Forgotten Proviso: What Sanjay Dave Left Unsaid About Letters Of Intent

Reflections on the Supreme Court's decision in Sanjay Dave v. Andhra Bank Ltd.[1]The forgotten provisoThe 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 mattersBuried 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 ...

Forgotten Proviso: What Sanjay Dave Left Unsaid About Letters Of Intent

Rajasekhar V.K

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Rajasekhar V.K

Forgotten Proviso: What Sanjay Dave Left Unsaid About Letters Of Intent

Rajasekhar V.K

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INR 1099+GST

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Rajasekhar V.K

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