2026 INSC 206 1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS.11746-11747 OF 2024

TORRENT POWER LTD. …APPELLANT

VERSUS

ASHISH ARJUNKUMAR RATHI

& OTHERS …RESPONDENTS

WITH

CIVIL APPEAL NOS.11689 -11690 OF 2024

CIVIL APPEAL NOS.12994 -12995 OF 2024

J U D G M E N T

NAGARATHNA, J.

Preface:

The Insolvency and Bankruptcy Code, 2016 (for short, “IBC”)

marks a fundamental shift in India’s insolvency regime: from a

court-centric model to a creditor-driven process. At its core lies the

doctrine of commercial wisdom: a conscious legislative choice to

vest decisive authority in the Committee of Creditors (for short,

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“CoC”), comprising financial creditors who bear the economic

consequences of failure.

1.1 The IBC recognises that decisions on viability, valuation,

and acceptable haircuts are inherently commercial, not judicial.

Courts, therefore, do not substitute their assessment for that of the

CoC. The adjudicating authority performs a supervisory role,

ensuring statutory compliance and procedural fairness but

refrains from second-guessing economic bodies, in this case, the

CoC.

1.2 The doctrine of commercial wisdom thus embodies both

institutional discipline and legislative intent: insolvency resolution

must be efficient, market-responsive and guided by those best

placed to evaluate commercial risk.

1.3 With this preface, we now proceed to examine the facts and

issues arising in the present civil appeals.

Introduction:

2. The unsuccessful resolution applicants being aggrieved by

the dismissal of their appeals by the National Company Law

Appellate Tribunal, Principal Bench, New Delhi ( for short,

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“NCLAT”), are before this Court by filing the present civil appeals

under Section 62 of the IBC.

2.1 By the impugned order dated 01.10.2024 in Company Appeal

(AT) (Ins) Nos.1621-1622 of 2024, the NCLAT has affirmed the

order dated 13.08.2024 in CP (IB) No.893 (MB) of 2021 passed by

the National Company Law Tribunal, Mumbai Bench -IV (for short,

“NCLT”) which allowed IA No.2794 of 2023 filed by Mr. Ashish

Arjunkumar Rathi, Resolution Professional (for short, “RP”) of SKS

Power Generation (Chhattisgarh) Limited (“Corporate Debtor”) for

approval of the Resolution Plan submitted by Sarda Energy and

Minerals Limited (for sake of convenience, “SEML”). By the same

order, the applications filed by the appellants herein – Torrent

Power Limited (for short, “Torrent”) being IA No.3399 of 2023,

Vantage Point Asset Management Pte. Ltd. (for short, “Vantage”)

being IA No.3336 of 2023, and Jindal Power Limited (for short,

“Jindal”) being Intervention Petition No.40 of 2024 also came to be

rejected by the NCLT.

2.2 By way of this common order, we are disposing of Civil Appeal

Nos.11746-47 of 2024, 11689-90 of 2024, and 12994-95 of 2024

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preferred by the appellants - Torrent, Vantage, and Jindal

respectively.

Brief Facts:

3. SKS Power Generation (Chhattisgarh) Ltd. is the Corporate

Debtor against whom an application was filed by Bank of Baroda

under Section 7 of the IBC seeking initiation of Corporate

Insolvency Resolution Process (for short, “CIRP”). The same was

admitted by order dated 29.04.2022 passed by the NCLT in

Company Petition (IB) No. 893 of 2021. Respondent No.1 was

appointed as the Interim Resolution Professional (for short, “IRP”)

and he came to be confirmed as the RP by the CoC and

subsequently by the NCLT.

3.1 On 17.07.2022, the RP issued Form-G inviting Expressions

of Interest (for short, “EoIs”) from prospective resolution applicants.

On receipt of the EoIs, the RP issued a Request for Resolution Plan

(for short, “RFRP”), Information Memorandum, and provided

access to the Virtual Data Room of the Corporate Debtor to all

prospective resolution applicants on 12.08.2022. After granting

several extensions, the final date for submission of Resolution

Plans was decided as 30.12.2022. Pursuant thereto, SEML and six

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other applicants including the appellants herein submitted their

Resolution Plans and negotiations were held from January 2023 to

February 2023.

3.2 As its 26

th Meeting held on 12.04.2023 and 13.04.2023, the

CoC decided to hold an inter-se bidding process amongst the

applicants on 19.04.2023. A Process Note dated 13.04.2023 (for

short, “Process Note”) governing the said bidding process was also

issued as per which all the resolution applicants were requested to

submit their revised Resolution Plans by 28.04.2023.

3.3 After its 29

th meeting on 06.05.2023, the CoC directed the

RP to seek clarifications from the resolution applicants on their

respective Resolution Plans, without any change in commercial

terms as set at the end of the negotiation process on 19.04.2023.

By an email dated 08.05.2023, the resolution applicants were

called upon to submit clarification in the form of an addendum to

their respective Resolution Plans. This was duly submitted by all

the resolution applicants.

3.4 On 16.05.2023, the CoC in its 31

st Meeting put to vote the

seven Resolution Plans and e-voting was conducted from

28.05.2023 to 08.06.2023. The result of the voting was that the

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Resolution Plan of SEML read together with the addendum dated

10.05.2023 was approved with a 100% vote share. Consequently,

the RP issued a Letter of Intent (for short, “LoI”) to SEML, which

was then called upon to submit a Performance Bank Guarantee

(for short, “PBG”) of Rs.150 crores. SEML unconditionally accepted

the LoI and submitted a PBG of Rs.150 crores.

3.5 On 17.06.2023, the RP filed IA No.2794 of 2023 before the

NCLT seeking approval of the Resolution Plan of SEML as approved

by the CoC. Parallelly, after informing all the other resolution

applicants about the result of the voting, the RP refunded the

Earnest Money Deposits to the other resolution applicants.

3.6 Meanwhile, IA No.2794 of 2023 was heard and reserved for

orders by the NCLT on 10.07.2023. However, on 01.08.2023 and

03.08.2023, interlocutory applications came to be filed by the

appellants - Vantage and Torrent bearing Nos.3336 of 2023 and

3399 of 2023 respectively seeking directions for fresh consideration

of their plans. The NCLT by its common order dated 06.10.2023

partly allowed the application filed by Torrent, dismissed the

application filed by Vantage and remitted the Resolution Plan

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pending approval in IA No.2794 of 2023 to the CoC for its

reconsideration.

3.7 Consequently, the CoC held its 34

th Meeting on 19.10.2023

in which it again deliberated on all the Resolution Plans and

reiterated its earlier decision in favour of SEML. In the meantime,

the order dated 06.10.2023 passed by the NCLT came to be

appealed by SEML (in CA Nos.1395-07 of 2023) and Vantage (in

CA No.1445 of 2023), while an intervention application (being

Intervention Petition No.40 of 2024) was filed by Jindal before the

NCLAT.

3.8 By a common order dated 10.05.2024, the NCLAT set aside

the order dated 06.10.2023 passed by the NCLT on the ground that

no opportunity was provided to the RP or to the CoC to file a reply

in respect of IA Nos.3336 and 3399 of 2023. Accordingly, the plan

approval application, i.e., IA No. 2794 of 2023 and the two other

applications, i.e. IA No.3336 of 2023 and IA No. 3399 of 2023 were

revived before the NCLT for fresh adjudication. Intervention

Petition No.40 of 2024 filed by Jindal was rejected on the ground

that it did not raise objections before the NCLT.

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3.9 The NCLT by its order dated 13.08.2024 allowed the

application filed by the RP for approval of the Resolution Plan filed

by SEML and rejected IA No.3336 of 2023 and IA No.3399 of 2023.

Hence, the unsuccessful resolution applicants filed appeals before

the NCLAT.

3.10 However, the NCLAT by the impugned order dated

01.10.2024 dismissed the appeals preferred by the unsuccessful

resolution applicants and confirmed the order dated 13.08.2024

passed by the NCLT, holding that the approval of a Resolution Plan

by the CoC on the basis of its commercial wisdom cannot be

interfered with.

