Supreme Court Allows Shareholder To Approach NCLAT Chairperson After Split Verdict On Stay Of India Power's CIRP

The Supreme Court on Wednesday allowed India Power Corporation Ltd.'s shareholder Pragya Jhunjhunwala to approach the National Company Law Appellate Tribunal (NCLAT) Chairperson for consideration of a reference arising from a split verdict on applications seeking an interim stay of the company's admission into insolvency proceedings.

A vacation bench of Justices B.V. Nagarathna and Joymalya Bagchi disposed of the special leave petition. It reserved liberty to Jhunjhunwala to request the NCLAT Chairperson to consider the reference.

The court observed, "We dispose of this Special Leave Petition by reserving liberty to the petitioner herein to request the Hon'ble Chairman of the National Company Law Appellate Tribunal (NCLAT) to consider the reference made to him with regard to the difference of opinion arrived at between the Judicial Member and the Technical Member of the NCLAT."

The dispute concerns a corporate guarantee executed by India Power Corporation Ltd (IPCL) in favour of State Bank of India. SBI was the lead lender of a consortium that had advanced loans to Meenakshi Energy Pvt Ltd.

After Meenakshi Energy defaulted on its loans, SBI invoked the corporate guarantee and approached the National Company Law Tribunal (NCLT) to initiate insolvency proceedings against IPCL. The claim is for ₹967.21 crore.

The insolvency tribunal initially rejected the plea on October 30, 2023, holding that the corporate guarantee was not enforceable. The Supreme Court later set aside that order and directed the NCLT to reconsider the matter.

After hearing the matter afresh, the Hyderabad bench of the NCLT admitted the company into CIRP on May 15, 2026.

Two shareholders challenged that order before the NCLAT. They also sought an interim stay on the operation of the NCLT's admission order until their appeals were decided.

On May 27, the two-member NCLAT bench delivered a split verdict on the interim stay applications. Judicial Member Justice Sharad Kumar Sharma declined to stay the NCLT's admission order pending disposal of the appeals. Technical Member Jatindranath Swain disagreed. He favoured keeping the effect and operation of the NCLT's admission order in abeyance until the appeals are decided.

As the Judicial Member and the Technical Member differed on whether interim relief should be granted, the matter was referred to the NCLAT Chairperson for an appropriate reference.

The Supreme Court has now left it open to Jhunjhunwala to request the NCLAT Chairperson to consider that reference in accordance with law.