2026 INSC 166 Page 1 of 27

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO(s).2211/2024

Power Trust

(Promoter of Hiranmaye Energy Ltd.) ….Appellant(s)

Versus

Bhuvan Madan

(Interim Resolution Professional

of Hiranmaye Energy Ltd.) & Ors. …Respondent(s)

J U D G M E N T

Joymalya Bagchi, J.

1. Present appeal has been instituted by Power Trust,

1 a promoter of

Hiranmaye Energy Ltd.

2 under Section 62, Insolvency and

Bankruptcy Code, 2016

3, challenging order dated 25.01.2024 by

National Company Law Appellate Tribunal, Principal Bench, New

Delhi

4. By the impugned order, NCLAT has upheld order dated

02.01.2024 by National Company Law Tribunal, Kolkata Bench

5,

1 Hereinafter “Appellant”.

2 Hereinafter “Corporate Debtor”.

3 Hereinafter “IBC/The Code”.

4 Hereinafter “NCLAT”.

5 Hereinafter “NCLT/Adjudicating Authority”.

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whereby the NCLT admitted an application filed under Section 7, IBC

6

by REC Ltd.

7 and initiated the corporate insolvency resolution

process

8 against the Corporate Debtor.

FACTS GIVING RISE TO THE APPEAL

2. A common loan agreement dated 19.06.2013 was entered into

between the Corporate Debtor and 2

nd Respondent to avail a term

loan of Rs. 1859 crore for setting up of a thermal power plant at

Haldia, West Bengal. Due to cost overruns, on 30.10.2015, the

Corporate Debtor availed an additional term loan facility of Rs.

446.97 crore. Subsequently, the Corporate Debtor entered into a

power purchase agreement

9 with the West Bengal State Electricity

Distribution Company Ltd.

10

3. On 30.06.2018, 2

nd Respondent classified the accounts of Corporate

Debtor as non-performing assets due to alleged default committed by

the Corporate Debtor in making due payments.

4. Pursuant to negotiations, on 21.02.2020, 2

nd Respondent approved a

loan restructuring plan (restructuring without change in ownership)

wherein the Corporate Debtor was to commence repayment from

6 Hereinafter “Section 7 application”.

7 Hereinafter “2

nd Respondent/Financial Creditor”.

8 Hereinafter “CIRP”.

9 Hereinafter “PPA”.

10 Hereinafter “WBSEDCL”.

Page 3 of 27

31.12.2020 and interest payment on monthly basis was to commence

from 30.06.2020. Further revisions led to a second restructuring

proposal dated 29.09.2020 which envisaged repayment of loan in

instalments from 31.03.2021 till 31.12.2042.

5. Implementation of the restructuring proposals was subject to certain

pre-implementation conditions to be fulfilled by the Corporate Debtor.

Such conditions inter alia included obtaining a favourable tariff order

from West Bengal Electricity Regulatory Commission

11 by

28.02.2021, creating an initial Debt Service Revenue Account

12,

demonstrating Corporate Debtor’s power plant successfully running

at installed capacity continuously for 72 hours, making available a

priority debt of Rs. 83 crore and working capital of Rs.125 crore.

However, the tariff order was not approved by WBERC by the

stipulated date. Further, the Corporate Debtor also failed to comply

with other vital pre-implementation conditions within the agreed

deadline, i.e., 28.02.2021 as recorded in the consortium meeting

dated 17.02.2021.

6. Consequently, financial creditor filed the Section 7 application before

the NCLT recording the date of default as 31.03.2018 on an

outstanding claim of Rs. 21,83,19,16,896 as on 05.06.2021. The

11 Hereinafter “WBERC”.

12 Hereinafter “DSRA”.

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proceedings were assailed before the High Court at Calcutta and

Single Judge vide order dated 02.07.2021 dismissed the writ petition

inter alia holding that there was no arbitrary or unfair cancellation of

the restructuring offer and that initiation of proceedings under the

IBC before the Adjudicating Authority could not be faulted.

7. Matter was carried in appeal to the Division Bench. The Division

Bench took note of the tariff order dated 31.05.2021 and partly

modified the order passed by Single Judge.

13 The Bench directed the

financial creditors of the Corporate Debtor to consider the afore-

mentioned tariff order with regard to fulfilment of pre-implementation

conditions of the restructuring proposal.

