Section 31 IBC: Approval of Resolution Plan
Section 31 of the Insolvency and Bankruptcy Code, 2016 governs approval or rejection of a resolution plan by the Adjudicating Authority and states the legal consequences that follow once a plan is approved.
Updated: 30 September 2026 | Includes the Insolvency and Bankruptcy Code (Amendment) Act, 2026.
Meaning of important terms
Adjudicating Authority: For insolvency resolution and liquidation of corporate persons, the Adjudicating Authority is the National Company Law Tribunal having territorial jurisdiction as provided by Section 60 of the Code.
Resolution plan: Section 5(26) defines a resolution plan as a plan proposed by a resolution applicant for insolvency resolution of the corporate debtor as a going concern in accordance with Part II of the Code. The definition is subject to the current statutory text and amendments.
Resolution applicant: Under Section 5(25), a resolution applicant is a person who, individually or jointly with another person, submits a resolution plan to the resolution professional pursuant to the invitation made under the Code.
Committee of Creditors or CoC: The committee constituted under Section 21. Under Section 30(4), approval of a resolution plan requires the prescribed voting share and consideration of the matters required by the Code.
Resolution professional: The insolvency professional appointed to conduct the corporate insolvency resolution process and perform the functions assigned under the Code and applicable regulations.
Section 31 - Current legal framework
Section 31(1): Approval and binding effect
If the Adjudicating Authority is satisfied that the resolution plan approved by the CoC under Section 30(4) meets the requirements of Section 30(2), it approves the plan by order. The approved plan is binding on the corporate debtor and its employees, members, creditors, including the Central Government, State Governments and local authorities in respect of statutory dues, guarantors and other stakeholders covered by the provision.
Before approval, the Adjudicating Authority must also satisfy itself that the plan contains provisions for effective implementation.
Following the 2026 amendment, the statutory framework also permits, subject to the conditions in Section 31, an application by the resolution professional with approval of the CoC by not less than sixty-six per cent voting share for approval of implementation first and subsequent approval of the manner of distribution within the statutory period.
Section 31(2): Rejection of a non-compliant plan
If the Adjudicating Authority is satisfied that the resolution plan does not conform to the requirements referred to in Section 31(1), it may reject the plan. The 2026 amendment permits the Authority, before rejection, to give notice to the CoC to rectify defects in the resolution plan.
Section 31(2A): Time for the order
The 2026 amendment provides a thirty-day period from receipt of the resolution plan for an order under Section 31(1) or Section 31(2). If an order is not passed within that period, reasons for the delay are to be recorded in writing.
Section 31(3): Consequences after approval
After approval under Section 31(1):
(a) the moratorium imposed under Section 14 ceases to have effect; and
(b) the resolution professional forwards the records relating to the corporate insolvency resolution process and the resolution plan to the Insolvency and Bankruptcy Board of India for its database.
Section 31(4): Other statutory approvals
The resolution applicant must obtain approvals required under other applicable laws within one year from approval of the resolution plan by the Adjudicating Authority, or within the period allowed by the relevant law, whichever is later.
For a resolution plan containing a combination within Section 5 of the Competition Act, 2002, the Competition Commission of India approval requirement must be complied with at the stage prescribed by the current proviso to Section 31(4), as amended in 2026.
Section 31(5): Licences, permits and similar grants
The 2026 amendment protects a licence, permit, registration, quota, concession, clearance or similar governmental or regulatory grant or right associated with an approved resolution plan from suspension or termination during its remaining period merely in the circumstances covered by Section 31(5), subject to Section 31(6) and compliance with the obligations applicable to the remaining period.
Section 31(6): Claims and proceedings after approval
Under the 2026 framework, unless the resolution plan otherwise provides, claims against the corporate debtor and its assets under other laws arising before approval are extinguished in the manner provided by Section 31(6), and proceedings based on those claims, including assessment proceedings, cannot be continued or instituted against the corporate debtor or its assets.
The statutory explanations preserve claims or proceedings against specified persons such as promoters or persons in management or control, guarantors, and persons having joint or joint and several liability with the corporate debtor. They also address indemnity rights arising where a jointly liable person pays the debt after approval of the resolution plan.
