In a significant ruling on the limits of judicial review under the Insolvency and Bankruptcy Code (IBC), the Supreme Court of India has dismissed a batch of appeals filed by unsuccessful resolution applicants in the insolvency of SKS Power Generation (Chhattisgarh) Ltd.
The Bench made it clear that once the Committee of Creditors (CoC) exercises its commercial wisdom within the framework of the law, courts cannot step in merely because another bidder claims to have made a better offer.
The judgment arose from civil appeals filed by Torrent Power Ltd. and others challenging the approval of a resolution plan submitted by Sarda Energy and Minerals Limited (SEML).
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Background of the Case
The insolvency process was initiated against SKS Power Generation under Section 7 of the IBC. After inviting Expressions of Interest and conducting multiple rounds of negotiations, the CoC held inter-se bidding in April 2023.
Seven resolution plans were placed before the CoC. In May 2023, SEML’s plan received 100% voting share and was approved.
Following this, the Resolution Professional (RP) moved the National Company Law Tribunal (NCLT) for plan approval. Competing bidders including Torrent, Vantage Point Asset Management, and Jindal Power challenged the process.
They alleged that SEML was allowed to modify its commercial offer after the bidding process had closed-something they claimed violated the bidding rules.
The NCLT and later the National Company Law Appellate Tribunal (NCLAT) rejected these objections. The matter then reached the Supreme Court.
What Were the Allegations?
The unsuccessful bidders raised two main objections:
- Bank Guarantees Issue – They argued that SEML increased its commitment toward replacement of bank guarantees from ₹103.39 crore to ₹180 crore after the bidding concluded.
- Upfront vs Deferred Payment Issue – They claimed SEML converted a deferred payment of ₹240 crore into an upfront payment, effectively improving its offer post-deadline.
According to the appellants, this amounted to a “material irregularity” in the insolvency process.
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Court’s Observations
The Bench examined the emails exchanged between the RP and SEML in May 2023 and the relevant clauses of the resolution plan.
On the bank guarantee issue, the Court found that SEML’s plan had, from the beginning, provided that the entire margin money of ₹180.05 crore would ultimately flow back to secured creditors. The clarification merely explained how and when that would happen.
“The payment to the CoC was ₹180.49 crores before clarification and remained ₹180.49 crores even after the clarification,” the Bench noted.
On the ₹240 crore payment issue, the Court said the amount represented the discounted present value of a deferred payment structure. SEML had already given the CoC an option - either accept non-convertible debentures over time or take ₹240 crore upfront.
The clarification only confirmed that no further discount would apply if the upfront option was chosen.
The Court concluded that there was no enhancement or modification of SEML’s offer.
Scope of Judicial Review Under IBC
A key part of the ruling focused on the limited scope of appellate interference.
Under Sections 61 and 62 of the IBC, appeals are maintainable only on specific grounds, such as non-compliance with statutory provisions or “material irregularity” by the Resolution Professional.
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The Bench emphasized that the RP had merely acted on the instructions of the CoC while seeking clarifications. That, it held, could not be treated as material irregularity.
“Where the RP acts on the instructions of the CoC, such conduct cannot… be characterised as a ‘material irregularity’,” the Court observed.
The Court further noted that both the NCLT and NCLAT had recorded concurrent findings that no irregularity occurred. In such cases, interference is rare unless the decision is perverse or contrary to law.
Commercial Wisdom is Paramount
Reiterating settled law, the Bench underlined that the commercial decision of the CoC cannot be second-guessed by courts merely because another bidder claims better financial terms.
The IBC, the Court said, intentionally places economic decision-making in the hands of financial creditors who bear the financial risk.
Once statutory requirements are satisfied, courts must respect that choice.
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The Final Decision
Finding no material irregularity, no question of law, and no violation of statutory provisions, the Supreme Court dismissed all the appeals.
The resolution plan of SEML, already implemented, remains undisturbed.
Case Title: Torrent Power Ltd. vs Ashish Arjunkumar Rathi & Others
Case No.: Civil Appeal Nos. 11746–11747 of 2024 (with connected appeals)
Decision Date: 2026 (as per reportable judgment)