8. However, in the lenders’ meeting on 11.11.2021 pursuant to such

directions of the Division Bench, the request to revive the

restructuring proposal was rejected as the Corporate Debtor had

repeatedly failed to satisfy key pre-implementation conditions,

including creation of a DSRA, maintenance of priority debt of Rs. 83

crore, and demonstration of Corporate Debtor’s power plant

successfully running at installed capacity continuously for 72 hours.

9. Thereafter, the Corporate Debtor took out IA No. 1020/2022 inter alia

for a declaration that the restructuring proposals dated 29.09.2020

13 MAT 626/2021, order dated 07.10.2021.

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and 14.01.2021

14 were valid and binding inter se parties and

dismissal of the Section 7 application. During the pendency of the

said IA, Corporate Debtor claimed various sums had been accepted

by 2

nd Respondent in repayment of the debt which was to be

liquidated by 2042 as per the 2

nd restructuring proposal. The

Corporate Debtor also filed IA No. 828/2023, inter alia praying that

the date of default as per restructuring agreement dated 21.02.2020

squarely fell in the period covered under Section 10A, IBC. After

hearing the parties, by order dated 02.01.2024, the Adjudicating

Authority dismissed IA No. 1020/2022 and IA No. 828/2023 , and

admitted the Section 7 application initiating CIRP.

10. Being aggrieved by the admission order, Appellant preferred appeal

before NCLAT which came to be dismissed vide the impugned order

and has been challenged before this Court.

PROCEEDINGS PENDING THE APPEAL

11. During the proceedings before this Court, Appellant took out IA No.

84962/2024 seeking directions to the Committee of Creditors

15 to

consider its settlement proposal and for stay of CIRP. On 03.05.2024,

liberty was granted to Appellant to submit a settlement proposal for

14 On 14.01.2021, the 2

nd restructuring proposal was approved by Power Finance

Corporation Ltd., which is another financial creditor of the Corporate Debtor.

15 Hereinafter “CoC”.

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consideration in accordance with law. Thereafter, Appellant made

three settlement proposals of Rs. 1,101.56 crore, Rs. 1,450 crore, and

Rs. 1,601.29 crore, all of which were rejected by the CoC by

overwhelming majorities. CoC rejected the settlement proposal citing

the Corporate Debtor’s repeated failure to implement earlier

restructuring plans and expressing doubts about the Appellant’s

ability to pay, particularly in light of letter dated 13.08.2024 by SREI

Equipment Finance Ltd.’s

16 alleging loan dues of Rs. 633 crore

payable by the Appellant. The CoC also noted that the settlement

proposals were being made by Appellant, the erstwhile promoter

responsible for the Corporate Debtor’s default in the first place.

12. On 29.10.2024, when the CoC rejected the Appellant’s third

settlement proposal, it simultaneously approved the resolution plan

of Damodar Valley Corporation .

17 1

st Respondent

18 moved an

application under Section 31, IBC before the Adjudicating Authority

seeking final approval of DVC’s resolution plan. Appellant filed

objections challenging both the CoC’s approval of DVC’s plan and

rejection of the Appellant’s third settlement proposal, and these

issues are still pending before the Adjudicating Authority.

16 Hereinafter “SEFL”, which is the sole secured financial creditor of Power Trust, the

Appellant.

17 Hereinafter “DVC/successful Resolution Applicant”

18 Hereinafter “Interim Resolution Professional”.

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13. Thereafter, the Appellant placed fourth (Rs.1,606.86 crore) and fifth

(Rs.1,671.86 crore) settlement proposal s before the CoC on

08.07.2025 and 20.07.2025 respectively, and both were rejected.

14. On 12.09.2025, this Court stayed the CIRP on the condition that the

Appellant deposit Rs. 25 crore and furnish a bank guarantee of Rs.

100 crore, and the Appellant deposited Rs. 25 crore with the Registry

of this Court. By order dated 23.09.2025, the stay was continued and

the bank guarantee requirement was substituted by a further deposit

of Rs.100 crore, which was also deposited, taking the total deposit to

Rs.125 crore. During these proceedings, DVC was impleaded

19 and

sought vacatur of the stay

20 citing serious prejudice and economic

hardship due to stalling of the CIRP. Additionally, SEFL’s application

to intervene was allowed

21 whereby they sought release of the Rs.125

crore deposit towards the Appellant’s alleged dues, contending that

the Appellant must first clear liabilities to SEFL before seeking to fund

settlement plans for the Corporate Debtor.

