Sections 54L and 54M explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 54L tells the Adjudicating Authority how to deal with a resolution plan approved by the committee of creditors in a pre-packaged insolvency resolution process: approve it within thirty days if it meets the requirements, or reject it and move to termination. Section 54M says on what grounds an approval can be appealed. This article reads both sections as per the IBBI consolidated text of the Code amended up to 12 August 2021 and then covers the changes the Insolvency and Bankruptcy Code (Amendment) Act, 2026 makes to section 54L.
If the Adjudicating Authority is satisfied that the plan approved under section 54K meets the requirements of section 30(2), it shall approve it within thirty days of receipt, after satisfying itself of effective implementation provisions. A plan that does not conform may be rejected within thirty days, with an order under section 54N. If management does not change hands after an order vesting management in the resolution professional, the plan must be rejected and liquidation ordered. An appeal against approval lies on the grounds in section 61(3).
Section 54L(1): approval within thirty days
"If the Adjudicating Authority is satisfied that the resolution plan as approved by the committee of creditors under sub-section (4) or sub-section (12), as the case may be of section 54K, subject to the conditions provided therein, meets the requirements as referred to in sub-section (2) of section 30, it shall, within thirty days of the receipt of such resolution plan, by order, approve the resolution plan." The plan reaches the Adjudicating Authority through section 54K(15); see our article on section 54K.
The proviso adds that the Adjudicating Authority "shall, before passing an order for approval of a resolution plan under this sub-section, satisfy itself that the resolution plan has provisions for its effective implementation." A reader who is preparing the plan for this stage should check the implementation provisions with an adviser; our team can help through legal dispute resolution support at the stage of the order.
Section 54L(2): effect of the approval order
"The order of approval under sub-section (1) shall have such effect as provided under sub-sections (1), (3) and (4) of section 31, which shall, mutatis mutandis apply, to the proceedings under this Chapter." As the consolidated text prints section 31, sub-section (1) makes an approved plan binding on the corporate debtor, 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 is owed), guarantors and other stakeholders. Sub-section (3) ends the moratorium order under section 14 and requires records to be forwarded to the Board. Sub-section (4) deals with obtaining approvals required under any law. For section 31 as a whole, see our post on section 31. Other laws are named in section 31(4), and the reader should check the current law for the corresponding provision.
Section 54L(3): rejection
"Where the Adjudicating Authority is satisfied that the resolution plan does not conform to the requirements referred to in sub-section (1), it may, within thirty days of the receipt of such resolution plan, by an order, reject the resolution plan and pass an order under section 54N." Approval is "shall"; rejection is "may". The order under section 54N is the termination of the pre-packaged process, explained in our article on section 54N.
Section 54L(4): management not changed after vesting order
"Notwithstanding anything to the contrary contained in this section, where the Adjudicating Authority has passed an order under sub-section (2) of section 54J and the resolution plan approved by the committee of creditors under sub-section (4) or sub-section (12), as the case may be of section 54K, does not result in the change in the management or control of the corporate debtor to a person who was not a promoter or in the management or control of the corporate debtor, the Adjudicating Authority shall pass an order":
| Clause | Order |
|---|---|
| (a) | rejecting such resolution plan |
| (b) | terminating the pre-packaged insolvency resolution process and passing a liquidation order in respect of the corporate debtor "as referred to in sub-clauses (i), (ii) and (iii) of clause (b) of sub-section (1) of section 33" |
| (c) | declaring that the pre-packaged insolvency resolution process costs, if any, "shall be included as part of the liquidation costs for the purposes of liquidation of the corporate debtor" |
The trigger needs both: a vesting order under section 54J(2) (see section 54J) and a plan that does not change management or control to a person who was not a promoter or in the management or control. The word is "shall"; the Adjudicating Authority has no choice once both are met. Section 33 is the liquidation order provision; see the live post on the liquidation order under section 33.
Section 54M: appeal
"Any appeal against an order approving the resolution plan under sub-section (1) of section 54L, shall be on the grounds laid down in sub-section (3) of section 61." Section 61(3) lists five grounds of appeal against an order approving a plan under section 31: the plan contravenes any law for the time being in force; material irregularity in the exercise of powers by the resolution professional during the corporate insolvency resolution period; debts owed to operational creditors not provided for in the manner specified by the Board; insolvency resolution process costs not provided for in priority to all other debts; and non-compliance with any other criteria specified by the Board. Section 54M borrows those grounds. Where section 61(3) says "corporate insolvency resolution period" and "under section 31", the text of section 54M does not alter the words; how they read for a pre-packaged plan is a matter to be checked. Section 61 is amended by section 43 of the Amendment Act, 2026 (a new sub-section (6)); see our article on sections 32, 61 and 62. Section 61 names the Appellate Tribunal as the National Company Law Appellate Tribunal.
