Reflections on the Supreme Court's decision in Sanjay Dave v. Andhra Bank Ltd.[1]
The forgotten proviso
The Letter of Intent (LoI) occupies an unusual position within India's insolvency framework. It is not a creature of the Insolvency and Bankruptcy Code, 2016 (IBC). The Code does not define it, regulate its contents or prescribe the consequences of refusing to accept it. Yet, in practice, the LoI is the bridge between approval of a resolution plan by the Committee of Creditors (CoC) and implementation of the commercial bargain embodied in that plan. It is, therefore, unsurprising that some of the most contentious post-approval disputes arise precisely at this stage.
The Supreme Court's recent decision in Sanjay Dave v. Andhra Bank Ltd. (2026 INSC 580) arose from one such dispute. A successful resolution applicant challenged a series of LoIs on the ground that they imposed conditions allegedly inconsistent with the approved resolution plan. The challenge failed before the Adjudicating Authority, the National Company Law Appellate Tribunal (NCLAT) and ultimately the Supreme Court. The Supreme Court held, in substance, that the applicant had participated in the relevant deliberations, was aware of the disputed stipulations and could not subsequently seek to avoid the consequences of a bargain to which he had acquiesced.
Seen that way, the case appears straightforward. And yet, the judgment illuminates a question that remains largely unexplored. The standard Request for Resolution Plan (RFRP) considered by the Court contained a proviso protecting an SRA who refuses to accept “additional terms” imposed beyond the resolution plan itself. The existence of that proviso necessarily presupposes that a distinction exists between implementation of an approved bargain and modification of that bargain through the introduction of fresh obligations. If every stipulation appearing in an LoI automatically became part of the approved bargain, the proviso would have little independent work to do. Neither the Code nor the reported authorities adequately explain where that boundary actually lies.
The unresolved question is what makes a term 'additional' when the governing documents themselves recognise that category but provide no test for its identification. Sanjay Dave does not answer that question. The facts did not require it to do so. The appellant's challenge failed because of what he knew, what he accepted and how he conducted himself during the CIRP. But sooner or later, a different case will arise, . where the Court may have to decide whether a disputed stipulation merely implements an approved bargain, or seeks to alter it after the event.
Why the proviso matters
Buried in the Request for Resolution Plan (RFRP) quoted by the Supreme Court is a proviso that may outlive the dispute before the Court.
The proviso appears in Clause 1.9.4 of the RFRP, dealing with forfeiture of the Earnest Money Deposit (EMD).[2] Most readers would pass over it without a second glance. The proviso is where things become interesting. It protects an SRA who refuses to accept “additional terms” imposed by the CoC beyond the resolution plan.
Pause there for a moment. What are “additional terms”?
The proviso does not say. The Code does not say. The reported cases do not say. Yet, the expression cannot simply be ignored. The proviso must mean something. Otherwise, it serves no purpose at all.
Suppose an LoI merely asks the SRA to do what it has already agreed to do under the approved resolution plan. Few would quarrel with that. The LoI is then doing no more than carrying the bargain into effect.
Now let's change the facts slightly.
Suppose the LoI introduces a fresh condition. Or a new liability. Or a risk allocation that never appeared in the resolution plan and was never discussed during the CIRP. Is the applicant still bound? Or has the LoI crossed the line from implementation into modification? That is where the real difficulty lies.
Every insolvency professional knows that the period between approval of a resolution plan and its implementation can be untidy. The voting may be over, but the paperwork is not. Performance guarantees have to be furnished. Documents have to be executed. Conditions have to be communicated. Most of the time, these are routine matters.
Sometimes, they are not. And when they are not, the dispute often surfaces in the LoI.
The proviso recognises this reality. It assumes that there may be a difference between implementing a bargain and changing it. What it does not tell us is where the line should be drawn.
Can a term discussed in a CoC meeting, but omitted from the written plan, later appear in the LoI? Does silence amount to acceptance? Can an implementation clause become so burdensome that it effectively changes the commercial bargain? Where does a condition cease to be administrative and become substantive? The proviso leaves all these questions unanswered.
The Supreme Court in Sanjay Dave never had to answer them. The appellant lost for other reasons. The Court found that he knew about the disputed stipulations, participated in the relevant discussions and later attempted to resile from a position he had already accepted. The controversy before the Court was therefore very different from a case in which a Successful Resolution Applicant is confronted for the first time with a genuinely new obligation.