ARGUMENTS AT THE BAR

15. The Appellant argues that the CIRP is barred by Section 10A, IBC

which prohibits initiation of CIRP for defaults occurring between

25.03.2020 and 24.03.2021. Although the Section 7 application

19 IA No. 240917/2025.

20 IA No. 240982/2025.

21 IA No. 260460/2025.

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attributes a default date of 31.03.2018 under the Common Loan

Agreement dated 19.06.2013, Appellant submits that the first

restructuring agreement dated 21.02.2020 reset the repayment

schedule. As per the revised terms, interest payments were to

commence on 30.06.2020 and the first instalment was due on

31.12.2020, thereby rendering the default date within the period

envisaged in the Section 10A window.

16. It is also argued that the restructuring proposals dated 21.02.2020

and 29.09.2020 were final and binding between the parties and had

novated the earlier common loan agreement dated 19.06.2013. 2

nd

Respondent had received a sum of Rs. 50 crore in December, 2021

without demur and had not controverted the Corporate Debtor’s letter

dated 24.12.2021 stating “your receipt of the payment of the said sum

of Rs. 50 Crore will be deemed and constructed by us to be an

acceptance by you of the proposal contained herein”. This amounted

to a deemed approval of the 2

nd restructuring proposal dated

29.09.2020. No letter of termination of the restructuring proposal due

to non-fulfilment of pre-implementation conditions was issued. The

restructuring proposals envisaged repayment of loan in instalments

till 2042 and there is no provision in these agreements that on failure

of payment of any instalment the entire liability would stand revived.

Notwithstanding these facts, both the Adjudicating Authority and

NCLAT incorrectly held the restructuring proposals dated 21.02.2020

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and 29.09.2020 were not final and binding and the debt had become

due and payable.

17. It is further contended that the Corporate Debtor is a running and

viable power project which cannot be treated as insolvent. The

Corporate Debtor has a subsisting PPA for 25 years with WBSEDCL

and has raised bills of about Rs. 906 crore between 01.11.2024 to

31.03.2025. It has a continuing fuel supply arrangement with

Mahanadi Coalfields Ltd. under the SHAKTI Scheme, and had earned

an EBIDTA of Rs. 20 crore per month during the CIRP. In this factual

matrix, relying on Vidarbha Industries Power Ltd. v. Axis Bank Ltd.,

22

it is contended that the Section 7 application ought not to have been

admitted.

18. Finally, it is argued that the settlement plan submitted by the

Appellant is more viable and about Rs. 177 crore higher than that of

the successful Resolution Applicant. Given this situation, CIRP may

be kept in abeyance and CoC be directed to consider the settlement

plan proposed by the Appellant.

19. To the contrary, the Respondents submit that the Appellant’s reliance

on Section 10A is misconceived. According to the Respondents, the

restructuring proposals dated 21.02.2020 and 29.09.2020 never

22 (2022) 8 SCC 352.

Page 10 of 27

ripened into binding arrangements because the Corporate Debtor

failed to satisfy the pre-implementation conditions. Once the

restructuring failed at that threshold stage, the date of default cannot

be shifted by referring to repayment schedules contemplated under

those unimplemented proposals. Even otherwise as per the

Appellant’s case, the 1

st restructuring proposal had been subsumed

in the 2

nd restructuring proposal, wherein the first instalment fell due

on 31.03.2021 beyond the Section 10A window.

20. The Respondents further contend that the Appellant’s case of

novation is unsustainable for the same reason. As the pre-

implementation conditions were not fulfilled, the proposals did not

crystallise into enforceable agreements, and there was no novation of

the original financing terms. The Respondents submit that

subsequent part payments made towards an existing debt do not

revive a failed restructuring nor do they satisfy the debt in full

justifying the dismissal of the Section 7 application.