3.11 The case of the appellants has remained the same at every

round of litigation including in the present appeals . They

contended that SEML had modified its Resolution Plan after the

negotiation process had concluded and the commercial offers by all

resolution applicants stood frozen. This was firstly, by allegedly

enlarging its commitment towards Bank Guarantees (for short,

“BGs”) of the Corporate Debtor from Rs.103.39 crores to Rs.180.05

crores, and secondly, by purportedly converting a deferred

payment offer of Rs.240 crores into an upfront payment offer.

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According to the appellants, these changes were introduced by

SEML under the guise of “clarifications” through post -bid

communications between the RP/CoC and SEML, in breach of the

Process Note governing the negotiation process, thus resulting in

discrimination and material irregularity in the resolution process

warranting interference by this Court under Section 63 of the Act.

4. Before we consider the arguments of the appellants, the NCLT

and NCLAT orders may be summarised as under:

NCLT Order:

4.1 After SEML’s Resolution Plan was declared accepted by the

CoC in its 31st meeting dated 16.05.2023, the RP filed an

application being IA No.2794 of 2023 before the NCLT under

Section 30(6) of the IBC, seeking approval of the Resolution Plan in

terms of Section 31(1) thereof.

4.2 Around the same time, on getting to know through

newspaper reports that the Resolution Plan submitted by SEML

was not the highest bid in terms of value, Torrent filed IA No.3399

of 2023 before the NCLT raising specific concerns, inter alia, stating

that “...it is not clear how the Second Respondent (SEML) emerged

as the highest bidder and how the Resolution Plan submitted by the

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Second Respondent (SEML) came to be accepted at all… ”

Accordingly, it prayed for a thorough examination of the process of

selection of SEML as the successful resolution applicant. By its

order dated 06.10.2023, the NCLT partly allowed IA No.3399 of

2023 filed by Torrent and remitted the Resolution Plan of SEML

back to the CoC for reconsideration.

4.3 SEML filed an appeal CA Nos.1395-07 of 2023 before the

NCLAT by assailing the order dated 06.10.2023 on the ground that

it was not given the opportunity to reply by the NCLT before passing

the order. Therefore, by way of its order dated 10.05.2024, the

NCLAT remanded the matter to the NCLT. The NCLT vide order

dated 13.08.2024 rejected IA No.3399 of 2023 filed by Torrent.

Further, it allowed IA No.2794 of 2023 filed by the RP for approval

of SEML’s Resolution Plan as approved and reiterated by the CoC.

4.4 Torrent had contended before the NCLT that the RP and the

CoC selectively permitted SEML to modify its commercial offer after

the conclusion of the negotiation process on 19.04.2023. No other

applicant was entitled to modify its commercial offer after the

conclusion of the negotiation process. However, the RP and the

CoC, under the guise of seeking clarifications by e-mail dated

11

08.05.2024, permitted SEML to modify its commercial offer by - (i)

converting the deferred amount of Rs.240 crores as provided under

its Resolution Plan to an upfront amount; and (ii) increasing the

amount towards infusion of BGs to approximately Rs.180 crores,

when in the Resolution Plan it had only offered to infuse Rs.103.39

crores. Rejecting these contentions raised by Torrent, the NCLT

held that the CoC had deliberated at length upon the feasibility and

viability of the Resolution Plan(s) submitted by all resolution

applicants and the NCLT could not, therefore, undertake any

quantitative analysis apropos the same. It was only after such

examination that the Resolution Plan(s) were put up for voting

during the 31st Meeting of the CoC and the CoC voted in favour of

SEML’s Resolution Plan. Placing reliance on the judgment of this

Court in Committee of Creditors of Essar Steel India Limited

vs. Satish Kumar Gupta, (2020) 8 SCC 531 (“Essar Steel India

Limited”), the NCLT also noted that it cannot interfere on merits

with the commercial decision taken by the CoC and the limited

judicial review available to it is to see that the CoC has taken into

account the fact that the corporate debtor needs to be kept as a

going concern during the insolvency resolution process; that it

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needs to maximise the value of its assets; and that the interests of

all stakeholders including operational creditors have been taken

care of. Once NCLT is satisfied that the CoC has paid attention to

these key features, it must necessarily approve the resolution plan,

other things being equal.

4.5 The NCLT also categorically held that the clarifications

sought by the RP/CoC from SEML did not amount to any

modification in the resolution plan and that no case of

discrimination or perversity in the process was made out since

similar clarifications were sought from all the Resolution

Applicants, including the appellants herein, vide emails dated

08.05.2023. It was further noted that on a conjoint reading of the

terms of Process Note and RFRP, the CoC was empowered to seek

clarifications from one/all resolution applicants and give effect to

its 'commercial wisdom'. That being so, no interference was called

for.

NCLAT Order:

4.6 Aggrieved by the order dated 13.08.2024 passed by the

NCLT, Torrent filed Company Appeal (AT)(Ins) Nos.1621-1622 of

2024 before the NCLAT. By the impugned order dated 01.10.2024,

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the NCLAT dismissed the appeal holding that (i) there was no

modification/deviation by SEML with respect to the treatment of

BGs and the payment of Rs.240 crores as an upfront amount; and

that (ii) the wisdom of the CoC on these aspects could not be

interfered with in any case.

4.7 Dealing first with the contention that SEML’s Resolution

Plan allegedly provided for replacement of BGs to the extent of

Rs.103.39 crores which was only later revised to Rs.180.05 crores,

NCLAT noted that SEML’s Resolution Plan from the inception

provided for replacement of BGs aggregating to Rs.180.05 crores.

While considering the plan, the RP, by email dated 08.05.2023 had

sought a clarification regarding the treatment of the BGs listed at

Item Nos.6 and 7. In response, SEML had clarified on 10.05.2023

that since the BGs at Item Nos.6 and 7 would not continue as per

its proposed Resolution Plan, the corresponding margin money of

Rs.76.71 crores would be returned to the Corporate Debtor on the

transfer date. The NCLAT found that this clarification merely

explained and reaffirmed the existing terms of the Resolution Plan

and did not amount to any modification or enhancement of the

offer. Accordingly, it rejected the contention that the Resolution

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Plan was limited to Rs.103.39 crores, holding that SEML’s

commitment always extended to the full Rs.180.05 crores.

4.8 As regards the second argument, that SEML was allowed to

convert a deferred payment of Rs.240 crores into an upfront

payment under the guise of a clarification, the NCLAT, upon

examining the Resolution Plan noted that it expressly provided for

a deferred payment of Rs.301.64 crores, whose net present value

(for short, “NPV”) was Rs.240 crores. It observed that as per the

Resolution Plan, the CoC had the option to choose the deferred

payment upfront, and that Rs.240 crores was only the discounted

value of Rs.301.64 crores. The NCLAT noted that SEML merely

clarified that should the CoC opt to receive the amount upfront, no

further discounting would apply, since Rs.240 crores itself already

represented a discounted value. The NCLAT held that this

clarification did not alter the financial offer or permit substitution

of deferred payments with upfront payments. Accordingly, it

rejected the contention that SEML had modified its commercial

proposal, holding that the commercial terms of the Resolution Plan

remained unchanged.

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4.9 Lastly, while examining the limited scope of appellate

interference with an approved resolution plan under the IBC, the

NCLAT upheld that an appeal is maintainable only where there is

a material irregularity in the exercise of powers by the RP/CoC and

that such appellate interference does not extend to the merits of

the commercial decision of the CoC. Noting that the CoC and RP

were fully empowered to ask for any clarification from any or all

resolution applicants as per the RFRP and that the RP acted on

instructions of the CoC in issuing email dated 08.05.2023, it

cannot be said that any irregularity was committed by the RP/CoC.

Accordingly, the NCLAT dismissed the appeals filed by the

unsuccessful resolution applicants.

5. We have heard learned senior counsel and learned counsel

for the respective parties and perused the material on record.

