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Informist, Friday, Feb. 27, 2026

 

--SC upholds Sarda Energy's INR-19.5-bln resolution plan for SKS Power

--SC rejects pleas of Torrent Power, Jindal Power vs Sarda Energy IBC plan 

 

NEW DELHI – The Supreme Court Friday upheld Sarda Energy and Minerals Ltd.'s INR 19.50-billion resolution plan for debt-ridden SKS Power Generation (Chhattisgarh) Ltd. and rejected challenges filed by unsuccessful resolution applicants Torrent Power Ltd., Jindal Power Ltd. and Vantage Point Asset Management Pte. Ltd. The commercial wisdom of the committee of creditors enjoys primacy and cannot be supplanted by judicial review, said the top court.

 

The appeals before the court are an example of how unsuccessful resolution applicants seek to reopen almost every commercial decision under the guise of procedural impropriety, said a Bench of Justices B.V. Nagarathna and Ujjal Bhuyan. Such an approach constitutes strategic obstruction and is fundamentally inconsistent with the economic logic and statutory design of the Insolvency and Bankruptcy Code, 2016, the Bench said.

 

The 2016 Code represents a conscious legislative choice that ensures speed, certainty and creditor-driven decision-making over exhaustive judicial scrutiny, the court said. Experience shows that unsuccessful bidders will always try to question commercial decisions of the committee of creditors as procedurally faulty, in order to secure a second shot to litigation by filing applications or making representations, said the bench. However, courts need to remain vigilant against any temptation to expand the scope of review beyond the narrow boundaries prescribed by the Insolvency and Bankruptcy Code, it added.

 

The top court rejected the petitioner's argument that there was "material irregularity" by the resolution professional of the debt-ridden company while approving Sarda Energy's plan for SKS Power. The resolution professional acted on the instructions of the committee of creditor of SKS Power and did not take any unilateral decision, said the top court.

 

The court said an efficient insolvency resolution system performs an important function. It preserves viable firms through timely reorganisation, while ensuring swift liquidation and exit or exit of non-viable businesses where insolvency laws are totally enforced, it said. 

 

The 2016 Code recognises that decisions on viability, valuation and acceptable haircuts are inherently commercial, not judicial determinations. Therefore, courts do not substitute their assessment for that of the committee of creditors. The adjudicating authority performs a supervisory role, ensuring statutory compliance and procedural fairness, but refrains from second-guessing economic bodies, said the court. In this case, the doctrine of commercial wisdom does embody both institutional discipline and legislative intent, it added.

 

Insolvency resolution must be efficient, market responsive, and guided by those best placed to evaluate commercial work. Respecting these limits will preserve the economic sense of the 2016 Code and ensure that insolvency remains a predictable, time-bound and market-driven process, said the court.

 

In 2022, the Mumbai bench of the National Company Law Tribunal had admitted a petition by Bank of Baroda to start insolvency proceedings against SKS Power with total claims of INR 18.90 billion. In 2024, the Mumbai tribunal approved Sarda Energy's INR 19.50-billion bid for SKS Power and rejected challenges from unsuccessful resolution applicants Torrent Power, Jindal Power, and Vantage Point Asset. Challenging this, the unsuccesful bidders moved the appellate tribunal, which also upheld the resolution plan.

 

Torrent Power had said that discrimination was made towards other resolution applicants, since Sarda Energy was given an opportunity in the guise of seeking clarification to pay INR 2.40 billion upfront, which was not proposed earlier.

 

The appellate tribunal had rejected the contention of Torrent Power and other parties, and said the clarification sought by the resolution professional in no manner permitted Sarda Energy or any other resolution applicant to modify the resolution plan. "...we do not find that any sufficient grounds have been made out within the meaning of Section 61(3)(ii) of the IBC (Insolvency and Bankruptcy Code, 2016) to interfere with the decision of the adjudicating authority approving the resolution plan of Sarda, in these appeals filed by unsuccessful resolution applicant," the appellate tribunal had said.

 

At 1129 IST, shares of Torrent Power were up 1.2% at INR 1,584.00 on the National Stock Exchange, while those of Sarda Energy were up 6.3% at INR 551.75.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Surya Tripathi

Edited by Tanima Banerjee

 

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