21. The Respondents also submit that the Appellant’s emphasis on the

Corporate Debtor’s alleged viability is legally misplaced at the

admission stage under Section 7 , IBC. They contend that the

Adjudicating Authority’s role at that stage is limited to examining

whether a financial debt exists and whether a default has occurred,

and once those requirements are met, the Adjudicating Authority has

Page 11 of 27

scarcely any discretion to refuse admission. Proceedings under

Section 7 cannot be expanded into a broad inquiry on business

viability, equities, or surrounding circumstances. Reliance is placed

on Innoventive Industries Ltd. v. ICICI Bank

23 and M. Suresh Kumar

Reddy v. Canara Bank & Ors.

24

22. The Respondents submit that the Appellant’s settlement proposal

cannot interdict the CIRP unless such proposal secures approval of

90% of the CoC. In the present case, at the CoC meeting on

29.10.2024, the successful Resolution Applicant’s plan was approved

by 99.92% voting, while the Appellant’s settlement proposals have

been repeatedly rejected by overwhelming majority. It is well settled

that the commercial wisdom of the CoC is non-justiciable. They assert

that the settlement proposals pressed by the Appellant after

29.10.2024 are merely opportunistic attempts to disrupt CIRP, and

therefore do not warrant any consideration.

ANALYSIS

23. Analysing the submissions of the parties, it appears the Appellant

has assailed the admission of Section 7 application on the following

issues:

23 (2018) 1 SCC 407.

24 (2023) 8 SCC 387.

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i. Whether date of default fell between 25.03.2020 to 24.03.2021,

and was thereby barred under Section 10A, IBC?

ii. Whether common loan agreement had been novated by 1

st

restructuring agreement dated 21.02.2020, which was followed

by the 2

nd restructuring agreement dated 29.09.2020, envisaging

the repayment of debt in monthly instalments till 31.12.2042

and there was no existing debt due and payable by the Corporate

Debtor at the time of admission of the Section 7 application?

iii. Whether the Adjudicating Authority ought not to have admitted

the Section 7 application mechanically without assessing the

viability of the Corporate Debtor as an ongoing concern and its

ability to repay the debts, in view of Vidarbha (supra)?

24. Without prejudice to the aforesaid, it has also been contended that

the settlement proposals given by the Appellant are more viable than

that of the successful Resolution Applicant and accordingly, the CIRP

ought to be kept in abeyance and such settlement proposal be

favourably considered by the CoC.

A. Bar under Section 10A, IBC

25. Firstly, we take up the issue with regard to admission of the Section

7 application. In our considered view, the plea of bar under Section

10A, IBC is a non-starter. In the backdrop of outbreak of COVID-19

Page 13 of 27

pandemic, as an ameliorative measure, Section 10A was incorporated

in the IBC. The provision barred initiation of CIRP against a corporate

debtor in the event the default arose on or after 25.03.2020, for a

period of 6 months or such period not exceeding one year as may be

notified. It may be noted that by notification the government extended

the embargo till 24.03.2021.

25 Explanation to the Section, however,

clarified that the bar will not apply to any default committed before

25.03.2020.

26. In the Section 7 application, 2

nd Respondent’s case is that the

Corporate Debtor had defaulted under the common loan agreement

dated 19.06.2013 on 31.03.2018, much prior to the commencement

of the Section 10A bar. Controverting this stance, Appellant would

argue that the common loan agreement had been subsequently

restructured vide the 1

st restructuring proposal dated 21.02.2020,

whereby the first instalment became payable on 31.12.2020,

attracting the prohibition under Section 10A. This argument is wholly

misconceived. Even if the Appellant’s case is assumed that the 1

st

restructuring plan had been accepted, the same was subsumed in

the 2

nd restructuring plan dated 29.09.2020 whereby the first

instalment fell due on 31.03.2021, beyond the Section 10A period

which operated from 25.03.2020 to 24.03.2021.

25 Notification S.O. 4638(E) dated December 22, 2020, Ministry of Corporate Affairs.

Page 14 of 27

27. That apart, we are in wholesome agreement with the NCLAT’s finding

that the restructuring proposals had not fructified into valid

agreements novating the original contract. Both the restructuring

proposals were underpinned on pre-implementation conditions inter

alia,

a. obtaining a favourable tariff order from WBERC by 28.02.2021;

b. creating an initial DSRA;

c. demonstrating Corporate Debtor’s power plant successfully

running at installed capacity continuously for 72 hours;

d. making available a priority debt of Rs. 83 crore and working

capital of Rs.125 crore.