Submissions by the Appellants:

Torrent:

5.1 Dr. Abhishek Manu Singhvi, learned senior counsel

appearing for Torrent advanced the following submissions before

us:

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a) During the CIRP, the RP and the CoC had conducted a

negotiation process (for short, “negotiation process”) with the

resolution applicants on 19.04.2023 in terms of Regulation

39(1A) of the Insolvency and Bankruptcy Board of India

(Insolvency Resolution Process for Corporate Persons)

Regulations, 2016 (for short, “CIRP Regulations”).

b) The Process Note dated 13.04.2023 shared with the resolution

applicants which governed the negotiation process

contemplated an inter-se bidding process to be conducted

amongst the resolution applicants where, in each bidding

round, the resolution applicants were required to submit the

key commercial terms of their resolution plans including the

upfront and deferred components of their proposed offers (“Key

Commercial Terms”).

c) As per Step 6(i) of the Annexure to the Process Note, all

resolution applicants were required to submit a draft

resolution plan by 28.04.2023 incorporating only those figures

of their Key Commercial Terms, as was submitted in their

respective Appendices, at the end of the negotiation process on

19.04.2023. As such, at the end of the negotiation process,

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there was no scope - (i) for modification of the Key Commercial

Terms once the negotiation process had been completed, or (ii)

to insert any additional offer(s) (as a potential inducement) in

the resolution plan submitted on 28.04.2023 which were not

already part of the proposal submitted by such resolution

applicant in Appendix I.

d) Despite the above, SEML was selectively permitted to increase

its commercial offer on two separate occasions leading to

discrimination and material irregularity in the process in terms

of Section 61(3)(1) of the IBC.

e) SEML had provided payment of Rs.40 crores as a deferred

payment in Appendix I submitted on 19.04.2023 at the end of

the negotiation process. However, while submitting its

resolution plan on 28.04.2023 after the end of the negotiation

process, SEML for the first time provided the CoC with the

choice of converting a deferred payment of Rs. 240 crores (as

provided in its Appendix I) to an upfront payment (not

contemplated in Appendix I, when the commercial offer stood

frozen).

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f) As per the RFRP, (i) all resolution applicants were required to

replace the existing BGs of the Corporate Debtor amounting to

Rs.180.49 crores approximately backed by 100% existing

margin money, i.e., Rs.180.49 crores [Clause 3.4 (w) of the

RFRP]; (ii) the existing margin money released upon

replacement of the BGs would form part of the cash balances

of the Corporate Debtor and would be passed on to the CoC

[Clause 3.4 (x) (A), (B) of the RFRP); (iii) such existing margin

money passed on to the CoC would not be construed as the

applicant’s contribution into the Corporate Debtor [Clause

1.4.65 of the RFRP]; and would therefore not form part of the

upfront offer of the resolution applicant; and (iv) the fresh

infusion of funds by a resolution applicant towards

replacement margin money would only be counted as the

applicant’s contribution into the Corporate Debtor [Clause

1.4.70 of the RFRP].

g) SEML had initially proposed to infuse only Rs.103.39 crores

towards BGs listed at Item Nos.1 to 5 in its resolution plan. It

did not provide for any treatment of BGs listed at Item Nos.6

and 7 amounting to approximately Rs.76 crores. However, the

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RP/CoC under the garb of a clarification by email dated

08.05.2023, sought SEML’s response to treatment of the BGs

listed at Item Nos.6 and 7. In response, SEML, by way of email

dated 10.05.2023, under the garb of a clarification, for the first

time proposed to infuse Rs.76 crores towards the BGs listed at

Item Nos.6 and 7, thereby taking its contribution towards the

BGs to approximately Rs.180 crores from the original figure of

Rs.103.39 crores.

h) The CoC’s acceptance of SEML’s revised offer post 19.04.2023

constitutes a clear breach of the binding terms of the Process

Note and RFRP, which expressly prohibited any modification

thereafter.

i) Even from a commercial point of view, Torrent’s overall bid was

Rs.2,000 crores (Rs.1810 crores + Rs.190 crores for CIRP

costs), and the entire amount was proposed to be paid by way

of an upfront cash payment with no deferred payments. Thus,

in Torrent’s plan, the lenders would get almost all their dues

(Rs.1810 crores to be recovered against the admitted financial

creditors’ dues of Rs.1876 crores). Despite this, the CoC

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proceeded to approve SEML’s plan, which raises serious

doubts on the bona fides of the CoC and the RP.

j) In any case, while the CoC’s commercial wisdom is generally

accorded primacy, it is well-settled that such commercial

wisdom must be exercised strictly within the four corners of

the IBC, the CIRP Regulations, and the process prescribed in

the RFRP and the Process Note. Thus, notwithstanding that

the commercial wisdom of the CoC is ordinarily non -

justiciable, this immunity cannot extend to decisions that are

patently capricious, arbitrary, and/or irrational. In the present

case, the CoC’s decision is demonstrably dehors the provisions

of the IBC, the Rules, and in manifest breach of the governing

Process Note and the RFRP.

k) For the foregoing reasons, SEML’s revised offer dated

10.05.2023 is non est in law, and the process, suffering from

manifest irregularity, warrants judicial interference.

Vantage:

5.2 Mr. Kapil Sibal, learned senior counsel appearing for

Vantage advanced the following submissions before us:

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a) Vantage’s Resolution Plan offered the highest upfront payment

of Rs.2191.43 crores with no deferred payment proposed ,

making it far superior to other Resolution Plans including

SEML’s Resolution Plan.

b) Vantage being the highest bidder, the CoC could not have

achieved value maximisation of the assets of the Corporate

Debtor by approving SEML’s Resolution Plan.

c) By emails dated 14.06.2023 and 16.06.2023, Vantage revised

its Resolution Plan by further increasing its bids, which would

have led to further value maximisation of the Corporate

Debtor.

d) The purported exercise of commercial wisdom by the CoC is

materially incorrect, arbitrary, and unreasonable.

e) Funds and asset managers across the world and in India

regularly invest in construction projects and assets as financial

investors in order to earn returns, and in turn appoint

operating personnel and management teams which are well -

equipped to manage and operate the asset. The eligibility

criteria as set out under the EoI for the Corporate Debtor

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clearly and categorically stated that resolution applicants can

be strategic investors and/or financial investors which was

duly satisfied by Vantage. Therefore, any adverse inference

against Vantage because it is a fund manager rather than a

power-sector operator, is commercially unsound and contrary

to the IBC, which expressly permits and encourages

participation of such sophisticated financial investors in CIRP.

With the view to demonstrate the rival merits of Vantage’s

proposed plan over SEML’s Resolution Plan, Mr. Sibal drew our

attention to the relevant figures in Vantage’s proposed Resolution

Plan in the tables being part of the compilations.

Jindal:

5.3 The learned counsel appearing for Jindal advanced the

following submissions before us:

a) That upon the conclusion of the bidding process on

19.04.2023, SEML’s offer amounted to Rs.1995 crores whereas

Jindal’s offer on the same date stood at Rs.2003 crores and in

the event, the 10% equity upside offered by Jindal is added,

the said amount would have become Rs.2130.10 crores.

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b) The objective of the IBC being value maximisation, the CoC’s

decision to approve SEML’s plan is contrary to the IBC and the

CoC cannot hide under the guise of “commercial wisdom” to

escape judicial scrutiny of its decisions.

Submissions by the Respondents :

RP:

6. The learned senior counsel appearing for the RP advanced

the following submissions before us:

a) In its 29

th meeting dated 06.05.2023, the CoC directed the RP

to seek clarifications from the resolution applicants. Acting on

specific instructions of the CoC, the RP by email dated

08.05.2023 sought clarifications from the appellants - Torrent,

Vantage, Jindal as well as the respondent - SEML on their

respective Resolution Plans. Clarifications having been

solicited from all applicants, no case of discrimination can be

made out.

b) SEML’s Resolution Plan provided that Rs.240 crores would be

paid by SEML to the CoC and two options were provided by

SEML to the CoC to avail the said money. The first of this was

that Rs.240 crores be availed by the CoC in a deferred manner

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through the issuance of non-convertible debentures (for short,

“NCDs”) which shall bear coupon interest, meaning that

interest on Rs.240 crores shall be paid from the date of

issuance of NCDs till their redemption. The second option was

that the CoC could opt to take the amount as upfront cash, in

which case only Rs.240 crores would be paid to the CoC.

c) SEML was, inter alia, called upon to confirm if in case of the

second option, the amount of Rs.240 crores will be paid fully

and not be discounted to a lower value. This was only to obviate

any misconception about the offer made by SEML which could

have arisen on account of possible interpretation of the phrase

“discounted amount of Rs.240 crores” as occurring in SEML’s

Resolution Plan.

d) SEML by email dated 10.05.2023 clarified that in case the CoC

opts to avail the second option, Rs.240 crores shall be paid to

the CoC without any discount. As such, no modification of the

Resolution Plan could be said to have occurred.

e) Additionally, as per the Process Note, the evaluation of the

resolution plans was to be carried out on the basis of NPV

[Clause 9v(xii)]. There is no change in NPV offered under the

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first and the second option by SEML as it offered an upfront

payment of Rs.1,553 crores and a deferred payment of Rs.240

crores, payable over three years with a 10% coupon. As a result

of the interest component, SEML’s deferred payments

aggregated to Rs.301.64 crores, payable in instalments at the

end of the second and third years. When discounted as per the

prescribed discount rate, the present value of this aggregate

amount equals Rs.240 crores. Therefore, the clarification did

not lead to enhancement of the commercial offer.

f) As for the contention that SEML had enhanced its offer for

replacement of BGs from Rs.103.39 crores to Rs.180 crores, it

was submitted that SEML’s response did not enhance the offer.