Example
Orbit Tools Pvt Ltd's plan, approved by the committee under section 54K(13), reaches the Adjudicating Authority. The Adjudicating Authority checks that the plan meets section 30(2) and has provisions for effective implementation, and approves it within thirty days. An operational creditor says its debts were not provided for in the manner specified by the Board; that is a ground under section 61(3)(iii), and section 54M lets it appeal on that ground. If instead management had been vested in the resolution professional under section 54J and the plan left the old promoters in control, section 54L(4) would require rejection, termination, a liquidation order and costs treated as liquidation costs. The names are invented.
What the Amendment Act, 2026 changes
Section 37 of the Insolvency and Bankruptcy Code (Amendment) Act, 2026 amends section 54L in three places. The Amendment Act, 2026 comes into force on the date or dates the Central Government notifies; the notification is not in the texts consulted, so check whether this change has been notified. Section 54M is not touched.
| As printed in the consolidated text | After the 2026 Act |
|---|---|
| (2) Effect "as provided under sub-sections (1), (3) and (4) of section 31" | The words "and (4)" are replaced by ", (4), (5) and (6)", so the reference reads to sub-sections (1), (3), (4), (5) and (6) of section 31 |
| (3) No proviso | Proviso added: "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." |
| (4)(b) Liquidation order "as referred to in sub-clauses (i), (ii) and (iii) of clause (b) of sub-section (1) of section 33" | The words "(ii) and (iii)" are replaced by "(ii), (iii), (iv) and (v)" |
New sub-sections (5) and (6) of section 31 are inserted by section 19 of the Amendment Act, 2026. Sub-section (5) provides that, where a resolution plan is approved, a licence, permit, registration, quota, concession, clearances or a similar grant or right given by a Government, local authority, sectoral regulator or other authority "shall not be suspended or terminated during the subsistence of the remaining period of such grants or rights" if the corporate debtor or the person whose plan is approved complies with the obligations for that period. Sub-section (6) provides that, unless otherwise provided in the plan, claims against the corporate debtor and its assets under any other law, prior to the date of approval, "shall be extinguished" and no proceedings shall be continued or instituted on the basis of such claims. Three Explanations follow. Our post on the clean slate in section 31 deals with the section. Explanation III there says sub-sections (5) and (6) are deemed to apply to an approved plan "on and from the date of commencement of this Code, except for matters that have attained finality under this Code"; how those words read with section 54L(2) is not stated in the texts consulted.
One reading point: the Amendment Act, 2026 calls the items (i) to (iii) of section 33(1) "sub-clauses" of "clause (b)", whereas the consolidated text prints (i), (ii) and (iii) after clauses (a) and (b) as the orders the Adjudicating Authority makes. The cross-reference in section 54L(4)(b) is quoted as printed in each text and is not reconciled here.
The Insolvency and Bankruptcy Board of India (Pre-packaged Insolvency Resolution Process) Regulations, 2021 are made under provisions of Chapter III-A of Part II; the copy consulted is amended up to 2 June 2026, and its date does not show that any provision of the Amendment Act, 2026 is in force.
Amendments and notifications made after 12 August 2021, other than the Amendment Act, 2026, are not in the texts consulted and should be checked.
Need help with approval or appeal of a plan?
An order approving or rejecting a pre-packaged plan can be challenged only on the grounds the Code allows, and a plan that leaves management with the same promoters after a vesting order is exposed to rejection. Our team can help you assess the position and the grounds through legal dispute resolution.
Key takeaways
- The Adjudicating Authority shall approve a conforming plan within thirty days of receipt, after satisfying itself that it has effective implementation provisions.
- It may reject a non-conforming plan within thirty days and pass an order under section 54N.
- After a section 54J vesting order, a plan that does not change management or control to a person who was not a promoter or in management must be rejected, with liquidation.
- An appeal against approval is on the grounds laid down in section 61(3).
- The 2026 Act extends the reference to section 31 to include sub-sections (5) and (6), adds a notice proviso to sub-section (3) and extends the section 33 reference in sub-section (4).
Read next
- Section 54K: consideration and approval of the resolution plan
- Section 54N: termination of the pre-packaged process
- Section 31: clean slate and the approved plan
- Sections 32, 61 and 62: appeals against resolution plan orders
Disclaimer: Based on the IBBI consolidated text of the Insolvency and Bankruptcy Code, 2016 amended up to 12 August 2021 and on the Insolvency and Bankruptcy Code (Amendment) Act, 2026 (No. 6 of 2026), which comes into force on the date or dates notified by the Central Government, as consulted on 2 October 2026. It explains the words of the statute only; commencement notifications, other amendments made after 12 August 2021, notified thresholds, the rules and IBBI regulations, and the way tribunals and courts apply these sections should be checked. This article is general information, not legal advice; check the official text before acting.