These pre-conditions had not been complied with and even the

subsequent tariff order dated 31.05.2021 did not provide adequate

leverage to persuade the lenders to accept the restructuring proposals

in their meeting convened on 11.11.2021 pursuant to High Court’s

direction vide order dated 07.10.2021. In such view of the matter, the

date of default would relate to 31.03.2018 as per the Section 7

application, and the proceeding cannot be held to be barred in light

of the Explanation to Section 10A, IBC.

Page 15 of 27

B. Validity of CIRP Admission

28. The other aspect on which the Appellant has heavily relied is the

acceptance of various sums of money paid by the Corporate Debtor

purportedly under the 1

st and 2

nd restructuring proposals, which

according to them amounts to deemed approval of such proposal. As

discussed earlier, such argument flies in the face of the fact that the

2

nd Respondent had resolutely maintained and rightly so, that the

restructuring proposals were underpinned on pre -implementation

conditions which the Corporate Debtor had failed to fulfil. Under such

circumstances, receipt of various sums of money would not amount

to acceptance of the restructuring proposals, thereby novating the

earlier loan agreement. Neither would such part payments constitute

full satisfaction of the existing debt so as to render the Section 7

application inadmissible.

29. It has also been vociferously contended that the Corporate Debtor is

an ongoing concern and does not lack the ability to repay the debt. It

has a subsisting PPA for 25 years with WBSEDCL, and has raised

bills of Rs. 906 crore from 01.11.2024 to 31.03.2025. It also has a

continuous fuel supply arrangement with Mahanadi Coalfields Ltd.

under the SHAKTI scheme and had earned EBIDTA of Rs. 20 crore

per month during the CIRP. These facts though attractive at first

Page 16 of 27

blush, do not yield either legal or factual justification to rebut the

admission of the Section 7 application.

30. On the legal score, one must bear in mind the scope and purpose for

which IBC was promulgated. The main objective of its enactment was

to create a complete code for easy, prompt and seamless resolution

of insolvency process and thereby ensure that the net worth of the

corporate debtor is not dissipated and the entity is salvaged from

corporate death through a viable resolution plan accepted by its CoC.

The Code prescribes whenever a corporate debtor defaults on a debt

that is due and payable, an insolvency process may be initiated.

Section 3(12) defines “default” as non-payment of a debt which has

become due and payable, and includes default in respect of a part or

instalment thereof. Such insolvency process may be initiated either

by the corporate debtor itself, or by its creditors who are classified as

financial creditor or operational creditor. “Financial creditor” is

defined as any person to whom a financial debt is owed and includes

a person to whom such debt has been legally assigned.

26 A “financial

debt” means a debt along with interest if any, which is disbursed

against the consideration for time value of money and includes money

borrowed against payment of interest.

27 “Operational creditor” is

defined as a person to whom an operational debt is owed and includes

26 Section 5(7), IBC.

27 Section 5(8), IBC.

Page 17 of 27

any person to whom such debt has been legally assigned.

28

“Operational debt” is a claim in respect of the provision of goods or

services including employment or a debt in respect of payment of

dues arising under any law for the time being in force and payable to

the Central or State government, or any local authority.

29

31. In Swiss Ribbons (P) Ltd. v. Union of India,

30 such classification of

creditors as financial creditors and operational creditors has been

held to be constitutionally valid. The Bench underscored the essential

differences between a financial creditor and operational creditor and

held that financial creditors were mostly secured creditors like banks

and financial institutions who extended finance to enable a corporate

debtor to set up and/or operate its business. Such credit is extended

to a corporate debtor under well-defined loan agreements having

specified repayment schedules and reserving rights to recall the loan

in case of default or restructure the same enabling a corporate debtor

to tide over unforeseen financial stress. On the contrary, operational

creditors are mostly unsecured creditors and thei r claims are

relatable to supply of goods and services in the operation of the

business. Ordinarily, operational debts are not based on admitted

documents and the possibility of genuine disputes with regard to

such debts is much higher compared to financial debts.

28 Section 5(20), IBC.

29 Section 5(21), IBC.

30 (2019) 4 SCC 17, Para 50-51.