Clause 6.3.14 of SEML's Resolution Plan expressly provided

that margin money aggregating to Rs.180 crores would be

returned to the CoC and utilised for payment to secured

financial creditors. Separately, the Resolution Plan recorded

that SEML would infuse Rs.103.39 crores as fresh funds

towards margin money for BGs listed at Serial Nos.1 to 5.

However, the manner in which the balance margin money of

Rs.76.66 crores, corresponding to BGs at Serial Nos.6 and 7,

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would be released was not explicitly set out in Clauses 6.3.14

and 6.3.15 of the Resolution Plan.

g) In response, SEML clarified that since the BGs at Serial Nos. 6

and 7 were proposed to be extinguished under its Resolution

Plan, the corresponding margin money of Rs.76.66 crores

would also be released and returned to the CoC for payment to

secured financial creditors. The clarification thus confirmed

that SEML had, at all times, provided for payment of the entire

Rs.180 crores to secured financial creditors, consistent with

the Resolution Plan.

SEML:

6.1 The learned counsel appearing for SEML advanced the

following submissions before us:

a) The appellants are unsuccessful resolution applicants, whose

resolution plans were unanimously rejected by 100% of the

CoC. As such, they have no vested right to claim that their

plans should have been accepted by the CoC.

b) Further, the appellants voluntarily took back their Earnest

Money Deposit after being informed by the RP of the approval

of SEML's Resolution Plan. This shows that the appellants only

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want to take a chance through litigation, without having any

skin in the game.

c) The present appeals by Torrent must be tested strictly with

reference to Section 61(3) of the IBC, which limits the scope of

challenge to an approved resolution plan before the NCLAT on

the grounds only of - (a) non-compliance with Section 30(2) of

the IBC; or (b) material irregularity in the process by the RP.

d) Admittedly, no grounds for non-compliance with Section 30(2)

of the IBC have been made out or even pleaded in the present

appeal. As regards “material irregularity”, the provision refers

to “material irregularity by the RP”. Hence, it does not cover

matters where the CoC has taken a decision with respect to a

resolution plan in its commercial wisdom, as is the case in the

present matter.

e) In the present matter, the CoC decided to seek clarifications

from all resolution applicants based on the contents of their

respective resolution plans. Further, it was the CoC’s decision

to approve the Resolution Plan of SEML and reject the

resolution plan of all other resolution applicants based on its

assessment of their feasibility and viability thereof. Thus, no

28

material irregularity can be said to have been committed by the

RP.

f) Finally, the CoC has already achieved value maximisation and

has already implemented the Resolution Plan and paid the

amounts to the creditors in terms of the same. In light of the

above, the impugned order ought not to be set aside and the

appeals ought to be outrightly dismissed with heavy costs.

CoC:

6.2 The learned counsel appearing for the CoC advanced the

following submissions before us:

a) SEML had paid the entire payment as required pursuant to its

Resolution Plan on 19.08.2024 itself and its Resolution Plan

stands fully implemented as on date.

b) Further, it has been laid down in a catena of judgements by

this Court that the commercial decision of the CoC to approve

or reject a resolution plan is non-justiciable and that an

unsuccessful resolution applicant has no vested right to have

its resolution plan considered. That being so, the present

appeals are liable to be dismissed in limine.

29

c) Section 62(1) of the IBC provides that any person aggrieved by

an order of the NCLAT may file an appeal to the Supreme Court

on a question of law arising out of such order under the IBC

within forty-five days from the date of receipt of such order.

But the present appeals raise no question of law.

d) The appellate jurisdiction of the NCLAT is extremely

circumscribed under the IBC. One of the grounds set out under

Section 61(3)(ii) of the IBC warranting the NCLAT’s appellate

jurisdiction is if “there has been material irregularity in

exercise of the powers by the RP during the CIRP”. Only a

“material irregularity” by the RP is a ground for appeal. Matters

pertaining to commercial decision-making by the CoC are not

even grounds for appeal before the NCLAT, let alone before the

Supreme Court. In this regard, reliance is placed on the

judgment in Kalparaj Dharamshi v s. Kotak Investment

Advisors Ltd., (2021) 10 SCC 401, wherein it was held that

if the actions of the RP in inviting EOIs after the last date have

the seal of approval of the CoC, then the decision of the CoC

cannot be interfered with.

30

e) The legislature has consciously kept any factual determination

or adjudication on matters pertaining to commercial decision-

making by the CoC outside the scope of Sections 61(3) and 62

of the IBC.

f) In any case, the NCLT and the NCLAT have both given

concurrent findings that there has been no “material

irregularity” in the process. It is trite law that the Supreme

Court would not ordinarily interfere in cases where there are

concurrent findings by the NCLT and the NCLAT vide Essar

Steel India Limited. Therefore, the question of “material

irregularity” cannot be raised afresh now.

g) The RFRP in clause 4.1.8 clearly provided that “Subject to such

final Resolution Plan of the Resolution Applicant being a

Compliant Resolution Plan, the CoC may vote on one or more of

the Resolution Plan to approve and/or reject such Resolution

Plans. It is made abundantly clear that the CoC is under no

obligation to any of the Resolution Applicants or any other

person to approve a Resolution Plan which has scored the

highest as per the Evaluation Criteria and any Resolution Plan

31

shall be approved solely on the basis of the CoC's commercial

wisdom.” Therefore, it was always known to each of the

resolution applicants right from inception that the CoC will

approve a resolution plan based on its own commercial wisdom

and further that the CoC shall not be bound to approve any

resolution plan solely for the reason that it quoted the highest

bid.

Issues:

7. Two broad issues arise for our consideration in these appeals

which are as under:

a) Whether the clarifications furnished by SEML pursuant to

queries raised by the RP in relation to the treatment and

replacement of BGs and the option of upfront payment,

resulted in any enhancement or modification of SEML’s

Resolution Plan?

b) Whether, the Resolution Plan having been approved by the

NCLT and the NCLAT and implemented as on date , any

interference is permissible by this Court at this stage in the

instant case?

32

Analysis and Findings:

7.1 At the outset, it is to be noted that an appeal to this Court

under Section 62 of the IBC is available only on a question of law.

Section 62 is extracted as under for immediate reference:

“62. Appeal to Supreme Court. —(1) Any person

aggrieved by an order of the National Company Law

Appellate Tribunal may file an appeal to the Supreme

Court on a question of law arising out of such order under

this Code within forty-five days from the date of receipt of

such order.

(2) The Supreme Court may, if it is satisfied that a

person was prevented by sufficient cause from filing an

appeal within forty-five days, allow the appeal to be filed

within a further period not exceeding fifteen days.”

7.2 Further, an appeal provided under Section 61 of the IBC

before the NCLAT is available only on the following five grounds:

“61. Appeals and Appellate Authority.

xxx

(3) In appeal against an order approving a resolution plan

under Section 31 may be filed on the following grounds,

namely:—

(i) the approved resolution plan is in contravention of the

provisions of any law for the time being in force;

(ii) there has been material irregularity in exercise of the

powers by the resolution professional during the corporate

insolvency resolution period;

(iii) the debts owed to operational creditors of the corporate

debtor have not been provided for in the resolution plan in

the manner specified by the Board;

33

(iv) the insolvency resolution process costs have not been

provided for repayment in priority to all other debts; or

(v) the resolution plan does not comply with any other

criteria specified by the Board.”

