Chapter II - Corporate Insolvency Resolution Process
Section 31
Section 31: approval of the resolution plan by the tribunal
Under Section 31, the tribunal approves a committee-approved resolution plan that meets Section 30(2), making it binding on the corporate debtor and its stakeholders. Approval ends the moratorium. From 26 May 2026, the tribunal is directed to decide within thirty days and may let the committee fix defects before rejecting. It may approve implementation first and distribution later. Approval also extinguishes prior claims and protects licences and similar grants, subject to conditions.
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This article is for general information. Refer to the Insolvency and Bankruptcy Code, 2016 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) If the Adjudicating Authority is satisfied that the resolution plan as approved by the committee of creditors under sub-section (4) of section 30 meets the requirements as referred to in sub-section (2) of section 30, it shall by order approve the resolution plan which shall be binding on the corporate debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed, guarantors and other stakeholders involved in the resolution plan:
Provided that the Adjudicating Authority shall, before passing an order for approval of resolution plan under this sub-section, satisfy that the resolution plan has provisions for its effective implementation:
Provided further that the Adjudicating Authority may, on an application made by the resolution professional, with the approval of the committee of creditors, by a vote of not less than sixty-six per cent. of the voting share, in such form and manner, and subject to such conditions as may be specified, first approve the implementation of the resolution plan and thereafter approve the manner of distribution provided therein within a period of thirty days from the date of approval of implementation of such resolution plan.
(2) Where the Adjudicating Authority is satisfied that the resolution plan does not confirm to the requirements referred to in sub-section (1), it may, by an order, reject the resolution plan:
Provided that the Adjudicating Authority may, before rejecting the resolution plan, give notice to the committee of creditors to rectify any defects in the resolution plan.
(2A) The Adjudicating Authority shall pass an order under sub-section (1) or (2), within a period of thirty days from the date of receipt of the resolution plan:
Provided that if the Adjudicating Authority has not passed an order within such period, it shall record the reasons for such delay in writing.
(3) After the order of approval under sub-section (1),—
(a) the moratorium order passed by the Adjudicating Authority under section 14 shall cease to have effect; and
(b) the resolution professional shall forward all records relating to the conduct of the corporate insolvency resolution process and the resolution plan to the Board to be recorded on its database.
(4) The resolution applicant shall, pursuant to the resolution plan approved under sub-section (1), obtain the necessary approval required under any law for the time being in force within a period of one year from the date of approval of the resolution plan by the Adjudicating Authority under sub-section (1) or within such period as provided for in such law, whichever is later:
Provided that where the resolution plan contains a provision for combination, as referred to in section 5 of the Competition Act, 2002, the resolution applicant shall obtain the approval of the Competition Commission of India under that Act before the resolution plan is submitted to the Adjudicating Authority under sub-section (6) of section 30.
(5) Notwithstanding anything contained in any other law for the time being in force and subject to sub-section (6), where a resolution plan has been approved under sub-section (1), a licence, permit, registration, quota, concession, clearances or a similar grant or right given by the Central Government, State Government, local authority, sectoral regulator or any other authority constituted under any other law for the time being in force, associated with such resolution plan, shall not be suspended or terminated during the subsistence of the remaining period of such grants or rights, if the corporate debtor or, if applicable, the person whose resolution plan is approved under sub-section (1), complies with the obligations in respect of the remaining period of such grants or rights.
(6) Where the Adjudicating Authority approves the resolution plan under sub-section (1),—
(a) unless otherwise provided in the resolution plan, any claim, against the corporate debtor and its assets under any other law for the time being in force, prior to the date of approval, shall be extinguished; and
(b) no proceedings shall be continued or instituted against the corporate debtor or its assets on the basis of such claims, including proceedings for assessment of the claims.
Explanation I.—For the purposes of this section, it is hereby clarified that nothing in this section shall affect a claim or any proceeding in respect of a person who was a promoter or in the management or control of the corporate debtor, a guarantor of the corporate debtor or any person having a joint liability or a joint and several liability with the corporate debtor, as the case may be.
Explanation II.—For the purposes of this section, it is hereby clarified that if a person has a joint liability or a joint and several liability with the corporate debtor for payment of debt owed to a creditor before the approval of resolution plan, and such person makes a payment for such debt after the approval of the resolution plan, then any right of such person to be indemnified by the corporate debtor shall be extinguished.
Explanation III.—For the removal of doubts, it is hereby clarified that the provisions of sub-sections (5) and (6) shall be deemed to apply to the resolution plan that is approved under sub-section (1), on and from the date of commencement of this Code, except for matters that have attained finality under this Code.