Page 18 of 27

32. In light of such classification, the Code makes a distinction in the

manner in which an insolvency process may be initiated by a financial

creditor under Section 7, IBC in contradistinction to an operational

creditor under Section 8 and 9, IBC. Unlike an operational creditor,

a financial creditor may trigger an insolvency process under Section

7 in respect of default of any financial debt, whether owed to itself or

to any other financial creditor. While the financial creditor may

directly file an application under Section 7 setting out the particulars

of the financial debt and evidence of default,

31 the operational

creditor, on the occurrence of a default, is to first deliver a demand

notice of the unpaid debt to a corporate debtor and the latter may

within 10 days of receipt of such demand notice bring to the notice of

the operational creditor the existence of a dispute or record the

pendency of a pre-existing suit or arbitration proceeding in respect of

such debt. Once a corporate debtor demonstrates a dispute regarding

the existence of the debt, the insolvency process stands aborted vis-

à-vis the operational creditor. But when the financial creditor initiates

the insolvency process for the purposes of admission , the

Adjudicating Authority is only to ascertain the existence of a default

31 Rule 4, Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules,

2016, read with Section 7(2), IBC prescribes the manner an application under Section

7, IBC, must be made. A financial creditor must make an application as in Form 1,

which consists five parts. Part I, II and III requires the particulars of the applicant, the

corporate debtor and the proposed resolution applicant respectively. Part IV requires

the particulars of the financial debt. Part V requires documents, records and evidence

of default.

Page 19 of 27

from the records of the information utility or the evidence furnished

by the financial creditor within fourteen days from the receipt of such

application. At this stage, neither is a corporate debtor entitled nor is

the Adjudicating Authority required to examine any dispute regarding

the existence of such debt. This significantly reduces the scope of

enquiry at the stage of a time-bound admission of an insolvency

process by a financial creditor which has been succinctly summed up

in Innoventive (supra):-

“30…… in the case of a corporate debtor who commits

a default of a financial debt, the adjudicating

authority has merely to see the records of the

information utility or other evidence produced by the

financial creditor to satisfy itself that a default has

occurred. It is of no matter that the debt is disputed so

long as the debt is “due” i.e. payable unless

interdicted by some law or has not yet become due in

the sense that it is payable at some future date. It is

only when this is proved to the satisfaction of the

adjudicating authority that the adjudicating authority

may reject an application and not otherwise.”

33. Reiterating the ratio in Innoventive (supra), this Court in ES

Krishnamurthy v. Bharath Hi-Tech Builders (P) Ltd.

32 held as follows:

“34. The adjudicating authority has clearly acted

outside the terms of its jurisdiction under Section 7(5)

32 (2022) 3 SCC 161.

Page 20 of 27

IBC. The adjudicating authority is empowered only to

verify whether a default has occurred or if a default

has not occurred. Based upon its decision, the

adjudicating authority must then either admit or reject

an application, respectively. These are the only two

courses of action which are open to the adjudicating

authority in accordance with Section 7(5). The

adjudicating authority cannot compel a party to the

proceedings before it to settle a dispute.”

34. In a similar vein, the Adjudicating Authority is not required to go into

the inability of a corporate debtor to pay its debt. This is a clear

departure from the scheme of winding up envisaged under Section

433(e) of the erstwhile Companies Act, 1956 which required the

Adjudicating Authority to come to a finding with regard to the inability

of the company to pay the debt and thereby arrive at a requisite

satisfaction whether it is just and equitable to wind up the company.

The Code restricts the scope of enquiry for admission of an insolvency

process by a financial creditor merely to the existence of default of a

debt due and payable and nothing more. The legislative intent behind

such prompt and summary intervention is “to ensure revival and

continuation of the corporate debtor by protecting the corporate debtor

from its own management and from a corporate death by liquidation.”