8. A perusal of the material placed on record in the present case

would reveal that the appeal before the NCLAT does not fit into any

of the aforesaid criteria. The only semblance of a ground invoked

by the appellants is that of “material irregularity” in the exercise of

powers by the RP under Section 61(3)(ii) of the IBC. However, in

our view, this ground is also not made out in the present case. It is

an admitted fact that in the present case, the RP has acted strictly

on the instructions of the CoC. During the evaluation of the

Resolution Plans submitted by the resolution applicants, the CoC

identified certain ambiguities and directed the RP to seek

clarifications from all the resolution applicants. Pursuant to the

CoC’s directions, the RP issued email dated 08.05.2023 seeking

clarifications from all the resolution applicants including SEML on

certain specific aspects vis-à-vis each resolution applicant and

plan. The RP did not take any independent or unilateral decision;

he merely communicated the CoC’s queries and placed all

34

responses including that of SEML dated 10.05.2023 before the CoC

for its consideration.

8.1 Where the RP acts on the instructions of the CoC, such

conduct cannot, by any stretch of imagination, be characterised as

a “material irregularity” within the meaning of Section 61(3)(ii). To

hold otherwise would be to conflate the statutorily distinct roles of

the RP and the CoC and to indirectly subject decisions of the CoC

to judicial review, contrary to the scheme of the IBC.

8.2 Having observed thus, since an appeal before the NCLAT

itself was not made out on any of the grounds under Section 61(3),

we find that the appeals before this Court on a conjoint reading of

Sections 61 and 62 are also not tenable since no question of law

pertaining to any of the five grounds specified in Section 61 of the

IBC arises for our consideration.

8.3 In addition, as the respondents have also pointed out, this

is a case arising out of concurrent findings. It is settled law that

when a concurrent view has been taken by two adjudicating

authorities, unless it is found that such a view was in ignorance of

the mandatory statutory provisions or was based on irrelevant

considerations or was ex-facie arbitrary or perverse, an interference

35

by this Court would not be permissible. In the present case, the

findings on all the issues are concurrent. As held by this Court in

Kalyani Transco vs. Bhushan Power & Steel Ltd., 2025 SCC

OnLine SC 2093 (“Kalyani Transco”):

“94. It can thus be seen that this court has taken a view

that when a concurrent view has been taken by two

Adjudicating Authorities provided under the special

statute, unless it is found that such a view was in

ignorance of the mandatory statutory provisions or was

based on extraneous consideration or was ex facie

arbitrary or illegal, an interference would not be

warranted.”

(underlining by us)

9. Although these appeals could be dismissed at the threshold

only on the basis of the concurrent findings of the NCLT and the

NCLAT and non-application of Section 62 of the IBC , we

nonetheless proceed to examine the contentions advanced on their

merits.

9.1 As already noted above, the two main grounds of attack

against the approval of the Resolution Plan pertain to the alleged

modification of the commercial offer by SEML by (i) increasing the

amount towards infusion in the BGs to approximately Rs.180.05

crores, when in the Resolution Plan, SEML had offered to infuse

only Rs.103.39 crores; and (ii) converting the deferred amount of

36

Rs.240 crores to an upfront amount. We will proceed to test both

the arguments.

A. Increase in amount towards infusion in BGs :

10. In order to consider this argument, we need to turn to the

email dated 08.05.2023, which was sent by the RP to SEML. The

entire email is extracted below for immediate reference:

“Dear Resolution Applicant,

This is with reference to the Resolution Plan submitted by

you on April 28, 2023 ("Resolution Plan") in the corporate

insolvency resolution process of SKS Power Generation

(Chhattisgarh) Limited. While the Resolution Plan is being

reviewed and evaluated by the Resolution Professional

("RP") and the Committee of Creditors ("CoC") alongwith

their respective advisors, we request you to kindly provide

necessary clarifications to the points attached in this

email, to enable a comprehensive evaluation of the

Resolution Plan.

Clarifications sought

1. We note that under clause 6.3.14 of the Resolution

Plan, the Resolution Applicant has provided that the

margin money of INR 180.05 crore provided against bank

guarantees will be returned by the relevant issuing bank

to the Corporate Debtor on the Transfer Date and utilised

for payment to the Secured Finance Creditors or in the

manner decided by the CoC. Further, as per clause 6.3.15

of the Resolution Plan, the Resolution Applicant has

undertaken to infuse INR 103.39 crore as part of Initial

Infusion Amount for utilising towards providing 100%

margin money for the Relevant BGs (as defined in the

Resolution Plan). The Margin Money Replacement Amount

(as defined in the Resolution Plan) is proposed to be

utilised for replacement/renewal/securing of the Relevant

37

BGs. It is further clarified in the Resolution Plan that in

the event any Relevant BG is encashed and paid out to the

beneficiary by the relevant issuing bank, then Margin

Money Replacement Amount corresponding to such

encashment shall be utilised for making payment to the

Secured Financial Creditors or to creditors as decided by

the CoC, on the Transfer Date.

In this regard please clarify the following:

(i) Will the Resolution Applicant replace all the BGs that

are secured by the margin money of INR 180.05 crore since

such amount of INR 180.05 Crores is sought to be

returned to the Corporate Debtor on the Transfer Date and

utilised for making payment to the Secured Financial

Creditors or to creditors as decided by the CoC under

clause 6.3.14 of the Resolution Plan?

(ii) In case the Resolution Applicant will not replace all the

BGs as above that are currently secured by margin money

of INR 180.05 crore, then what will be the treatment of the

bank guarantees at Item Nos. 6 and 7 of Annexure 3 which

are currently secured by margin money of INR 76. 66

crore? The treatment of the aforesaid BGs is not clear from

the Resolution Plan. Further, please clarify the treatment

of the underlying margin money, if it is not released by the

relevant issuing banks.

(iii) If the Relevant BGs are invoked prior to the Transfer

Date and the existing margin money securing such

Relevant BGs is utilised to adjust against the invoked

amount, will the Resolution Applicant still pay the

difference between INR 103.39 Crores and such utilised

margin money on the Transfer Date to make payments as

envisaged under the Resolution Plan?

(iv) Please clarify the treatment of the Exclusive Marin

Money (as defined in the RFRP) proposed under the

Resolution Plan which is required to be provided as per

clause 3.4(x)(A) & (C) of the RFRP?

(v) Whether the release of the margin money is being

sought before arranging for infusion of the fresh margin

38

money for the Relevant BGs? Please clarify that the

replacement of the bank guarantees will be undertaken in

a manner which does not leave the issuing bank's

exposure unsecured for any moment prior to, on or after

the Transfer Date for the following categories of BG:

i. BGs of INR 103.39 Crores - defined as Relevant BGs

ii. BGs of INR 76.61 Crores (with specific mention of

exclusive margin)

(vi) There seems to be an error in calculation of Annexure

3 viz aggregate of PGCIL/ SECL/ Rajasthan PPA is INR

103.83 Cr. Please clarify.

2. Are "Litigation Recovery" and "Litigation Benefits"

intended to be used inter-changeably? If not please clarify

the usage in the last sentence of Clause 6 3.4(a).

3. Clause 6 3. 4(b) provides that the Litigation Recovery

received by the Corporate Debtor after the Insolvency

Commencement Date shall not be construed as part of the

Surplus Cash. Further, the Litigation Recovery is proposed

to be paid after the Transfer Date as per Clause 6.3.4(d)

Accordingly, please clarify whether the Litigation Recovery

is also included within Clause 6.5 12.

4. Clause 6.3.5 (j) of the Resolution Plan stipulates that

the treatment in relation to Avoidance Benefits shall come

into effect only when the RA is provided with a copy of the

pleadings filed by the RP in relation to the Avoidance

Transaction Litigations and that RA has reserved the right

(in consultation with the CoC) to retain the Avoidance

Benefits fdr the benefit of the Corporate Debtor (and not

for Secured Financial Creditors) if in its reasonable opinion

the Avoidance Benefits are necessary for operations of the

Corporate Debtor. This is inconsistent with Clause 6.3.

