CIRP settlement requests must stay within the IBC process; writs and regulatory frameworks cannot bypass NCLT remedy.

After commencement of CIRP, attempts to secure a one-time settlement or challenge creditor decisions must be pursued within the Insolvency and Bankruptcy Code framework before the NCLT. The Court treated the IBC as a self-contained code, held that an RBI framework could not create a standalone right to seek OTS outside CIRP, and found that the absence of a Board-approved policy did not invalidate rejection of the settlement request once insolvency proceedings were underway. It also held that writ jurisdiction could not bypass the statutory remedy under section 60(5), that a sole financial creditor could not conclude a bilateral settlement in place of the collective insolvency process, and that withdrawal could not reopen an approved resolution plan.

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Issues: (i) Whether the petitioner was entitled to relief after commencement of the corporate insolvency resolution process; (ii) whether the RBI framework could create a right to seek consideration of an OTS outside the scheme of the Insolvency and Bankruptcy Code; (iii) whether the rejection of the OTS was vitiated for want of a Board-approved policy; (iv) whether the writ petition was maintainable in view of the statutory remedy under section 60(5) of the Insolvency and Bankruptcy Code, 2016; (v) whether a sole financial creditor could entertain an OTS once CIRP had commenced; (vi) whether withdrawal could be entertained after approval of the resolution plan; (vii) whether the writ petition was maintainable in the absence of the borrowing entity as a necessary party.

Issue (i): Whether the petitioner was entitled to relief after commencement of the corporate insolvency resolution process

Analysis: The borrowing entity had been under CIRP for years, while the petitioner approached the Court long after the impugned rejection and after material resolution steps had advanced. The delay was unexplained and had the effect of unsettling a time-bound insolvency process. The Court treated the timing and sequence of events as inconsistent with a bona fide challenge.

Conclusion: The issue was answered against the petitioner.

Issue (ii): Whether the RBI framework could create a right to seek consideration of an OTS outside the scheme of the Insolvency and Bankruptcy Code

Analysis: The IBC was treated as a self-contained code governing insolvency resolution. A right not contemplated by the Code could not be imported through a regulatory framework. The Court held that the RBI framework was subordinate to the insolvency regime and could not displace the collective process under CIRP.

Conclusion: The issue was answered against the petitioner.

Issue (iii): Whether the rejection of the OTS was vitiated for want of a Board-approved policy

Analysis: The Board-approved policy requirement was held to regulate the process for compromise settlements, not to create a duty to consider or accept an OTS in all circumstances. The Court further held that, once CIRP had already been in motion for years, the absence of such a policy at the time of rejection did not invalidate the impugned decision.

Conclusion: The issue was answered against the petitioner.

Issue (iv): Whether the writ petition was maintainable in view of the statutory remedy under section 60(5) of the Insolvency and Bankruptcy Code, 2016

Analysis: Section 60(5) vests the NCLT with jurisdiction over questions arising out of or in relation to insolvency resolution. The Court held that the petitioner had an efficacious alternative remedy before the NCLT and could not invoke writ jurisdiction to bypass the insolvency forum.

Conclusion: The issue was answered against the petitioner.

Issue (v): Whether a sole financial creditor could entertain an OTS once CIRP had commenced

Analysis: Once CIRP commences, the matter becomes a collective proceeding in rem and decisions concerning the debtor and creditors must be taken within the framework of the CoC. The Court held that the law does not contemplate bilateral settlement with a single creditor to the exclusion of other stakeholders.

Conclusion: The issue was answered against the petitioner.

Issue (vi): Whether withdrawal could be entertained after approval of the resolution plan

Analysis: Withdrawal under section 12A requires the prescribed CoC approval and cannot be used to undo a resolution plan already approved by the CoC. The Court held that, after approval, the plan attains binding finality and cannot be reopened by a unilateral attempt at withdrawal.

Conclusion: The issue was answered against the petitioner.

Issue (vii): Whether the writ petition was maintainable in the absence of the borrowing entity as a necessary party

Analysis: The reliefs sought directly affected the borrowing entity and the CIRP framework governing it. The borrowing entity and the resolution professional were necessary for complete adjudication, and their absence rendered the writ vulnerable.

Conclusion: The issue was answered against the petitioner.

Final Conclusion: The writ petition was held to be unsustainable both on maintainability and on merits because the dispute fell within the insolvency regime, the petitioner had an alternative statutory forum, and the requested relief would have disrupted the ongoing CIRP and the approved resolution process.

Ratio Decidendi: Once a corporate debtor enters CIRP, settlement attempts, withdrawal requests, and challenges to creditor decisions must be pursued strictly within the Insolvency and Bankruptcy Code before the NCLT, and neither a regulatory framework nor writ jurisdiction can be used to bypass the collective insolvency process or unsettle an approved resolution plan.

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