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Insolvency and Bankruptcy Code, 2016

Section 31: Approval of Resolution Plan under the IBC

Section 31 governs approval or rejection of a committee-of-creditors-approved resolution plan by the Adjudicating Authority and specifies the consequences of approval, including its binding effect and the end of the CIRP moratorium.

Updated: 21 October 2026 | Legal guide

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What is Section 31 of the IBC?

Under the Insolvency and Bankruptcy Code, 2016, the resolution professional places compliant resolution plans before the committee of creditors (CoC). After approval under Section 30(4), the plan is submitted to the Adjudicating Authority, ordinarily the National Company Law Tribunal (NCLT) for a corporate debtor. Section 31 provides the legal framework for the Tribunal's decision.

Resolution plan: a plan proposed by a resolution applicant for insolvency resolution of the corporate debtor as a going concern, within the meaning of Section 5(26). Corporate debtor: a corporate person that owes a debt, under Section 3(8). Adjudicating Authority: the NCLT for corporate persons under Section 5(1) read with Section 60. CoC: the committee of creditors constituted under Section 21.

Section 31: Subsection-wise explanation

Section 31(1): Approval and binding effect

If the Adjudicating Authority is satisfied that the plan approved by the CoC under Section 30(4) meets the requirements of Section 30(2), it shall approve the plan by order. Once approved, it binds the corporate debtor and its employees, members, creditors, guarantors and other stakeholders covered by the provision. This expressly includes the Central Government, State Governments and local authorities in respect of statutory dues.

The proviso requires the Adjudicating Authority to satisfy itself, before approval, that the plan provides for effective implementation. Approval is therefore not merely a formality, although the Tribunal does not ordinarily substitute its commercial judgment for that of the CoC.

Section 31(2): Rejection of a non-compliant plan

If the plan does not conform to the requirements in Section 31(1), the Adjudicating Authority may reject it by order. The legal consequences of rejection must be considered alongside Section 33 and the circumstances of the CIRP.

Section 31(3): Consequences of approval

  1. Section 31(3)(a): The moratorium imposed under Section 14 ceases to operate following approval of the resolution plan.
  2. Section 31(3)(b): The resolution professional must forward the CIRP records and resolution plan to the Insolvency and Bankruptcy Board of India (IBBI) for its database.

Section 31(4): Statutory and competition approvals

Following approval, the resolution applicant must obtain approvals required under other applicable laws within one year of the NCLT approval order or the period provided by the relevant law, whichever is later. However, where the plan involves a combination within Section 5 of the Competition Act, 2002, the necessary Competition Commission of India (CCI) approval must be obtained before CoC approval of the resolution plan, as provided in the proviso.

Important: NCLT approval does not automatically replace every sector-specific permission, licence or regulatory approval. The plan must be assessed against the law applicable to the particular business and transaction.

How approval of a resolution plan works

  1. The resolution professional examines plans against Section 30(2) and the applicable CIRP Regulations.
  2. The CoC considers eligible plans and approves a plan in accordance with Section 30(4), generally by at least 66% of voting share.
  3. The resolution professional submits the approved plan to the Adjudicating Authority under Section 30(6).
  4. The NCLT considers statutory compliance and effective implementation under Section 31(1).
  5. Following approval, the plan becomes binding, the Section 14 moratorium ends and the required records are sent to IBBI.

Impact on creditors, statutory dues and guarantors

The approved plan determines the treatment of claims and obligations within the statutory framework. Government dues are expressly within the binding effect of Section 31(1). Claims not provided for in the approved plan may be extinguished in accordance with applicable law and binding judicial precedent. The position of guarantors requires separate consideration of the guarantee, the approved plan and applicable case law; approval does not by itself invariably discharge a guarantor.

Appeal against an approval order

Section 32 directs appeals from orders approving resolution plans to the framework in Section 61(3). Such appeals lie to the National Company Law Appellate Tribunal (NCLAT) on specified statutory grounds, including contravention of law and material irregularity in the exercise of powers by the resolution professional. Applicable limitation rules should be checked promptly.

This article is general legal information. For a specific CIRP or resolution plan, check the currently operative Act, amendments, regulations and judicial orders.