Court’s decision
The Supreme Court of India dismissed civil appeals filed by unsuccessful resolution applicants challenging approval of a resolution plan for SKS Power Generation (Chhattisgarh) Limited.
Justice B.V. Nagarathna held that no “material irregularity” was made out under Section 61(3) of the Insolvency and Bankruptcy Code, 2016, and no question of law arose under Section 62 warranting interference. The Court reaffirmed that clarifications sought by the Resolution Professional at the direction of the Committee of Creditors did not amount to modification of the resolution plan. The commercial wisdom of the Committee of Creditors was upheld as paramount .
Facts
Corporate Insolvency Resolution Process was initiated against SKS Power Generation (Chhattisgarh) Limited under Section 7 of the Insolvency and Bankruptcy Code. Expressions of Interest were invited and multiple resolution applicants submitted plans.
After negotiations and inter-se bidding conducted pursuant to a Process Note dated 13.04.2023, resolution plans were evaluated. In its 31st meeting, the Committee of Creditors approved the plan submitted by Sarda Energy and Minerals Limited with 100% voting share.
Unsuccessful applicants challenged the process before the National Company Law Tribunal, alleging that post-negotiation “clarifications” permitted the successful applicant to improve its commercial offer.
Issues
The Supreme Court framed two core issues:
- Whether clarifications provided by the successful resolution applicant regarding bank guarantees and deferred payments resulted in modification or enhancement of its resolution plan.
- Whether interference was permissible after concurrent approval by the National Company Law Tribunal and the National Company Law Appellate Tribunal, particularly when the plan stood implemented.
Petitioners’ arguments
The appellants contended that after conclusion of the negotiation process on 19.04.2023, commercial terms stood frozen. They alleged that the successful resolution applicant was allowed to enhance its offer in two ways.
First, it allegedly increased infusion towards replacement of bank guarantees from ₹103.39 crores to approximately ₹180 crores. Second, it allegedly converted a deferred payment of ₹240 crores into an upfront payment, thereby improving its bid post-bidding.
They argued that such modifications violated the Process Note and amounted to material irregularity under Section 61(3) of the Insolvency and Bankruptcy Code. It was further contended that higher-value bids were unjustly disregarded, defeating the objective of value maximisation.
Respondents’ arguments
The Resolution Professional and Committee of Creditors submitted that clarifications were sought from all resolution applicants uniformly and were necessary to remove ambiguities.
They contended that the successful resolution plan, from inception, contemplated return of entire margin money of ₹180.05 crores to secured creditors. The ₹103.39 crores figure represented fresh infusion for continuation of certain guarantees, not the total benefit to creditors.
Regarding deferred payments, it was argued that ₹240 crores was already the discounted present value of deferred amounts. The clarification merely confirmed that no further discount would apply if taken upfront.
They emphasised that the scope of appellate review is limited to statutory grounds and that commercial wisdom is non-justiciable.
Analysis of the law
The Court reiterated that appeals under Section 61 are confined to specific grounds, including material irregularity by the Resolution Professional. Appeals under Section 62 lie only on questions of law.
It observed that where the Resolution Professional acts strictly on directions of the Committee of Creditors, such conduct cannot be characterised as material irregularity.
The Court further emphasised that judicial review in insolvency matters is supervisory, confined to statutory compliance under Section 30(2). Courts cannot re-evaluate commercial parameters such as feasibility, viability, or financial superiority of competing plans.
Precedent analysis
The Court relied on authoritative precedents reinforcing primacy of commercial wisdom:
• Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta — Judicial review is limited; merits of commercial decisions are non-justiciable.
• K. Sashidhar v. Indian Overseas Bank — Adjudicating authority cannot question commercial wisdom once statutory requirements are satisfied.
• Kalparaj Dharamshi v. Kotak Investment Advisors Ltd. — Decisions of the Committee of Creditors, even regarding procedural matters, are immune from judicial interference.
• Kalyani Transco v. Bhushan Power & Steel Ltd. — Supreme Court ordinarily will not interfere with concurrent findings unless perverse or illegal.
These authorities were applied to reject the challenge.
Court’s reasoning
On the bank guarantee issue, the Court noted that the resolution plan explicitly provided that the entire margin money of ₹180.05 crores would be returned to secured creditors. The clarification only explained interim treatment pending cancellation of certain guarantees. There was no enhancement of financial offer.
On the deferred payment issue, the Court clarified that ₹240 crores represented the net present value of ₹301.64 crores payable over time. Providing the option to take ₹240 crores upfront was inherent in the original plan and not a new inducement.
The Court held that the appellants’ challenge essentially sought re-evaluation of commercial merits, which is impermissible under the Insolvency and Bankruptcy Code.
Conclusion
The Supreme Court dismissed the civil appeals, holding that no material irregularity or question of law arose.
The resolution plan, already approved and implemented, remained undisturbed. The Court reaffirmed that the commercial wisdom of the Committee of Creditors is paramount and insulated from judicial reappraisal .
Implications
This ruling significantly strengthens insolvency jurisprudence by:
• Reaffirming limited appellate jurisdiction under Sections 61 and 62.
• Clarifying that clarifications do not amount to modification unless commercial value changes.
• Emphasising that unsuccessful resolution applicants have no vested right.
• Reinforcing finality once a resolution plan is implemented.
• Protecting institutional discipline in creditor-driven insolvency resolution.
The judgment further cements the Insolvency and Bankruptcy Code’s shift from court-centric adjudication to creditor-driven commercial decision-making.
Case law references
- Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta (2020) 8 SCC 531 – Judicial review limited to Section 30(2) compliance.
- K. Sashidhar v. Indian Overseas Bank (2019) 12 SCC 150 – Commercial wisdom of Committee of Creditors is non-justiciable.
- Kalparaj Dharamshi v. Kotak Investment Advisors Ltd. (2021) 10 SCC 401 – Decisions of Committee of Creditors, even on procedural aspects, are immune from interference.
- Kalyani Transco v. Bhushan Power & Steel Ltd., 2025 SCC OnLine SC 2093 – Supreme Court will not disturb concurrent findings unless ex facie illegal or perverse.
FAQs
1. Can courts interfere if a higher bid is rejected by the Committee of Creditors?
No. Courts cannot substitute their commercial assessment for that of the Committee of Creditors unless statutory violations are demonstrated.
2. What constitutes “material irregularity” under the Insolvency and Bankruptcy Code?
Material irregularity refers to improper exercise of powers by the Resolution Professional, not disagreement with commercial decisions of creditors.
3. Can clarifications after submission of a resolution plan invalidate the process?
Only if they alter the commercial value or violate statutory provisions. Mere explanatory clarifications do not amount to modification.