Courts Must Remain Vigilant Against Expanding 'Narrow Boundaries' Of IBC Review: Supreme Court
Kirit Singhania
27 Feb 2026 11:32 AM IST
The Supreme Court on Friday upheld the approval of Sarda Energy and Minerals Ltd.'s (SEML) resolution plan for SKS Power Generation (Chhattisgarh) Ltd., cautioning courts against expanding judicial review under the Insolvency and Bankruptcy Code, 2016.
Affirming the National Company Law Appellate Tribunal's order, which had upheld the National Company Law Tribunal's approval of the plan, a Bench of Justices BV Nagarathna and R Mahadevan stressed that the IBC prioritises speed and commercial wisdom over prolonged litigation.
“The IBC represents a conscious legislative choice to privilege speed, certainty and creditor driven decision making over exhaustive judicial scrutiny. Experience shows that unsuccessful bidders will always try to spin commercial decisions of the CoC as procedurally faulty in order to secure a second shot in litigation by filing applications or making representations. However, courts need to remain vigilant against any temptation to expand the scope of review beyond the narrow boundaries prescribed by the IBC.”
Warning against encouraging excessive litigation in insolvency proceedings, the court added:
“Excessive review also encourages strategic litigation. Stakeholders with little to no economic interest in the corporate debtor resort to litigation as a bargaining tool to delay implementation of the resolution plan or extract concessions thereby converting the insolvency process into an adversarial contest.”
The insolvency proceedings concern SKS Power Generation (Chhattisgarh) Ltd, against whom the Corporate Insolvency Resolution Process (CIRP) was initiated on April 29, 2022, on an application filed by Bank of Baroda. Following admission, the resolution professional issued invited Expressions of Interest. Seven prospective resolution applicants, including Torrent Power Ltd., Vantage Point Asset Management Ltd and Sarda Energy and Minerals Ltd (SEML), submitted resolution plans.
An inter-se bidding process was conducted on April 19, 2023, after which revised plans were submitted. In its 31st meeting, the Committee of Creditors (CoC), comprising Bank of Baroda and State Bank of India approved SEML's resolution plan with 100% voting share on June 8, 2023.
Unsuccessful resolution applicants filed applications alleging material irregularities in the process. They contended that SEML was permitted to alter key commercial terms under the guise of “clarifications,” particularly regarding conversion of deferred payments into upfront amounts and treatment of bank guarantees.
Vantage Point also claimed it had subsequently enhanced its financial offer and sought reconsideration in the interest of value maximisation. Jindal Power raised objections regarding evaluation of its equity upside component.
On August 13, 2024, the NCLT rejected the objections, upheld the integrity of the process, and approved SEML's resolution plan, holding that the CoC had exercised its commercial wisdom within the framework of the Insolvency and Bankruptcy Code. The order was subsequently challenged before the NCLAT.
The NCLAT upheld the NCLT's order approving Sarda Energy and Minerals' resolution plan and dismissed the appeals filed by the unsuccessful resolution applicants.
It held that seeking clarifications from all resolution applicants did not amount to modification of commercial terms, found no material irregularity in the CIRP process, while reiterating the CoC's commercial wisdom was paramount.