The various grounds have emerged from fact situations and are not framed within any judicial doctrine on the NCLT’s powers of approval of the resolution plan. The NCLT/NCLAT/Supreme Court while sending back resolution plans have reasoned that only the CoC can amend commercial aspects of the resolution plan but have overlooked if they possess the power to send back the resolution plan. In fact, common link in the above-mentioned decisions is that in none of them any judicial forum has examined the legislative intent or text of Section 31 to determine if it permits the CoC to reconsider an approved resolution plan. The IBC Act, 2026 attempts to alter the legislative intent underlying Section 31 to this end but suffers from shortcomings.
Notes on clauses to the IBC Bill, 2025 indicate that the NCLT must send back resolution plans only if defects are procedural, non-material and can be rectified by the CoC. To begin with, there is an erroneous presumption that substantive and procedural defects are neatly distinguishable categories in CIRP. None of the judicial decisions that have mandated reconsideration of resolution plan by the CoC have identified factors to distinguish substantive defect from a procedural defect. Even presuming that a clear categorization is possible, identifying the category of defect will require further judicial exercise, and create another layer of uncertainty about scope of the NCLT’s power. Not to mention that despite the legislative intent being to limit the NCLT’s power to only procedural defects, the proposed proviso mentions ‘any’ defect. An example of legislative drafting – prima facie – betraying the stated legislative intent.
Further, the change to Section 31 proposed by the IBC Act, 2026 also prevents accountability of the CoC for its decisions. The commercial aspects of a resolution plan are beyond judicial purview because the IBC presumes that it is the CoC that possesses business expertise and not judicial forums. But the CoC, is obligated to make commercial decisions as per the IBC’s mandate. For example, the CoC must vote on the resolution plan after considering the parameters enlisted in Section 30(2) and obey the mandate of Section 30(4). Thus, if the CoC approves the resolution plan that contravenes clearly enlisted parameters in Section 30(2) or Section 30(4); prima facie, the CoC has committed a dereliction of its duty. And if the NCLT simply sends back a resolution plan – previously approved by the CoC – for reconsideration without any penalty or meaningful legal consequence for the CoC, it avoids accountability for its failure to discharge a statutory duty. The Supreme Court, in Jet Airways case, suggested that the Insolvency and Bankruptcy Board of India should explore the enforcement of standards in Guidelines for the CoC instead of making them self-regulatory to ‘prevent any significant lapse in decision making on the part of the CoC.’ The legal mandate must move towards greater accountability for the CoC instead of the opposite direction.
Finally, the IBC Act, 2026 suffers from a contradiction in so far as it imagines role of the NCLT in CIRP. While the IBC Act, 2026 amends Section 7 to circumscribe the NCLT’s jurisdiction and expedite CIRP, it does the opposite as regards Section 31. The IBC Act, 2026 proposes to add Explanation 1 to Section 7 wherein if the NCLT is satisfied as to the existence of a default, is sure that the application is complete and no disciplinary proceedings are pending against the proposed resolution professional, it shall admit the CIRP application. Else reject it. The NCLT is not required to inquire into any other factor. Narrowing the NCLT’s jurisdiction under Section 7 is to expedite admission of the CIRP application if default by corporate debtor is proved. On the other hand, the NCLT is being permitted to send back the resolution plan by inserting a proviso in Section 31(2) to that effect. Thereby providing statutory basis to a judicial practice that is already contributing to delays in CIRP. The amendment to Section 31 may negate the amendment to Section 7 in so far as expediting CIRP is concerned.
The CoC’s Uncertain Role in Implementation of the Resolution Plan
The IBC is silent on the CoC’s role in implementation of the resolution plan. This is evident in the IBC not providing any specific role and functions for the CoC once the resolution plan is approved by the NCLT. For example, if the NCLT has approved a resolution plan, then under Section 33(3) of the IBC any person – other than the corporate debtor – aggrieved by contravention of the approved resolution plan may make an application to the NCLT for liquidation. And Section 33(4) states that if the NCLT determines that a corporate debtor has contravened provisions of the resolution plan it may pass an order of liquidation. There is no express requirement of seeking the permission or even opinion of the CoC before passing the liquidation order. The CoC’s approval for liquidation by sixty-six per cent voting share is needed only if the resolution plan has not been confirmed by the NCLT, i.e., before its implementation begins. Section 33(3) read with 33(4) reveal the CoC’s minimal role during implementation of the resolution plan.
