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Power Trust (Promoter of Hiranmaye Energy Ltd.) v. Bhuvan Madan (Interim Resolution Professional of Hiranmaye Energy Ltd.) & Ors.

Civil Appeal · 2026 INSC 166Decided 18 Feb 2026
C.A. No.-002211 - 2024
Justice Joymalya Bagchi · Justice Vipul M. Pancholi

Background

Power Trust, promoter of Hiranmaye Energy Ltd. (which built a thermal power plant in Haldia, West Bengal on loans of over Rs. 2,300 crore), challenged the NCLT's admission of a Section 7 insolvency petition filed by financial creditor REC Ltd. after the company defaulted and failed to meet pre-conditions for a proposed loan restructuring. The NCLAT upheld the admission of insolvency proceedings, and Power Trust appealed to the Supreme Court seeking to have the restructuring proposal enforced instead and the insolvency process halted. While the appeal was pending, the Supreme Court had temporarily stalled the insolvency process on the condition that the promoter deposit Rs. 25 crore and furnish a Rs. 100 crore bank guarantee, but a resolution applicant (DVC) had since stepped in and opposed further delay.

Decision Breakdown

The Supreme Court dismissed the appeal and vacated the stay on the corporate insolvency resolution process (CIRP), holding that the Corporate Debtor had repeatedly failed to fulfil the pre-implementation conditions of the restructuring proposals (such as maintaining a debt service reserve, priority debt, and demonstrating sustained plant operation), justifying the NCLT's admission of the Section 7 application. The Court held that once a resolution plan has been approved by the Committee of Creditors and a successful resolution applicant has emerged, courts should be reluctant to permit late-stage settlement proposals by the promoter that would derail a swift insolvency resolution, and that the earlier scope for pre-admission withdrawal under Section 12A no longer applies post-admission except in exceptional circumstances under Article 142. It also rejected a related application by a secured creditor (SEFL) seeking release of deposited funds, since no crystallised award existed against the promoter, and directed the Rs. 125 crore deposit (made only as a condition of the stay) to be refunded to the Appellant with accrued interest.

Lesson Learnt

Once an insolvency resolution process is admitted and progresses toward a resolution plan, courts will not readily entertain last-minute settlement proposals from a defaulting promoter to derail it: timely completion of the CIRP is treated as paramount, so borrowers must meet restructuring conditions before default, not after insolvency proceedings are already underway.

Official source (sci.gov.in)View Judgment (PDF)

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