That case remains to be decided. When it arrives, the dispute will likely turn on the source of the disputed obligation. A court will have to decide whether the disputed stipulation merely gives effect to the approved resolution plan or seeks to alter it. The answer may determine not only the fate of an Earnest Money Deposit, but whether a resolution succeeds, fails or ends in liquidation.
What Sanjay Dave actually decided
The temptation when reading Sanjay Dave is to view it as a judgment on conditional LoI. That is understandable. The dispute was framed in those terms from the beginning. The appellant's case rested on the contention that the LoI issued by the Resolution Professional contained conditions that were inconsistent with the approved resolution plan and that he was therefore justified in refusing to accept them. But that is not quite what the Court decided.
The Supreme Court did not begin by asking whether the impugned stipulations were permissible. It began by examining what the appellant knew, what he participated in and how he conducted himself during the resolution process. Those questions ultimately proved decisive.
Knowledge
One feature appears consistently throughout the decisions of the Adjudicating Authority, the NCLAT and the Supreme Court. The appellant was not treated as a stranger to the events that later formed the subject of the dispute.
The record showed that the appellant was present at the fifteenth meeting of the CoC held on 24 Jan 2020, where the pending applications of other prospective resolution applicants were discussed. The appellant submitted his own plan only after those proceedings had already become part of the CIRP.
This finding is important because a party who enters the process with knowledge of an existing controversy stands on a very different footing from a party who encounters a new condition for the first time after approval of the resolution plan.
Participation
The Supreme Court also attached considerable significance to the appellant's participation in subsequent CoC meetings. The minutes extracted in the judgment record repeated discussions concerning the status of the pending applications and the fact that approval of the resolution plan was being viewed in that context. The appellant attended those meetings, engaged in the process and sought issuance of the LoI.
This was therefore not a case where a disputed stipulation appeared suddenly and without warning in a document issued after completion of the voting process. The Court viewed the impugned conditions against the backdrop of discussions in which the appellant had actively participated.
Participation alone does not necessarily amount to acceptance. It does, however, make it considerably more difficult to characterise a later stipulation as a complete surprise.
Acquiescence
Now, acquiescence is where the judgment does its real work.
The Supreme Court noted that the appellant had accepted certain stipulations during the course of the CIRP, including matters relating to employee claims and the furnishing of the performance bank guarantee. These were not issues raised for the first time in the LoI. They had already formed part of the ongoing dialogue between the parties. Therefore, the Court saw the dispute through the lens of conduct rather than through the lens of contractual interpretation.
A court examining a disputed clause in isolation may ask whether it forms part of the approved bargain. A court examining the conduct of the parties may ask a different question: whether one party has already accepted the stipulation and is now attempting to avoid it. The Supreme Court adopted the latter approach.
Approbation and reprobation
The judgment culminated in the Court's conclusion that the appellant could not approbate and reprobate. Having participated in the process, accepted the relevant stipulations and sought the benefits flowing from approval of the plan, the appellant could not later rely upon those same stipulations as the basis for refusing to proceed. The Court regarded the challenge as an attempt to resile from the commitments that had already been accepted.
What the judgment did not decide
Sanjay Dave is a case about knowledge, participation and acquiescence. It is not a case in which the Supreme Court was required to determine the meaning of 'additional terms' in clause 1.9.4 of the RFRP.
The Court quoted the proviso. It acknowledged its existence. But it never had to decide whether a disputed stipulation amounted to an 'additional term' because, on the facts before it, the appellant had already accepted the stipulations in question.
A different case may yet require the Court to confront that question. Suppose an LoI contains a term that was never part of the approved resolution plan, never discussed during CoC deliberations and immediately objected to by the successful resolution applicant. Does the proviso still protect the applicant from forfeiture of the EMD? What test should a court apply in deciding whether the term is genuinely 'additional'?
Those questions remained outside the pale of controversy in Sanjay Dave. But those questions remain very much alive.
When does an LoI become an 'additional term'?
The proviso tells us that 'additional terms' exist. What it does not tell us is how to recognise them when they appear.
Suppose the approved resolution plan itself requires the successful resolution applicant to furnish a performance bank guarantee within a specified period. The LoI repeats that obligation and calls upon the applicant to comply with it. Few would describe that as an “additional term,” simply because the obligation already exists. The LoI is merely a vehicle for giving effect to it.
Suppose a particular condition does not appear in the final text of the resolution plan, but was discussed repeatedly during CoC deliberations and accepted by the applicant. The condition later finds its way into the LoI. Here too it would be difficult to argue that the applicant is encountering the obligation for the first time. The source of the obligation lies in the resolution process itself, not in the LoI.