5(a). In this regard, as also informed earlier, the pleadings

in relation to Avoidance Transaction litigation were already

made available in the Data Room to all the resolution

applicant [VDR Ref No. 12_CIRP/Avoidance Application

and 13_Additional Data/ Additional Date_27 April 2023/

39

Avoidance Application]. Accordingly, please clarify the

treatment of Avoidance Benefits.

5. We note that Clause 2.2.7 deals with furnishing of a

report by the Interim Accounting Agency (IAC).

Responsibilities of IAC are yet to be defined. The CoC

cannot vote on the terms/ obligations of the IAC.

Monitoring committee may take up this responsibi lity.

Please clarify that furnishing of the report by IAC is not a

prerequisite to distribution of plan amounts and

determination of CIRP costs.

6. Clause 6.3.2(b) states that Resolution Applicant will pay

a "discounted amount of INR 240 Cr" to the CoC, in case

CoC wishes to obtain the deferred portion of INR 240 Cr

upfront. Please clarify whether Resolution Applicant is

offering a value lower than INR 240 Cr (i.e. INR 240 Cr

discounted to a lower value), if the option to obtain the

value upfront is exercised.

7. We note that Clause 6.4.8 states that Monitoring

Committee (MC) will pay costs incurred during the

monitoring period as and when they fall due during the

monitoring period. Please clarify that this is subject to

Clause 6.2. 7.

8. In Clause 6.4.9, all dues relating to employees are

sought to be extinguished. Gratuity of continuing

employees which may fall due after takeover, but relate to

prior period, cannot be extinguished. Please clarify that

gratuity and other similar obligations that fall after the

Insolvency commencement date shall not be extinguished.

9. We note that Clause 7.3.2 stipulates that the RP shall

inform of expiring licenses to the Resolution Applicant on

transfer date. Please clarify that such responsibility will be

that of the Monitoring Committee, of which the Resolution

Applicant will be a part.

10. In Clause 9.2.6, please clarify that the Monitoring

Committee will be bound to take actions on a reasonable

efforts basis, as provided in Clause 9.2.1.

40

11. Clause 12.3 states that if any court sets aside or

unilaterally modifies the plan resulting into an increased

financial outlay, the amounts paid till then shall be

returned to the Resolution Applicant. Please clarify that, if

the adjudicating authority orders a payment over and

above the plan value and the RA was present and was

heard during the proceedings (i.e. not unilaterally), the

clause cannot operate.

We request you to kindly provide the necessary

clarification to the aforesaid queries by way of an

addendum to the Resolution Plan at the earliest but no

later than 11:59 p.m. IST of the 9th day of May 2023 by

way of an email to irp.skspower@gmail.com, to enable the

CoC and the RP to evaluate the Resolution Plan and

complete the CIRP within the timelines prescribed under

the Insolvency and Bankruptcy Code, 2016 (Code). Please

note that the clarifications must be provided by way of an

addendum to the Resolution Plan submitted by you on

April 28, 2023. The addendum may contain necessary

consequential changes (if any) pursuant to the points

raised on your Resolution Plan.

The aforesaid clarifications are necessary and

important for the complete assessment of the feasibility

and viability as well as commercial acceptability of each of

the resolution plans and to bring about clarity and

uniformity in the assessment to the resolution plans in

order to arrive at a considered decision, in accordance with

the provisions of the Code and the regulations thereunder.

This communication has been issued without

prejudice to the rights of the CoC and the Resolution

Professional to undertake all actions permissible under

law and the RFRP to achieve the objectives of the Code.”

(underlining by us)

10.1 We may now notice the reply to the queries as given by the

SEML by its email dated 10.05.2023:

41

“Response:

In our Resolution Plan, it is proposed that the entire

Margin Money will be utilised for payment to Secured

Financial Creditors. In our Resolution Plan, we had

proposed continuation of certain Bank Guarantees listed

in Annexure 3 (except BGs listed in point 6 and 7) to

ensure going concern status of the Corporate Debtor and

had accordingly provided for replacement of the Margin

Money with respect to such BGs. In respect of BGs listed

in point 6 and 7 of Annexure 3 since the underlying

liabilities of the Corporate Debtor towards the beneficiaries

(for which Remaining BGs have been given) would be

extinguished under the Resolution Plan, such BGs will not

be continued. We clarify that the corresponding Margin

Money (of INR 76.61 crs.) is therefore also sought to be

returned to the Corporate Debtor for further payment to

the Secured Financial Creditors as per the Resolution

Plan.

However, to provide assurance to the issuing banks, we

clarify that all BGs listed in Annexure 3 will be secured by

100% Margin Money at all times. Therefore, pending the

cancellation, expiry, release of BGs listed in point 6 and 7

of Annexure 3, we will be providing replacement Margin

Money to the issuing banks on the Transfer Date.

If any of the BGs listed in point 6 and 7 of Annexure 3 are

invoked prior to the Transfer Date then the equivalent

Margin Money of such invoked BGs shall be paid by the

Resolution Applicant which shall be utilised to make

payment to the Secured Financial C reditors or in the

manner as decided by the CoC, on the Transfer Date.

In case any of the BGs listed in point 6 and 7 of Annexure

3 are live or uninvoked as on the Transfer Date, the

Resolution Applicant shall provide replacement margin

money to the issuing banks on the Transfer Date which

shall be utilised for replacement/ renewal/securing of the

Remaining BGs and the relevant Margin Money shall be

returned by the issuing banks to Corporate Debtor which

Margin Money shall be utilised for the purposes of

42

payment to the Secured Financial Creditors or in the

manner as decided by the CoC, on the Transfer Date.

Notwithstanding anything to contrary, the benefit relating

to the Exclusive Margin Money (as defined in the RFRP)

shall be provided to the State Bank of India in accordance

with the terms of the RFRP.

The aforesaid clarification and rectification of calculation

errors are provided in the Addendum to the Resolution

Plan.”

(underlining by us)

10.2 The relevant clauses of the Resolution Plan dealing with

replacement of BGs, as referenced by the RP and SEML in the

above emails, are 6.3.13 to 6.3.15. These are as under:

“Bank Guarantees:

6.3.13. The Resolution Applicant understands that there

are bank guarantees issued by various banks as listed in

Annexure 3 (such bank guarantees, the "BGs"). All BGS

are secured against 100% Margin Money.

6.3.14. The Margin Money of INR 180.05 Crores provided

against the BGs will be returned by the relevant issuing

bank to the Corporate Debtor on the Transfer Date and

utilized for making payment to the Secured Financial

Creditors or in the manner decided by the CoC . It is

clarified that in the event any BG is returned prior to the

Transfer Date, the Margin Money provided against such

BGs shall be returned by the relevant issuing bank to the

account of the Corporate Debtor prior to the Transfer Date

for purposes of payment to the Secured Financial

Creditors or to creditors as decided by the CoC, on the

Transfer Date.

6.3.15. In order to maintain the going concern status of

the Corporate Debtor and secure the continuity of the BGs,

the Resolution Applicant shall provide 100% margin

43

money to the relevant issuing banks towards the BGs

listed at Item No. 1 - Item No. 5 of Annexure 3 ("Relevant

BGs") on the Transfer Date. For such purpose, the

Resolution Applicant shall infuse INR 103.39 Crores

("Margin Money Replacement Amount") in the Escrow

Account (as a part of Initial Infusion Amount) which shall

be utilised to provide such margins towards the Relevant

BGs. It is clarified that the Margin Money Replacement

Amount shall be utilised for replacement/renewal/

securing of the Relevant BGs. It is further clarified that in

the event any Relevant BG is encashed and paid out to the

beneficiary by the relevant issuing bank, the Margin

Money Replacement Amount corresponding to such

encashment shall be utilised for making payment to the

Secured Financial Creditors or to creditors as decided by

the CoC on the Transfer Date.”

(underlining by us)

10.3 Clause 6.3.13 refers to Annexure 3, which contains the

details of BGs from Serial Nos.1 to 7. Annexure 3 is extracted

below:

“ANNEXURE 3:

BANK GUARANTEES (as on 28 FEBRUARY, 2023)

S.

No.

Name of the Beneficiary Amounts

(in crores)

Remarks

1 Power Grid Corporation

of India Limited

37.50 A claim has been filed

by PGCIL for this

amount which has

been duly admitted by

the RP.

2 South Eastern Coal

fields Limited

36.33 This was provided

under the Coal Supply

Agreement.