Introduction
Section 19 of the Insolvency and Bankruptcy Code (Amendment) Act, 2026, in force from 26 May 2026 under S.O. 2625(E), added a second proviso to subsection (1) for staged approval and a proviso to subsection (2) allowing a rectification notice to the committee. It inserted subsection (2A), directing an order within thirty days of receipt of the plan, with reasons recorded for any delay. In the proviso to subsection (4), Competition Commission approval is now needed before the plan is submitted to the tribunal under Section 30(6), instead of before committee approval.
The same section added subsections (5) and (6). Subsection (5) protects licences and similar grants, and subsection (6) extinguishes prior claims. Explanations I to III cover promoters, guarantors and co-obligors, indemnity rights and retrospective application. An appeal against an approval order lies under Section 32 read with Section 61.
Key takeaways
Binding on all stakeholders
An approved plan binds the corporate debtor, its employees, members and creditors (including governments and statutory authorities), guarantors and other stakeholders involved in the plan.
Thirty-day direction
Subsection (2A) directs an order approving or rejecting the plan within thirty days of receipt, with written reasons for any delay.
Staged approval option
On the resolution professional's application with 66% committee approval, the tribunal may approve implementation first and the manner of distribution within thirty days afterwards.
Clean slate, with limits
Unless the plan provides otherwise, claims against the corporate debtor and its assets arising before approval are extinguished. Claims against promoters, guarantors and co-obligors are expressly unaffected.
Approval, rejection and timing
The tribunal must be satisfied that the plan meets Section 30(2) and has provisions for its effective implementation. If it is not satisfied, it may reject the plan. Under the new proviso, it may first give the committee notice to rectify defects. The thirty-day period in subsection (2A) runs from receipt of the plan. A delay requires written reasons; it does not result in deemed approval.
For the staged-approval proviso, Regulation 39(3C) of the CIRP Regulations, inserted with effect from 2 June 2026, requires the resolution professional to file in a Form notified by IBBI through circular.
Effects of approval
On approval, the Section 14 moratorium ceases and the resolution professional forwards the process records and the plan to IBBI. The resolution applicant must obtain approvals required under other laws within one year of approval, or the period those laws allow, whichever is later. Competition Commission approval for a combination must be in place before the plan is filed with the tribunal.
Subsection (5) prevents suspension or termination of a licence, permit, registration, quota, concession, clearance or similar grant associated with the plan for its remaining period. This applies only if the corporate debtor, or the successful applicant, complies with the obligations for that period. Subsection (6) extinguishes prior claims under other laws and bars proceedings, including assessments, on them, unless the plan provides otherwise.
Promoters, guarantors and co-obligors
Explanation I preserves claims and proceedings against former promoters or persons in management or control, guarantors and persons jointly liable with the corporate debtor. Under Explanation II, a co-obligor who pays a pre-approval debt after the plan is approved loses any right to be indemnified by the corporate debtor. Explanation III deems subsections (5) and (6) to apply to plans approved on and from the commencement of the Code, except matters that have attained finality.
Practical checklist
Do
- Confirm that the plan meets Section 30(2) and contains provisions for effective implementation before filing.
- Obtain any required Competition Commission approval before the plan is submitted under Section 30(6).
- Track the one-year window for approvals under other laws from the date of the tribunal's approval.
- For staged approval, obtain the 66% committee vote and use the IBBI-notified Form under Regulation 39(3C).
Avoid
- Do not treat the thirty-day period as deemed approval.
- Do not assume that guarantors or former promoters are released by the corporate debtor's plan.
- Do not assume licence protection applies where the obligations for the remaining period are not met.
Glossary
- Staged approval
- In this guide, approval of plan implementation first and of the manner of distribution within thirty days later, under the second proviso to subsection (1).
- Combination
- As referred to in Section 5 of the Competition Act, 2002: specified acquisitions, mergers and amalgamations that cross the thresholds in that section.
Frequently asked questions
How long does the tribunal have to approve a resolution plan?
Section 31(2A), effective 26 May 2026, directs an order within thirty days of receipt of the plan. If the order is late, the tribunal records its reasons in writing.
Can the tribunal send a plan back instead of rejecting it?
Under the new proviso to Section 31(2), it may give the committee of creditors notice to rectify defects before rejecting the plan.
Does plan approval release personal guarantors?
No. Explanation I says nothing in Section 31 affects a claim or proceeding against a guarantor of the corporate debtor, a former promoter or manager, or a person jointly liable with it.
Are tax demands for earlier periods extinguished?
Under Section 31(6), unless the plan provides otherwise, claims under any other law arising before approval are extinguished, and no proceedings, including assessment proceedings, may be continued or started on them against the corporate debtor or its assets. Claims against guarantors and others listed in Explanation I are not affected.
Need help applying this provision to your situation?
Contact BizeneedLast updated 11 October 2026