Supreme Court Reaffirms Primacy of CoC’s Commercial Wisdom in IBC Resolution Plan Approval
Case Name: Torrent Power Ltd. v. Ashish Arjunkumar Rathi & Others
Citation: 2026 INSC 206; Civil Appeal Nos. 11746–11747 of 2024 with Civil Appeal Nos. 11689–11690 of 2024 and 12994–12995 of 2024
Date of Judgment/Order: 27 February 2026
Bench: Hon’ble Ms. Justice B.V. Nagarathna and Hon’ble Mr. Justice K.V. Viswanathan
Held: The Supreme Court held that the commercial wisdom of the Committee of Creditors (CoC) in approving a resolution plan under the Insolvency and Bankruptcy Code, 2016 cannot ordinarily be interfered with by the NCLT, NCLAT, or the Supreme Court unless the statutory grounds under Sections 61 and 62 of the IBC are clearly established. Clarifications sought by the Resolution Professional from resolution applicants during the evaluation process do not amount to modification of the resolution plan where the commercial terms remain unchanged. Consequently, unsuccessful resolution applicants cannot challenge the CoC’s decision merely on the ground that their financial bid was allegedly higher.
Summary: The dispute arose from the Corporate Insolvency Resolution Process (CIRP) of SKS Power Generation (Chhattisgarh) Ltd. initiated under Section 7 of the Insolvency and Bankruptcy Code on the application of Bank of Baroda. Several resolution applicants, including Torrent Power Ltd., Vantage Point Asset Management, Jindal Power Ltd., and Sarda Energy and Minerals Ltd. (SEML), submitted resolution plans pursuant to the Request for Resolution Plan issued by the Resolution Professional. Following negotiations and an inter-se bidding process, the Committee of Creditors approved SEML’s resolution plan with a 100% vote share. The unsuccessful applicants challenged the approval before the NCLT and subsequently before the NCLAT alleging that SEML had improperly modified its plan after the negotiation stage by increasing the amount towards bank guarantee margin money and converting deferred payments into upfront payments. Both tribunals rejected these allegations and upheld the CoC’s decision. Before the Supreme Court, the appellants reiterated that the process suffered from material irregularity and discrimination. The Court examined the relevant clauses of the resolution plan and the clarifications sought by the Resolution Professional. It held that SEML’s clarifications merely explained the treatment of bank guarantees and the present value of deferred payments and did not alter the commercial offer. The Court further emphasised that under the IBC framework, judicial review is limited and courts cannot second-guess the economic decision of the CoC regarding viability, valuation, or value maximisation. Since no material irregularity by the Resolution Professional or violation of statutory provisions was demonstrated, the challenge to the resolution plan was found to be unsustainable.
Decision: The Civil Appeals were dismissed, the concurrent orders of the NCLT and NCLAT approving the resolution plan submitted by Sarda Energy and Minerals Ltd. were upheld, and the Court declined to interfere with the commercial decision of the Committee of Creditors, noting that the resolution plan had already been implemented.