3 Ajmer Vidyut Vitran

Nigam Limited

(Rajasthan PPA)

8.14 Issued to Rajasthan

Discom

44

S.

No.

Name of the Beneficiary Amounts

(in crores)

Remarks

4 Jaipur Vidyut Vitran

Nigam Limited

(Rajasthan PPA)

12.08 Issued to Rajasthan

Discom

5 Jodhpur Vidyut Vitran

Nigam Limited

(Rajasthan PPA)

9.78 Issued to Rajasthan

Discom

6 Excise Department 69.77

7 Customs 6.89

TOTAL 180.05

10.4 What emerges from the above can be further analysed

thus: The Resolution Plan of SEML (in clause 6.3.14) itself provided

that “... The Margin Money of Rs.180.05 crores provided against the

BGs will be returned by the relevant issuing bank to the Corporate

Debtor on the Transfer Date and utilized for making payment to the

Secured Financial Creditors or in the manner decided by the CoC.”

Therefore, the Resolution Plan, from its inception, contemplated

that the entire margin money of Rs.180.05 crores lying with the

issuing banks would ultimately flow to the CoC for payment to

secured financial creditors. Clause 6.3.14 leaves no ambiguity on

this aspect - irrespective of whether the BGs were continued or

discontinued, the margin money backing those guarantees was to

45

be returned to the Corporate Debtor on the transfer date and

utilised as directed by the CoC.

10.5 The confusion arose in the mind of the CoC when under its

Resolution Plan, SEML proposed to continue BGs aggregating to

Rs.103.39 crores (Serial Nos.1 to 5) and accordingly undertook to

infuse fresh funds to replace the margin money backing those

guarantees. At the same time, though, it proposed to discontinue

the remaining BGs aggregating to Rs.76.61 crores (Serial Nos.6 and

7), as the liabilities underlying these were proposed to be

extinguished under the Resolution Plan.

10.6 We note that Rs.103.39 crores did not represent the “extent

of SEML’s offer” in relation to BGs. Rather, it represented the

incremental funding requirement arising from SEML’s decision to

continue certain BGs. Continuing a guarantee necessarily requires

substitution of collateral; discontinuing it does not. The Plan

therefore required fresh infusion only for those guarantees which

were to be continued. The remaining guarantees, aggregating to

Rs.76.61 crores, stood on a different footing. SEML proposed

extinguishment of liabilities underlying these guarantees. Once the

liabilities were extinguished, the guarantees would inevitably be

46

cancelled, and the margin money backing them would be released.

That margin money, like the rest, was already earmarked for the

CoC.

10.7 The real issue, therefore, was not whether the CoC would

receive Rs.76.61 crores, but how and when. Since SEML did not

intend to replace BGs amounting to Rs.76.61 crores, the CoC

asked what would happen to the BGs at Serial Nos.6 and 7 and

what would happen to the margin money backing those

guarantees. Accordingly, on 10.05.2023, SEML clarified that the

margin money of Rs.76.61 crores relating to the BGs at Serial Nos.6

and 7 was also to be returned to the CoC and paid to the secured

financial creditors, exactly as provided in the Resolution Plan. At

the same time, SEML clarified that until those BGs were cancelled,

expired, or released, the issuing banks would continue to have live

obligations under the guarantees. To ensure that the issuing banks

were not left unsecured during this period, SEML stated that it

would provide replacement margin money so that all BGs would

remain backed by 100% margin money at all times. What is

relevant is that in any event, upon the release of the BGs, the

underlying margin money, i.e., Rs.76.61 crores was to be passed

47

on to the CoC together with Rs.103.39 crores. All that the

clarification did was address the issuing banks’ interim exposure

pending formal return of these BGs. This did not result in any

increase in payment to the CoC. The payment to the CoC was

Rs.180.49 crores before clarification and remained Rs.180.49

crores even after the clarification.

10.8 Therefore, we do not find any force in the appellants’

contention that SEML had enhanced its offer for replacement of

BGs from Rs.103.39 crores to Rs.180 crores. The contention is

wholly erroneous and is not accepted by us.

B. Increase in Upfront Amount:

11. The second attack against SEML is that by way of the same

clarification dated 10.05.2023, it increased the deferred amount

payable under its Resolution Plan even as other resolution

applicants were not given a similar opportunity to do so.

We may note paragraph 6 of the email dated 08.05.2023 by

which the CoC sought clarifications from SEML extracted above:

“6. Clause 6.3.2.(b) states that Resolution Applicant will

pay a "discounted amount of INR 240 Cr" to the CoC, in

case CoC wishes to obtain the deferred portion of INR 240

Cr upfront. Please clarify whether Resolution Applicant is

offering a value lower than INR 240 Cr (i.e. INR 240 Cr

48

discounted to a lower value), if the option to obtain the

value upfront is exercised.”

We now notice Clause 6.3.2(b) (referred above):

“6.3.2 (b) Secured Financial Creditors shall be issued

NCDs by the Corporate Debtor for an amount equal to

Deferred Amount (INR 240 Crores). The NCDs will be

unsecured and issued in 2 different series of INR 120

Crore, being Series A & B. The NCDs will carry a coupon

(Interest on Deferred Amount) and shall be redeemed as

per the terms set out in Annexure 5. In the event CoC does

not propose to subscribe to the NCDs on the Transfer Date,

the Resolution Applicant shall pay a discounted amount of

INR 240 Crore to the Secured Financial Creditors on the

Transfer Date, in lieu of the Deferred Amount ("Deferred

Amount Compensation"), The CoC shall inform the

Resolution Applicant regarding its decision to subscribe to

the NCDs or opt for discounted payment in lieu of the

Deferred Amount to the Resolution Applicant in the LoI to

be issued to the Resolution Applicant upon approval of its

Resolution Plan. It is clarified that in case the CoC decides

to take the Deferred Amount Compensation, no NCDs shall

be issued and no Interest on the Deferred Amount shall be

payable to the Secured Financial Creditors:”

The reply of SEML with regard to the query is as follows:

“No. The value of INR 240 crores is the discounted value of

deferred payment (which includes principal amount of

NCDs i.e. INR 240 Crore plus interest on such NCDs). If

CoC exercises the option to obtain the value upfront, then

the RA will pay INR 240 Crores upfront i.e. the principal

amount of NCDs.”

11.1 What transpired as extracted above is simple: SEML

proposed to issue NCDs at a face value of Rs.240 crores with a

coupon rate of 10%. However, it also gave the CoC the option to

49

either - (i) take the NCDs, i.e., Rs.240 crores with 10% coupon

(which comes to a total of Rs.301.64 crores over three years); or (ii)

take Rs.240 crores upfront.

11.2 The RP specifically sought SEML’s response in relation to

clause 6.3.2.(b) of its Resolution Plan, “...which stated that

Resolution Applicant will pay a "discounted amount of Rs.240 Cr" to

the CoC, in case CoC wishes to obtain the deferred portion of Rs.240

Cr upfront. Please clarify whether Resolution Applicant is offering a

value lower than Rs.240 Cr (i.e. Rs.240 Cr discounted to a lower

value), if the option to obtain the value upfront is exercised.” Thus,

the question to SEML was, whether, it would provide a further

discount on Rs.240 crores in the event of the CoC choosing the

upfront payment option.

11.3 On 10.05.2023, SEML clarified that Rs.240 crores is in fact

the discounted value of the deferred payment. Quite clearly, SEML

had not converted Rs.240 crores deferred into Rs.240 crores

upfront as argued by the appellants. Instead, it gave the CoC an

option to either take Rs.301.64 crores over time (Rs.240 crores +

10% over three years) or take a discounted amount of Rs.240 crores

upfront (i.e., the present day value/NPV of Rs.301.64 crores). It

50

was the CoC's choice to either take a higher value later or take its

present value upfront. Hence, it is obvious that there was no

change made to SEML’s Resolution Plan through its clarification.

Commercial Wisdom of the CoC Paramount:

12. Having concluded that neither of the issues raised by the

appellants establishes any modification of the Resolution Plan or

any material irregularity in the conduct of the RP, the challenge

stands stripped of its factual foundation. What remains is, in

substance, a challenge to the commercial decision taken by the

CoC. The IBC leaves no scope for judicial intervention even here.