What Section 30(2) requires before a plan can be approved
Section 31(1) is directly linked to Section 30(2). The resolution professional must examine each resolution plan received to confirm that it satisfies the statutory requirements. These include, among other matters, treatment of insolvency resolution process costs, treatment of operational creditors and dissenting financial creditors as required by law, management of the corporate debtor after approval, implementation and supervision of the plan, compliance with applicable law, and requirements specified by the IBBI.
| Provision | Practical effect |
|---|---|
| Section 30(2) | Sets mandatory compliance requirements that the resolution professional must examine before the plan is placed for approval. |
| Section 30(4) | Governs CoC approval of the resolution plan by the statutory voting threshold after considering the matters required by the Code. |
| Section 31(1) | Empowers the Adjudicating Authority to approve a compliant CoC-approved plan and gives the approved plan binding effect. |
| Section 31(2) | Permits rejection where the plan does not conform to the statutory requirements, subject to the current defect-rectification framework. |
| Section 31(3) | Ends the Section 14 moratorium after approval and requires forwarding of CIRP records to IBBI. |
| Section 31(4) | Deals with statutory approvals needed for implementation of the approved plan. |
| Section 31(5) and (6) | Current provisions address specified governmental or regulatory grants and the treatment of pre-approval claims and proceedings. |
| Section 61(3) | Specifies statutory grounds for an appeal against an order approving a resolution plan. |
Binding effect of an approved resolution plan
The binding effect of Section 31 is central to the resolution process. Once a plan has received the required CoC approval and is approved by the Adjudicating Authority, stakeholders cannot ordinarily disregard the treatment of claims fixed by the approved plan. The statutory scheme is intended to permit implementation of the resolution on a defined liability basis while preserving liabilities of other persons where the Code expressly does so.
Government and local authority dues are expressly covered by Section 31(1). The 2026 insertion of Section 31(6) further codifies the treatment of pre-approval claims against the corporate debtor and its assets, subject to the terms of the resolution plan and the statutory explanations.
Effect on guarantors and jointly liable persons
Approval of a resolution plan for the corporate debtor does not automatically erase the independent liability of a guarantor merely because the corporate debtor is resolved. The current statutory explanations to Section 31(6) expressly preserve claims and proceedings against guarantors and other specified persons. The nature and extent of liability will also depend on the applicable law and the terms governing that liability.
Moratorium ends after approval
Section 31(3)(a) provides that the moratorium ordered under Section 14 ceases after the resolution plan is approved. Section 14 protects the corporate debtor during CIRP by restricting specified proceedings, enforcement actions and recovery measures. Once the approved plan takes effect, implementation proceeds under the plan and the applicable provisions of the Code.
Regulatory framework for implementation
The Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 supplement the Code. The regulations prescribe detailed procedural requirements for CIRP, resolution plans, compliance certificates, records and implementation-related matters. Users should check the latest consolidated regulations and amendments because procedural requirements can change.
Appeal against approval of a resolution plan
Section 61(3) provides specific grounds for an appeal against an order approving a resolution plan. These include contravention of law by the approved plan, material irregularity in exercise of powers by the resolution professional during CIRP, failure to provide for operational creditors or insolvency resolution process costs in the manner required by law, and failure to comply with criteria specified by the Board. An appeal is made to the National Company Law Appellate Tribunal subject to the Code.
Key points for Section 31 compliance
- The plan reaching the Adjudicating Authority must have the approval required under Section 30(4).
- The Adjudicating Authority examines compliance with Section 30(2) and effective implementation requirements.
- A compliant plan approved under Section 31 becomes binding in accordance with the Code.
- The Section 14 moratorium ends after the approval order.
- Required approvals under other laws must be obtained within the period prescribed by Section 31(4) and the relevant law.
- Current Section 31 includes the 2026 provisions on regulatory grants, claims and proceedings.
- Guarantors and other persons specified in the statutory explanations are not automatically released merely because the corporate debtor's plan is approved.
Official legal resources
For the authoritative and most recent text, amendments and regulations, refer to the official resources maintained by the Insolvency and Bankruptcy Board of India and the Government of India. The consolidated regulations should be checked whenever a resolution plan is being prepared, examined, approved or implemented.
This page is an informational explanation of Section 31 and should be read with the current text of the Insolvency and Bankruptcy Code, 2016, applicable rules, IBBI regulations, notifications and binding judicial decisions.