The lack of any specific role for the CoC during implementation of the resolution plan came to fore in Jet Airways case and Bhushan Steel case. In Jet Airways case, the Supreme Court suggested a monitoring committee for implementation of an approved resolution plan. And that it should consist of resolution professional, nominees from the CoC as well as the resolution applicant. In Bhushan Steel case, the Supreme Court identified the CoC as a vital stakeholder in the implementation of the resolution plan and thus held that it continues to exist until the resolution plan is implemented, or an order of liquidation is passed. In Jet Airways the Supreme Court’s suggestion was motivated by a need to ensure that implementation of the resolution plan is overseen by a specific body consisting of all stakeholders. And the NCLT/NCLAT do not approve changes to timelines or conditions in the resolution plan that de facto amends and affects the viability/feasibility of the resolution plan. While in Bhushan Steel case, the Supreme Court extended lifespan of the CoC to prevent an ‘anomalous situation’ wherein if there is failure to implement the resolution plan, creditors will not be able to take any steps for realization of their dues from the corporate debtor.
The IBC Act, 2026 – taking a cue from the Supreme Court’s recommendation in Jet Airways case – proposes that every resolution plan must mandatorily provide for constitution of an implementation committee. The IBC Act, 2026 should have gone further and clarified the CoC’s role during implementation of the resolution plan. This is because while the IBC Act, 2026 mandates the constitution of an implementation committee it does not detract from the Supreme Court’s observation in Bhushan Steel, i.e., the CoC’s continues to exist until the resolution plan is implemented. If the implementation committee and the CoC are to co-exist during implementation phase, the IBC Act, 2026 should ideally and expressly provide specific roles and functions of the CoC during implementation phase. For example, it is unclear if the implementation committee will be a sub-set of the CoC. And if all requests for time extensions or other amendments need to be necessarily pre-approved by the CoC. Will implementation of the resolution plan be supervised by the implementation committee and the CoC will only approve any requests for amendments in the plan? There is no clarity that emerges from the IBC Act, 2026.
The CIRP Regulations already provide for constitution of an implementation committee. The IBC Act, 2026 aims to provide a statutory basis to the implementation committee and mandates that every resolution plan must necessarily provide for composition of the implementation committee. But the IBC Act, 2026 leaves the issue of overlapping existence of both entities unaddressed. The CoC should certainly be involved in implementation of the resolution plan. And the rationale for its involvement in implementation of the resolution plan is strengthened by the need to preserve viability and feasibility of the resolution plan. Else, NCLT approving changes to the resolution plan without the CoC’s involvement may alter it to such an extent that it dilutes or defeats commercial wisdom of the CoC. Finally, continued role of the CoC during implementation phase is also relevant because the IBC Act, 2026 proposes that it shall ‘supervise the conduct of the liquidation process by the liquidator’. Notes on clauses state that the CoC should supervise liquidation so that it can apply learnings from CIRP to liquidation. I suggest the same reason is equally relevant to keep the CoC involved in implementation of the resolution plan. Not only will the CoC’s role in implementation of the resolution plan ensure continuity, prevent unwarranted changes, but also – if need arises – keep it abreast of developments that may be helpful during liquidation of the corporate debtor. But clarity about nature and extent of the CoC’s involvement in implementation will be welcome. Specifically, its role vis-à-vis the implementation committee which will now exist under each resolution plan.
Conclusion
To conclude, it is worth mentioning two related but separate judicial observations about the CoC’s tenure: (a) that the CoC does not become functus officio after the NCLT approves a resolution plan; (b) judicial review of the CoC’s commercial wisdom does not preclude sending the resolution plan back for its reconsideration. Ensuring that the CoC continues beyond approval of the resolution plan is defensible for it ensures a smooth implementation. But the CoC’s continued existence also creates an incentive or at least provides an option to the NCLT/NCLAT/Supreme Court to refer resolution plans back to the CoC. Even though the IBC does not expressly contemplate such a reconsideration. And, in fact, the reconsideration proves counterproductive to timely completion of CIRP without attaching any penalties to the CoC for its failure to perform its statutory duties. The proposed proviso to Section 31(2) has the potential to provide sanctity to an unsatisfactory legal situation instead of streamlining the CIRP-related judicial process. At the same time, the IBC Act, 2026 does not clearly delineate the CoC’s role in implementation of the resolution plan leaving room for uncertainty on that aspect. The CoC and the implementation should have, ideally, clearly defined roles via provisions in the IBC itself and only procedural details should have been left for CIRP Regulations.
