The National Company Law Appellate Tribunal (NCLAT) on October 04, 2022 in the matter of Shardha Buildcon Pvt. Ltd v. The Dhar Textile Mills Ltd., while dismissing the appeal filed by the Resolution Applicant seeking permission to withdraw its resolution plan, held that allowing withdrawal of a resolution plan will have serious disastrous effect on the whole purpose of the Insolvency & Bankruptcy Code, 2016 (“IBC”).

In the instant matter, the Appellant had filed an appeal before the NCLAT against the order passed by NCLT, Indore. The NCLT, Indore relied upon the judgment of Supreme Court in Ebix v. Educomp and dismissed the application filed by Appellant seeking withdrawal of the resolution plan. The Appellant contended that the judgement of Ebix is not applicable as the same deals with the cases where the Corporate Debtor has undergone changes but in the present case, the Appellant is seeking withdrawal due to the financial difficulty being faced by the Appellant.

The Bench of Apex Court held that even if the Appellant is allowed to withdraw from the plan due to financial difficulty, the same will amount to go back from the commitment made in the resolution plan which is not permissible. The Bench observed:

“The IBC is process consists of different steps with a ultimate object of reviving the Corporate Debtor. Permitting Successful Resolution Applicant to withdraw after the Plan has been approved will have serious disastrous effect on whole purpose and object of IBC”.

Accordingly, NCLAT dismissed the appeal filed by the Appellant and upheld the order of NCLT, Indore.