The facts of Sanjay Dave fall largely within these two situations. The Court repeatedly returned to the appellant's knowledge of the disputed stipulations, participation in the relevant discussions and acceptance of positions that later became the subject of challenge.
A different situation arises where the LoI deals only with implementation. Not every clause in an LoI is part of the commercial bargain. Some clauses simply deal with the mechanics: documents have to be executed. Accounts have to be identified. Timelines have to be fixed. Information has to be exchanged, because a resolution plan cannot implement itself. These provisions may not appear in the approved plan, but they are necessary to make the plan work in practice.
That does not mean that every implementation clause is beyond challenge. It does mean that courts are likely to look at such provisions differently from clauses that alter the commercial allocation of rights, obligations or risks between the parties.
The real difficulty begins somewhere else.
Suppose an LoI introduces a fresh obligation that cannot be traced to the approved plan, the addenda, the CoC discussions or the ordinary mechanics of implementation. Suppose it imposes a liability that the applicant never agreed to assume. Suppose it introduces a condition precedent that was never part of the bargain approved by the CoC.
The applicant is no longer objecting to the implementation of the plan. The applicant is saying, “Wait a minute. This was never part of the bargain in the first place.” That, one would think, is precisely the situation that the proviso had in mind when it referred to “additional terms.”
For present purposes, LoI stipulations may be divided into four categories.
The first consists of obligations expressly contained in the approved resolution plan.
The second consists of obligations discussed and accepted during the resolution process, even if they are imperfectly reflected in the final documentation.
The third consists of provisions that are necessary to implement obligations already assumed under the approved plan.
The fourth is fresh substantive obligations introduced after approval of the plan.
The first three categories have one thing in common. The obligation already exists in one form or another. The LoI merely records it, reflects it or facilitates its implementation. The fourth category stands apart. Here, the obligation derives its force from the LoI itself. Remove the LoI, and the obligation disappears. And this is where the real battle is likely to be fought.
The proviso to clause 1.9.4 does not become relevant merely because an LoI contains a condition. Almost every LoI contains conditions of some sort. The proviso becomes relevant when the condition owes its existence to the LoI, rather than to the bargain that preceded it.
That distinction may not answer every case. It does, however, provide a starting point. It also allows the proviso to do the work it was clearly intended to do.
Source, conduct and proof
What happens when the parties disagree about where a particular term belongs?
The successful resolution applicant may insist that the disputed term appeared for the first time in the LoI. The CoC may respond that the term was always understood to be part of the bargain. The Resolution Professional may point to discussions during the CIRP. The minutes may or may not support that position. The issue then becomes how such a dispute should be resolved.
The SRA cannot simply point to a clause in the LoI and utter the words “additional term.” Equally, the CoC and the Resolution Professional cannot merely assert that the term was always part of the understanding between the parties. Both sides must do more.
The successful resolution applicant must start by showing why the disputed term was never part of the bargain. Is the term absent from the addenda? Was it never discussed during CoC deliberations? Was an objection raised at the first available opportunity? These are matters that lie peculiarly within the successful resolution applicant's case and should be clearly articulated.
Once that is done, the burden should shift.
The Resolution Professional and the CoC are far better placed to explain where the obligation came from. If the disputed term formed part of the bargain, the record should ordinarily reveal it. The approved plan, the addenda, the minutes of CoC meetings and contemporaneous correspondence should all assist in tracing its origins. Indeed, the quality of the record may often determine the outcome.
A Resolution Professional who wishes to rely upon a disputed stipulation would be well advised to ensure that the minutes record not merely that a matter was discussed, but whether the successful resolution applicant accepted it, objected to it or sought clarification. The difference may prove decisive years later when the dispute reaches a judicial forum.
The successful resolution applicant also bears a corresponding responsibility.
An objection that exists only in hindsight will not hold water. An objection raised promptly, recorded contemporaneously and maintained consistently throughout the process stands on a very different footing.
This, perhaps, is the enduring lesson of Sanjay Dave. The appellant did not fail because the Supreme Court evolved a broad theory of conditional LoI. The appellant failed because the record demonstrated knowledge, participation and acquiescence. The Court found that the disputed stipulations formed part of a process in which the appellant had willingly participated.
A future case may present the opposite picture. The disputed term may appear nowhere in the approved plan, in the addenda or in the CoC minutes. The successful resolution applicant may object immediately and consistently. The Resolution Professional may be unable to point to any contemporaneous record demonstrating acceptance.
If that happens, the forgotten proviso may assume centre stage. And when it does, the dispute is likely to turn less on abstract arguments about conditionality and more on a simple question: can the term be traced to the bargain that the parties actually made?