33

33 Swiss Ribbons (supra), Para 28.

Page 21 of 27

35. The Appellant has heavily relied on Vidarbha (supra) to argue that the

Adjudicating Authority has ample discretion to apply its mind to

relevant factors including the feasibility of initiation of insolvency

process notwithstanding the existence of default on a debt due and

payable by the Corporate Debtor. In Vidarbha (supra), this Court

observed:-

“61. In our view, the Appellate Authority (NCLAT)

erred in holding that the adjudicating authority (NCLT)

was only required to see whether there had been a

debt and the corporate debtor had defaulted in

making repayment of the debt, and that these two

aspects, if satisfied, would trigger the CIRP. The

existence of a financial debt and default in payment

thereof only gave the financial creditor the right to

apply for initiation of CIRP. The adjudicating authority

(NCLT) was required to apply its mind to relevant

factors including the feasibility of initiation of CIRP,

against an electricity generating company operated

under statutory control, the impact of MERC's appeal,

pending in this Court, order of Aptel referred to above

and the overall financial health and viability of the

corporate debtor under its existing management.

……………………………………………………………… …

90. We are clearly of the view that the adjudicating

authority (NCLT) as also the Appellate Tribunal

(NCLAT) fell in error in holding that once it was found

that a debt existed and a corporate debtor was in

default in payment of the debt there would be no

Page 22 of 27

option to the adjudicating authority (NCLT) but to

admit the petition under Section 7 IBC.”

36. However, in review, this Court clarified that observations made in

Paragraph 90 are restricted to the facts of Vidarbha (supra):-

“6. The elucidation in para 90 and other paragraphs

[of the judgment under review] were made in the

context of the case at hand. It is well settled that

judgments and observations in judgments are not to

be read as provisions of statute. Judicial utterances

and/or pronouncements are in the setting of the facts

of a particular case.”

34

37. Finally, the apparent dichotomy between Innoventive (supra) and

Vidarbha (supra) was set at rest in M. Suresh Kumar Reddy (supra),

wherein this Court observed:-

“14. Thus, it was clarified by the order in review that

the decision in Vidarbha Industries was in the setting

of facts of the case before this Court. Hence, the

decision in Vidarbha Industries cannot be read and

understood as taking a view which is contrary to the

view taken in Innoventive Industries and E.S.

Krishnamurthy. The view taken in Innoventive

Industries still holds good.” (emphasis supplied)

34 Axis Bank Ltd. v. Vidarbha Industries Power Ltd. (2023) 7 SCC 321.

Page 23 of 27

38. In light of the ratio in M. Suresh Kumar Reddy (supra) there is no cavil

that the ratio in Innoventive (supra) lays down the correct proposition

of law and the observations in Vidarbha (supra) were made in the

facts of the case and do not operate as binding precedent.

39. Even otherwise on facts, Vidarbha (supra) does not come to the aid

of the Appellant. In Vidarbha (supra), this Court had taken note of an

award passed by APTEL

35 in favour of the corporate debtor which far

exceeded the claim of the financial creditor, and held in the setting of

such facts, initiation of CIRP was unwarranted. In the present case,

Appellant’s contention regarding Corporate Debtor’s viability is highly

dubious. Though the Corporate Debtor strenuously demonstrates its

commercial viability, the NCLAT has noted that the extent of

outstanding liability as on 02.01.2024 was Rs. 3103.31 crore, which

far exceeds the bills raised on WBSEDCL to the tune of Rs 906 crore

and EBITDA of Rs. 20 crore per month during the CIRP.

40. For these reasons, we are of the opinion the admission of the Section

7 application was lawful and does not call for interference.

C. Settlement Proposals

41. Finally, the Appellant in a last-ditch effort, has prayed that the

settlement proposal offered by them is more viable than that of the

35 Appellate Tribunal for Electricity.

Page 24 of 27

successful Resolution Applicant, and on such score the CIRP may be

stayed as per Section 12A. During the pendency of the appeal, the

CIRP had continued and by order dated 03.05.2024, this Court gave

liberty to the Appellant to submit settlement proposal to the CoC.

Appellant made three settlement proposals, of Rs. 1,101.56 crore, Rs.

1,450 crore, and Rs. 1,601.29 crore, all of which were rejected by

CoC. Such rejection had been prompted due to repeated failure on

part of the Corporate Debtor to implement earlier restructuring plans

and the viability of the Appellant’s proposal in light of letter written

by SEFL alleging a loan liability payable by the Appellant.

42. On 29.10.2024, while rejecting Appellant’s 3

rd settlement proposal,

the CoC approved the resolution plan of DVC. Thereafter, Appellant’s

4

th and 5

th settlement proposals worth Rs. 1,606.86 crore and Rs.

