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Torrent Power Limited v. Ashish Arjunkumar Rathi & Ors.

Civil Appeal · 2026 INSC 206Decided 27 Feb 2026
C.A. No.-011746-011747 - 2024
Justice B.V. Nagarathna · Justice R. Mahadevan · Justice Ujjal Bhuyan

Background

SKS Power Generation (Chhattisgarh) Ltd. went through insolvency proceedings, and after a competitive bidding and negotiation process among several applicants, its Committee of Creditors (CoC) approved the resolution plan of Sarda Energy and Minerals Ltd. (SEML) with a 100% vote share. Three unsuccessful resolution applicants (Torrent Power, Vantage Point Asset Management, and Jindal Power) challenged the plan's approval, alleging that clarifications sought from SEML after the bidding closed effectively let SEML alter its commercial terms without a fresh competitive round, and that this procedural irregularity should have led the National Company Law Tribunal (NCLT) to reject the plan. After a back-and-forth in the NCLT and the National Company Law Appellate Tribunal (NCLAT), including one round where the NCLT's earlier order was set aside for not letting the CoC respond, the NCLAT ultimately affirmed the CoC's approval of SEML's plan, and the unsuccessful bidders appealed to the Supreme Court.

Decision Breakdown

The Supreme Court dismissed the appeals, reaffirming the doctrine of "commercial wisdom" under the IBC: a deliberate legislative choice to give the CoC, which bears the economic risk, decisive authority over commercial matters like plan valuation and terms, with courts confined to a supervisory role checking only statutory compliance and procedural fairness. Examining the specific clarifications sought from SEML (relating to bank guarantee margin money and other technical clauses), the Court found these were genuine clarifications sought at the CoC's direction without altering SEML's underlying commercial terms, not an improper renegotiation favouring one bidder. It held that neither of the two main objections raised by the appellants had merit, and since the plan had already been approved by both the NCLT and NCLAT and was being implemented, there was no scope left for the Court to intervene. The Court added a strong cautionary note that unsuccessful bidders frequently try to dress up commercial disagreements as procedural violations to get a "second shot" through litigation, and that excessive judicial review of CoC decisions undermines the IBC's core goals of speed, certainty, and value preservation, discouraging future bidders and eroding recoveries for creditors.

Lesson Learnt

Once a Committee of Creditors has approved an insolvency resolution plan following a fair and transparent process, courts will not second-guess the CoC's commercial judgment merely because a losing bidder disagrees with the outcome: litigation dressed up as a procedural challenge to relitigate a lost commercial bid is discouraged, since delay itself destroys value for all stakeholders in an insolvency process.

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

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