The Supreme Court has dismissed appeals filed by unsuccessful resolution applicants challenging the approval of the resolution plan for SKS Power Generation (Chhattisgarh) Ltd., reaffirming that courts cannot interfere with the commercial wisdom of the Committee of Creditors (CoC) under the Insolvency and Bankruptcy Code (IBC) unless statutory violations or material irregularities are established.
Case Details
- Case Title: Torrent Power Ltd. v. Ashish Arjunkumar Rathi & Others
- Court: Supreme Court of India
- Bench: Justice B.V. Nagarathna
- Judgment Citation: 2026 INSC 206
- Date of Judgment: 2026
- Civil Appeals: Nos. 11746–11747 of 2024, 11689–11690 of 2024, and 12994–12995 of 2024
Background of the Insolvency Process
The case arose from the corporate insolvency resolution process (CIRP) of SKS Power Generation (Chhattisgarh) Ltd., initiated after Bank of Baroda filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 before the National Company Law Tribunal (NCLT), Mumbai.
The NCLT admitted the application on April 29, 2022 and appointed Ashish Arjunkumar Rathi as the Interim Resolution Professional, who was later confirmed as the Resolution Professional (RP).
Following the initiation of CIRP, the RP issued invitations for expressions of interest from prospective resolution applicants. Seven entities, including Torrent Power Ltd., Vantage Point Asset Management Pte. Ltd., and Jindal Power Ltd., submitted resolution plans.
After multiple rounds of negotiations and an inter-se bidding process conducted by the CoC, the resolution plan submitted by Sarda Energy and Minerals Ltd. (SEML) was approved with a 100% vote share of the CoC.
Subsequently:
- The RP filed an application before the NCLT seeking approval of SEML’s plan.
- Competing bidders filed applications alleging irregularities in the process.
- The NCLT eventually approved SEML’s resolution plan.
- The National Company Law Appellate Tribunal (NCLAT) upheld the approval.
- The unsuccessful bidders approached the Supreme Court under Section 62 of the IBC.
Core Dispute Before the Supreme Court
The unsuccessful resolution applicants argued that SEML had improperly modified its resolution plan after the bidding process had concluded.
According to them, this allegedly created discrimination and violated the process rules.
Two key allegations were raised:
- Enhancement of Bank Guarantee (BG) commitments: It was alleged that SEML initially proposed to infuse only ₹103.39 crore towards replacing bank guarantees but later increased the amount to around ₹180 crore after the bidding process ended.
- Conversion of deferred payment into upfront payment: Appellants claimed that SEML converted a deferred payment component of ₹240 crore into an upfront payment, effectively improving its financial offer after the deadline.
The appellants argued that these changes amounted to material irregularities in the insolvency resolution process and violated the governing process note and request for resolution plan (RFRP).
They also claimed that their own resolution plans offered higher value to creditors and therefore the CoC failed to achieve value maximisation.
Legal Framework Under the Insolvency and Bankruptcy Code
The Court examined the scope of appellate review under the IBC, particularly Sections 61 and 62.
Under Section 61(3), an appeal against approval of a resolution plan is permitted only on limited grounds, including:
- contravention of law,
- material irregularity by the resolution professional,
- failure to provide for operational creditors,
- improper treatment of insolvency resolution costs, or
- non-compliance with regulatory criteria.
Further, Section 62 permits appeals to the Supreme Court only on questions of law arising from the NCLAT’s order.
The Court noted that the present appeals primarily challenged factual aspects of the bidding process and the commercial evaluation conducted by the CoC.
Court’s Analysis on Alleged Increase in Bank Guarantee Commitment
The Supreme Court closely examined SEML’s resolution plan and the clarifications provided during the process.
The Court observed that SEML’s plan already contemplated that margin money of ₹180.05 crore tied to bank guarantees would eventually be returned to the corporate debtor and used to pay secured creditors.
The confusion arose because:
- SEML proposed to continue certain bank guarantees worth ₹103.39 crore, requiring fresh margin infusion.
- Other guarantees worth ₹76.61 crore would be discontinued because the underlying liabilities would be extinguished under the resolution plan.
When the CoC sought clarification, SEML explained that the margin money relating to the discontinued guarantees would also be returned to creditors.
The Court held that this clarification did not increase SEML’s financial offer, because the total amount payable to creditors remained the same.
The judgment observed that the clarification merely addressed the operational mechanics of replacing or cancelling bank guarantees and did not constitute a modification of the plan.
Court’s Findings on Alleged Conversion of Deferred Payment
The second allegation concerned a deferred payment of ₹240 crore.
Under SEML’s resolution plan:
- Creditors could either receive ₹240 crore via non-convertible debentures (NCDs) with interest, amounting to approximately ₹301.64 crore over time.
- Or they could choose to receive ₹240 crore upfront, which represented the net present value (NPV) of the deferred payments.
The Court clarified that:
- ₹240 crore was already the discounted present value of the deferred payment.
- SEML’s clarification only confirmed that no further discount would be applied if the CoC chose the upfront option.
Therefore, the Court rejected the argument that SEML had increased or modified its commercial offer.
Supreme Court on “Material Irregularity”
The Court also examined whether any material irregularity had occurred in the conduct of the resolution process.
It found that:
- The Resolution Professional merely acted on instructions of the CoC.
- Clarifications were sought from all resolution applicants, not just SEML.
- The RP did not exercise independent discretion or favour any bidder.
The Court held that actions taken by the RP under the direction of the CoC cannot be treated as material irregularities under Section 61(3).
Commercial Wisdom of the Committee of Creditors
Reiterating settled insolvency jurisprudence, the Court emphasised that the CoC’s commercial decisions are non-justiciable except in limited circumstances.
The Court cited earlier precedents including K. Sashidhar v. Indian Overseas Bank and Committee of Creditors of Essar Steel v. Satish Kumar Gupta, which recognise the primacy of the CoC in evaluating resolution plans.
The judgment explained that courts cannot substitute their own assessment of:
- viability,
- feasibility,
- value maximisation, or
- commercial risk.
Such decisions are intentionally entrusted to financial creditors under the IBC framework.
Concurrent Findings of NCLT and NCLAT
The Supreme Court also noted that both the NCLT and the NCLAT had already rejected the allegations raised by the appellants.
Referring to established principles, the Court stated that when two specialised tribunals under a statute reach concurrent findings, the Supreme Court ordinarily will not interfere unless the decision is:
- perverse,
- based on irrelevant considerations, or
- contrary to statutory provisions.
No such circumstances were found in this case.
Resolution Plan Already Implemented
Another significant factor was that the resolution plan had already been implemented.
SEML had completed payments to creditors in accordance with the approved plan.
The Court held that disturbing an implemented resolution plan would undermine the objectives of the IBC, particularly the need for certainty and finality in insolvency resolutions.
Supreme Court’s Final Decision
The Court concluded that:
- No material irregularity occurred during the resolution process.
- SEML’s clarifications did not amount to modification of its resolution plan.
- The appeals did not raise any substantial question of law under Section 62 of the IBC.
Accordingly, the Supreme Court dismissed the appeals filed by Torrent Power, Vantage Point Asset Management, and Jindal Power, thereby upholding the approval and implementation of SEML’s resolution plan for SKS Power Generation (Chhattisgarh) Ltd.
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