Bidder won the bid, then tried to walk away. Court said: no.

Ebix won the bid for Educomp. Then it tried to walk away—three times. The court's answer?

For two years, Ebix Singapore had waited. Its resolution plan for Educomp Solutions had been approved by creditors in February 2018. But the National Company Law Tribunal (NCLT — the special court that handles insolvency cases) hadn't confirmed it. Meanwhile, investigations revealed financial irregularities at Educomp. Ebix wanted out. It applied to withdraw its plan once, then twice, then a third time. The NCLT finally allowed the withdrawal in January 2020. The appellate tribunal reversed that decision. By September 2021, the question had reached the Supreme Court: once creditors approve a rescue plan, can the bidder simply change its mind?

When the creditors said yes, but the bidder said no

The story begins in May 2017, when Educomp Solutions filed for insolvency under Section 10 of the Insolvency and Bankruptcy Code (IBC — the law that governs corporate bankruptcy in India). The NCLT admitted the company into the Corporate Insolvency Resolution Process (CIRP — the formal process of trying to revive a company or sell it to pay off debts).

Ebix Singapore, a Singapore-based subsidiary of the US-listed Ebix Inc., submitted a resolution plan (a proposal to take over and revive the company). On February 22, 2018, the Committee of Creditors (CoC — the group of lenders who decide the company's fate) approved the plan with a 75.35% vote, including a late vote from CSEB. Under Section 30(4) of the IBC, that approval was enough to send the plan to the NCLT for final confirmation under Section 31.

But confirmation never came. The NCLT kept the matter pending. The stack of documents on the bench grew thicker with each passing month. Meanwhile, Ebix's own investigations uncovered financial irregularities at Educomp. The bidder felt the ground had shifted. It filed its first withdrawal application in July 2019. The NCLT dismissed it. A second application in September 2019 was also dismissed, though the tribunal gave Ebix "liberty to refile" — permission to try again. The courtroom fell silent as the order was read. In January 2020, the NCLT allowed the third application. Ebix was free to walk away.

The Committee of Creditors appealed. The National Company Law Appellate Tribunal (NCLAT — the court that hears appeals from the NCLT) reversed the NCLT's order in July 2020. Ebix was back in the deal. It appealed to the Supreme Court.

Three appeals, one question

The Supreme Court heard three appeals together. In the first, Ebix wanted to withdraw its plan for Educomp. In the second, Kundan Care/Astonfield, a solar company's only contract was under threat, and the bidder sought withdrawal citing changed circumstances. In the third, Seroco, the bidder wanted to modify its already-approved plan, not withdraw entirely. All three raised the same core question: does the IBC allow a successful resolution applicant to withdraw or modify its plan after the creditors have approved it, but before the tribunal has confirmed it?

The NCLAT had held that no such jurisdiction existed. The bidders argued otherwise. Ebix pointed to the delay — two years of tribunal inaction — and the financial irregularities it had discovered. It also pointed to a clause in its own plan that set a validity period for the offer. Once that period expired, Ebix argued, the plan should lapse automatically.

What the IBC actually says

The court examined the statutory framework. Section 5(26) of the IBC defines a resolution plan. Section 25(2)(h) requires the Resolution Professional (RP — the person managing the insolvency process) to invite and receive plans. Section 30 governs submission and approval. Section 31 gives the NCLT the power to approve or reject a plan after the CoC has approved it.

Nowhere in these provisions, the court noted, is there a mechanism for a bidder to withdraw its plan after submission to the tribunal. Section 12A of the IBC allows withdrawal of the entire insolvency process — but only before the CoC approves a plan, and only with the CoC's consent. That provision, the court said, does not give a bidder the right to withdraw its own plan.

The court also examined the CIRP Regulations (the detailed rules that govern how the insolvency process runs). Again, no provision for unilateral withdrawal. The court was clear: the IBC is a complete code. If Parliament had intended to allow bidders to withdraw after CoC approval, it would have said so.

Why the bidder's contract argument failed

Ebix argued that its resolution plan contained a clause stating the offer would remain valid only for a specified period. Once that period expired, the plan should be treated as withdrawn. The court rejected this argument. A resolution plan, once approved by the CoC and submitted to the NCLT, is no longer a private contract between the bidder and the creditors. It becomes part of a statutory process governed by the IBC. Contractual terms cannot override the statutory scheme. If bidders could insert validity periods and walk away when they expired, the entire insolvency process would become unstable. Creditors who had voted in favour of the plan, employees who had pinned their hopes on revival, and other stakeholders would be left in limbo.

The court also addressed the delay argument. Yes, the NCLT had taken two years to confirm Ebix's plan. That was unacceptable. But the remedy for delay was not to allow the bidder to walk away. The remedy was to approach the appellate tribunal or the Supreme Court for directions to the NCLT to decide the matter expeditiously. A bidder cannot use delay as a reason to unilaterally withdraw.

The ratio: no exit after CoC approval

The Supreme Court upheld the NCLAT's judgment. The ratio decidendi (the court's central reasoning) was clear: a successful resolution applicant cannot unilaterally withdraw its resolution plan after it has been approved by the Committee of Creditors under Section 30(4) of the IBC, but before confirmation by the adjudicating authority under Section 31. As the court stated, 'The IBC contains no provision—legislative hook or regulatory tether—that permits a Resolution Applicant to withdraw its plan after submission to the Adjudicating Authority.' Terms in a resolution plan providing for validity periods or withdrawal mechanisms cannot override the statutory scheme.

The court also clarified that the doctrine of constructive res judicata (the principle that a matter already decided cannot be re-litigated) did not apply in Ebix's case. The NCLT's earlier dismissal of the first two withdrawal applications had not consciously adjudicated on the specific issue of whether withdrawal was legally permissible. Moreover, the NCLT had granted "liberty to refile" in the second order, which meant the issue remained open.

THE PLAY: Once the Committee of Creditors approves your resolution plan, you cannot walk away — not even if the tribunal delays confirmation for years, and not even if your plan contains a validity period clause.

What this means for bidders and creditors

For bidders, the message is stark: do your due diligence before you bid, not after. The IBC does not give you a cooling-off period after CoC approval. If you discover problems later, your remedy is not withdrawal — it is to seek expedition from the appellate court, or to negotiate with the CoC for a consensual modification (if the court permits it). For creditors, the judgment provides certainty. Once a plan is approved, the bidder cannot hold the process hostage by threatening to walk away.

The court ended where it began: with a bidder who won the auction, then tried to leave. The answer was no.