TORRENT POWER LIMITED v. ASHISH ARJUNKUMAR RATHI
Primacy of CoC's Commercial Wisdom and the Limited Scope of Judicial Review in Challenging Approved Resolution Plans under the IBC.
Court: Supreme Court of India
Citation: 2026 INSC 206
Decision Date: 27-02-2026
List of Laws
Insolvency and Bankruptcy Code, 2016; IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016; Doctrine of Commercial Wisdom; Judicial Review of Resolution Plans
- Facts: SKS Power Generation (Chhattisgarh) Ltd. underwent Corporate Insolvency Resolution Process (CIRP). After a negotiation process and inter-se bidding, the Committee of Creditors (CoC) approved the resolution plan of Sarda Energy and Minerals Limited (SEML) with a 100% vote share. Unsuccessful resolution applicants, including Torrent Power Ltd., challenged this approval, alleging that SEML was selectively permitted to modify its commercial offer after the bidding process had concluded. They specifically contended that SEML enhanced its commitment towards Bank Guarantees (BGs) from Rs.103.39 crores to Rs.180.05 crores and converted a deferred payment of Rs.240 crores into an upfront payment under the guise of "clarifications" sought by the Resolution Professional (RP).
- Procedural Posture: The National Company Law Tribunal (NCLT) approved SEML's plan and rejected the appellants' objections. The National Company Law Appellate Tribunal (NCLAT) affirmed the NCLT's order, holding that the CoC's commercial wisdom is paramount. The appellants then approached the Supreme Court under Section 62 of the Insolvency and Bankruptcy Code (IBC).
- Issue: Whether the clarifications provided by the successful resolution applicant resulted in an unauthorized modification of the resolution plan, and whether the court can interfere with the commercial wisdom of the CoC in approving such a plan.
- Holding: No, the clarifications did not amount to a modification of the plan, and the court cannot interfere with the commercial wisdom of the CoC.
- Reasoning: The Court reasoned that the RP acted strictly on the instructions of the CoC to seek clarifications from all applicants to resolve ambiguities. Upon detailed examination, the Court found that SEML's original plan already earmarked the full Rs.180.05 crores in margin money for the CoC, and the "enhancement" was merely an explanation of how interim bank exposure would be handled. Regarding the payment, the plan already offered the CoC an option between a deferred amount (with interest) and its discounted Net Present Value (NPV) upfront; the clarification merely reaffirmed this existing choice. The Court emphasized that judicial review is limited to the grounds under Section 30(2) and 61(3) of the IBC. It held that "commercial wisdom" is non-justiciable and unsuccessful bidders cannot use the judicial system to obstruct the resolution process.
🔒 For Members Only