The case that awaits decision
The dispute in Sanjay Dave was ultimately resolved by reference to the appellant's knowledge, participation and acquiescence. The Supreme Court never had to decide what would happen if a successful resolution applicant was confronted with a genuinely new obligation for the first time in an LoI.
A resolution plan is approved by the CoC. The plan is put to vote. The voting concludes. The successful resolution applicant believes that the commercial bargain has been settled. Then the LoI arrives.
This time, however, the disputed stipulation cannot be traced to the approved resolution plan. It cannot be traced to the addenda. It cannot be traced to the minutes of the CoC meetings. No contemporaneous correspondence records any discussion of it. Yet the LoI insists upon it. The successful resolution applicant objects immediately. The objection is recorded in writing. It is not withdrawn. It is not qualified. It is maintained consistently throughout the process. The Resolution Professional and the CoC take a different view. They insist that the stipulation must be accepted before the process can move forward. The successful resolution applicant refuses. The EMD is forfeited. Litigation follows.
That dispute would look very different from Sanjay Dave. The dispute would no longer be about acquiescence. It would no longer turn upon participation in prior discussions or acceptance of earlier stipulations. Instead, the court would be required to confront the proviso itself. Was the disputed stipulation merely implementing a bargain already made? Or was it attempting to alter that bargain after the event?
That question cannot be answered merely by describing the LoI as “conditional” or “unconditional.” Almost every LoI contains conditions of one kind or another. The real inquiry becomes one of source. Where did the obligation come from?
If it can be traced to the approved resolution plan, the addenda, the recorded deliberations of the CoC or the ordinary mechanics of implementation, the argument for enforcement becomes considerably stronger. If it cannot be traced to any of those sources, the proviso to clause 1.9.4 may finally have to do the work for which it was included in the RFRP.
Sooner or later, a court will be asked to draw that line. When that happens, the dispute may not turn upon the language of the LoI alone. It may turn upon a much simpler question: was this always part of the bargain, or did it become part of the bargain only after the bargain had already been struck?
That question lay beyond the facts of Sanjay Dave. It may well define the next chapter of the jurisprudence.
The decision in Sanjay Dave closed one controversy and left another untouched. It firmly establishes that a successful resolution applicant who participates in the resolution process, accepts stipulations during that process and subsequently seeks to resile from them, cannot invoke the language of a “conditional” LoI as a means of escape. On the facts before it, the Supreme Court's conclusion was difficult to fault.
The judgment, however, did not require the Court to determine the meaning of “additional terms” in clause 1.9.4 of the RFRP. The proviso remains where it was before Sanjay Dave was decided: recognised, quoted but still awaiting meaningful judicial exposition. Its presence assumes that a stipulation appearing in an LoI may, in some circumstances, do more than implement an approved bargain.
That case awaits another day. Until then, the forgotten proviso will continue to wait in the wings. When the right case arrives, the question is unlikely to be whether an LoI is conditional or unconditional. The real question will be the one that has run through this discussion from beginning to end: was the disputed obligation always part of the bargain, or did it appear only after the bargain had already been struck?
End Notes & References:
1. For a recent commentary examining Sanjay Dave through the lens of withdrawal from approved resolution plans and the absence of a statutory exit mechanism, see Koushik Kumar, “A Successful Resolution Applicant cannot escape through a 'conditional' Letter of Intent,” Livelaw (13 June 2026). ↑
2. Clause 1.9.4 along with the proviso is extracted in para 33 at page 25 of the Supreme Court's judgment ibid. It reads as follows:
“1.9.4 Forfeiture of Earnest Money Deposit of the Applicant:
3. The Designated Lender shall be entitled to forfeit Earnest Money Deposit where:
b) the Successful Applicant fails to submit the Performance Guarantee within the stipulated time; or
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e) in case of any other non-compliance with the Resolution Plan Process or the Resolution Plan submitted by the Applicant.
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Provided, that the Designated Lender shall not be entitled to forfeit the Earnest Money Deposit of the Successful Applicant in accordance with this Clause 1.9.4, if any non-compliance with the requirements set out above arises due to (a) non-receipt of the Letter of Intent from the Committee of Creditors; or (b) the Successful Applicant not accepting additional terms stipulated by the Committee of Creditors in addition to the Resolution Plan, pursuant to discussions of the Committee of Creditors with the Successful Applicant.”
Author is Former Member (Judicial), National Company Law Tribunal. He continues to engage with insolvency, judicial process, and institutional reform through writing, research, and advisory work. Views are personal.