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Sanjay Dave v. Andhra Bank Ltd. & Ors.

Civil Appeal · 2026 INSC 580Decided 27 May 2026
C.A. No.-012264-012266 - 2024
Justice K.V. Viswanathan · Justice Vipul M. Pancholi · Justice J.B. Pardiwala

Background

The appellant was the promoter/director of a corporate debtor, M/s. Oracle Home Textiles Limited, undergoing the Corporate Insolvency Resolution Process. His resolution plan was approved by the Committee of Creditors (CoC) with a 99.90% majority, but he then disputed the terms of the Letter of Intent (LoI) issued to him as conditional, and failed to accept successive LoIs or submit the required performance guarantee, leading to forfeiture of his earnest money deposit. When the resolution process timeline lapsed without a finalized plan, the CoC voted (99.61%) to liquidate the company instead. The appellant's applications to restore his plan/deposit were dismissed by the Adjudicating Authority and the NCLAT, leading to this further appeal to the Supreme Court under Section 62 of the IBC.

Decision Breakdown

The Supreme Court held that once a successful resolution applicant leads the CoC to believe it will comply with an approved plan but then reneges, the CoC is entitled under Section 33 of the Code (and its 2019 Explanation) to resolve to liquidate the corporate debtor to realise value for creditors, and no fault lies in that process. Relying on K. Sashidhar v. Indian Overseas Bank, the Court reaffirmed that the "commercial wisdom" of the CoC in rejecting a plan is non-justiciable and cannot be second-guessed by adjudicating authorities. Since the CoC's decision to liquidate was made by an overwhelming majority following the appellant's own default in accepting the LoI terms, the Court found no ground for interference. The appeals were dismissed, all interim orders vacated, and the liquidator directed to proceed with liquidation.

Lesson Learnt

A resolution applicant whose plan is approved by creditors must comply with the terms of the Letter of Intent within stipulated timelines; if it fails to do so, the CoC's commercial decision to liquidate the company instead cannot be challenged in court, as courts do not sit in appeal over the CoC's business judgment under the IBC.

Official source (sci.gov.in)View Judgment (PDF)

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