1,671.86 crore respectively were also rejected by the CoC. Appellant

argues its 5

th settlement plan is offering to pay Rs. 1,671.86 crore and

is more viable than the accepted resolution plan submitted by DVC.

It is trite law that the commercial wisdom of the CoC to accept one

resolution plan over another cannot be second -guessed by the

Court.

36

36 Committee of Creditors of Essar Steel India Ltd v. Satish Kumar Gupta and Others,

(2020) 8 SCC 531, Para 62-64; Ebix Singapore (P) Ltd. v. Educomp Solutions Ltd. (CoC),

(2022) 2 SCC 401, Para 157-158.

Page 25 of 27

43. Prior to the introduction of Section 12A and Regulation 30A,

37 there

was no express provision in the IBC to withdraw the insolvency

process once the CIRP was admitted. In such situations, this Court

invoked Article 142 to do complete justice and arrive at just and

equitable outcome by withdrawing CIRP.

38 Taking note of such

lacuna, the legislature introduced Section 12A in the Code providing

the statutory framework for withdrawal and settlement of claims post

constitution of CoC when 90% of the voting share in the CoC approves

such plan. Similarly, Regulation 30A was amended to provide for a

detailed procedure for withdrawal/ settlement of claims after

admission but prior to appointment of CoC. In light of such statutory

architecture in place, this Court in GLAS Trust Co. LLC v. BYJU

Raveendran,

39 held reference to inherent powers under Rule 11 ,

NCLT/NCLAT Rules,

40 or under Article 142 to direct post-admission

withdrawal/settlement of claims no longer arises. However, we

hasten to add that our observation may not be construed as a

complete bar on the plenary powers under Article 142 to pass

directions during CIRP in appropriate cases to do complete justice.

37 IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.

38 Uttara Foods & Feeds (P) Ltd. v. Mona Pharmachem, (2018) 15 SCC 587; Lokhandwala

Kataria Construction (P) Ltd. v. Nisus Finance and Investment Managers LLP, (2018) 15

SCC 589.

39 (2025) 3 SCC 625, Para 64.

40

National Company Law Tribunal Rules, 2016, and National Company Law Appellate

Tribunal Rules, 2016.

Page 26 of 27

44. Notwithstanding the above stated statutory scheme and merely as a

concessionary measure, this Court stalled the CIRP vide order dated

12.09.2025 subject to the Appellant depositing Rs. 25 crore and

furnishing a bank guarantee of Rs. 100 crore. At this stage, DVC

intervened and vehemently opposed delay in final approval of its

resolution plan. Having considered these concerns of the successful

Resolution Applicant, we are in agreement with the Respondents that

any further direction to stall the CIRP on the plea of further

settlement proposals at the behest of the Appellant would be

prejudicial to the interest of a swift and timely resolution of insolvency

process.

CONCLUSION

45. In light of the aforesaid discussion, the appeal is dismissed and the

stay on CIRP vide order dated 12.09.2025 is vacated.

IA NO. 260460/2025

46. SEFL, a secured creditor of the Appellant, has prayed for release of

deposits amounting to Rs.125 crore made by the Appellant as a

condition of the stay granted by this Court. SEFL contends that an

order restraining the alienation of shares of Corporate Debtor held by

Appellant was passed by the High Court at Calcutta in an application

Page 27 of 27

under Section 9, Arbitration & Conciliation Act, 1996.

41 We are

unwilling to accede to such plea as no award , final or interim,

crystallising SEFL’s claim against the Appellant has been placed on

record and the aforesaid deposit was made as a condition to stay the

CIRP of the Corporate Debtor and not to secure any claim against the

Appellant. Given these circumstances, SEFL’s application stands

rejected. Registry is directed to refund the amount of Rs.125 crore

kept as fixed deposit along with interest accrued thereon to the

Appellant.

47. Pending application(s), if any, also shall stand disposed of.

………………………………………., CJI

(SURYA KANT)

………………………………………, J

(JOYMALYA BAGCHI )

………………………………………, J

(VIPUL M. PANCHOLI)

NEW DELHI,

FEBRUARY 18, 2026.

41 Arbitration Petition (Commercial) No. 857/2024, order dated 16.12.2024.