12.1 It has been the consistent view of this Court that the

commercial wisdom of the CoC cannot be interfered with by the

NCLT, the NCLAT or this Court as was held in K. Sashidhar vs.

Indian Overseas Bank, (2019) 12 SCC 150 as under:

“55. Whereas, the discretion of the adjudicating authority

(NCLT) is circumscribed by Section 31 limited to scrutiny

of the resolution plan “as approved” by the requisite

percent of voting share of financial creditors. Even in that

enquiry, the grounds on which the adjudicating authority

can reject the resolution plan is in reference to matters

specified in Section 30(2), when the resolution plan does

not conform to the stated requirements. Reverting to

Section 30(2), the enquiry to be done is in respect of

whether the resolution plan provides : (i) the payment of

insolvency resolution process costs in a specified manner

51

in priority to the repayment of other debts of the corporate

debtor, (ii) the repayment of the debts of operational

creditors in prescribed manner, (iii) the management of the

affairs of the corporate debtor, (iv) the implementation and

supervision of the resolution plan, (v) does not contravene

any of the provisions of the law for the time being in force,

(vi) conforms to such other requirements as may be

specified by the Board. The Board referred to is established

under Section 188 of the I&B Code. The po wers and

functions of the Board have been delineated in Section 196

of the I&B Code. None of the specified functions of the

Board, directly or indirectly, pertain to regulating the

manner in which the financial creditors ought to or ought

not to exercise their commercial wisdom during the voting

on the resolution plan under Section 30(4) of the I&B Code.

The subjective satisfaction of the financial creditors at the

time of voting is bound to be a mixed baggage of variety of

factors. To wit, the feasibility and viability of the proposed

resolution plan and including their perceptions about the

general capability of the resolution applicant to translate

the projected plan into a reality. The resolution applicant

may have given projections backed by normative data but

still in the opinion of the dissenting financial creditors, it

would not be free from being speculative. These aspects

are completely within the domain of the financial creditors

who are called upon to vote on the resolution plan under

Section 30(4) of the I&B Code.

xxx

58. Indubitably, the inquiry in such an appeal would be

limited to the power exercisable by the resolution

professional under Section 30(2) of the I&B Code or, at

best, by the adjudicating authority (NCLT) under Section

31(2) read with Section 31(1) of the I&B Code. No other

inquiry would be permissible. Further, the jurisdiction

bestowed upon the appellate authority (NCLAT) is also

expressly circumscribed. It can examine the challenge only

in relation to the grounds specified in Section 61(3) of the

I&B Code, which is limited to matters “other than” enquiry

into the autonomy or commercial wisdom of the dissenting

52

financial creditors. Thus, the prescribed authorities

(NCLT/NCLAT) have been endowed with limited

jurisdiction as specified in the I&B Code and not to act as

a court of equity or exercise plenary powers.”

(Underlining by us)

12.2 Similarly, in Kalyani Transco, decided on 26.09.2025, a

three-Judge Bench of this Court held as follows:

“179. It can thus be seen that this Court has held that the

legislature purposefully did not include a means to

challenge the commercial wisdom exercised by the CoC.

This makes a challenge to the same non – justiciable. It

has been further held that a challenge cannot be raised

against the decision making of the CoC unless and until

the grounds for challenge as given in the Code are

satisfied. Any interference in the paramount objective of

the CoC of exercising its commercial wisdom would

amount to the Court rewriting the law and going against

the very objectives of the IBC.

180. We are therefore of the opinion that in the present

matter as well, the CoC exercised its commercial wisdom

while approving the Resolution Plan whereby the Appellant

– Jaldhi was classified as a contingent creditor and such a

decision is deemed to be non – justiciable by this Court in

view of K. Sashidhar (supra) which has been subsequently

followed in a catena of judgments. The NCLT, and the

NCLAT have also approved the Resolution Plan, and in

light of the settled principle of law, we find no question of

law being raised by the Appellant – Jaldhi and therefore,

the appeal filed by it is liable to be dismissed.”

(underlining by us)

12.3 We note the observations in Essar Steel India Limited,

clarifying that once the NCLT is satisfied that the CoC has applied

53

its mind to the statutory requirements spelt out in sub-section (2)

of Section 30 it must necessarily pass the resolution plan, as

under:

“73. ...Thus, while the Adjudicating Authority cannot

interfere on merits with the commercial decision taken by

the Committee of Creditors, the limited judicial review

available is to see that the Committee of Creditors has

taken into account the fact that the corporate debtor needs

to keep going as a going concern during the insolvency

resolution process; that it needs to maximise the value of

its assets; and that the interests of all stakeholders

including operational creditors has been taken care of. If

the Adjudicating Authority finds, on a given set of facts,

that the aforesaid parameters have not been kept in view,

it may send a resolution plan back to the Committee of

Creditors to re-submit such plan after satisfying the

aforesaid parameters. The reasons given by the Committee

of Creditors while approving a resolution plan may thus be

looked at by the Adjudicating Authority only from this

point of view, and once it is satisfied that the Committee of

Creditors has paid attention to these key features, it must

then pass the resolution plan, other things being equal.”

(Underlining by us)

12.4 We also note the observations in Pratap Technocrats

Private Ltd. vs. Monitoring Committee of Reliance Infratel

Limited, (2021) 10 SCC 623 wherein this Court categorically held

as follows:

“29. The jurisdiction which has been conferred upon the

adjudicating authority in regard to the approval of a

resolution plan is statutorily structured by sub-section (1)

of Section 31. The jurisdiction is limited to determining

54

whether the requirements which are specified in sub -

section (2) of Section 30 have been fulfilled. This is a

jurisdiction which is statutorily-defined, recognised and

conferred, and hence cannot be equated with a jurisdiction

in equity, that operates independently of the provisions of

the statute. The adjudicating authority as a body owing its

existence to the statute, must abide by the nature and

extent of its jurisdiction as defined in the statute itself.

44. …the jurisdiction of the adjudicating authority and the

appellate authority cannot extend into entering upon

merits of a business decision made by a requisite majority

of the CoC in its commercial wisdom. Nor is there a

residual equity based jurisdiction in the adjudicating

authority or the appellate authority to interfere in this

decision, so long as it is otherwise in conformity with the

provisions of IBC and the Regulations under the

enactment.”

(Underlining by us)

12.5 The issue is no longer res integra, the law having been

settled that the commercial wisdom of the CoC enjoys primacy and

cannot be supplanted by judicial review. Neither the NCLT, nor the

NCLAT nor even this Court is empowered to substitute its

assessment in place of the commercial decision arrived at by a

requisite majority of the CoC.

13. The appeals before us typify the growing strategic use of the

judicial system by unsuccessful resolution applicants, who seek to

reopen almost every commercial decision under the guise of

procedural impropriety. This converts the corporate resolution

55

process into a protracted adversarial contest and erodes the value

of the Corporate Debtor. Such an approach incentivises delay,

rent-seeking, and strategic obstruction and is fundamentally

inconsistent with the economic logic and statutory design of the

IBC.

13.1 In the present case, the Resolution Plan stands approved by

both the NCLT and the NCLAT and has since been implemented,

leaving absolutely no scope for intervention by this Court.

13.2 In view of the foregoing, we do not find any merit in the

appeals. With the above observations, these appeals are dismissed.

Therefore, the Impugned Judgment dated 01.10.2024 passed by

the NCLAT is affirmed.

14. Before parting, we wish to add a few words of caution. The

IBC represents a conscious legislative choice to privilege speed,

certainty, and creditor-driven decision-making over exhaustive

judicial scrutiny. Experience shows that unsuccessful bidders will

always try to spin commercial decisions of the CoC as procedurally

faulty in order to secure a second shot through litigation by filing

56

applications or making representations. However, courts need to

remain vigilant against any temptation to expand the scope of

review beyond the narrow boundaries prescribed by the IBC.

14.1 From an ex post perspective, excessive judicial review in the

CIRP carries significant economic costs that run counter to the

objects of IBC. The IBC is premised on the recognition that delay

and uncertainty are value-destructive in distressed situations.

When commercial decisions taken by the CoC are subjected to

expansive judicial scrutiny, resolution timelines lengthen,

transaction costs rise, and the going-concern value of the

Corporate Debtor erodes. The consequence therefore is not merely

delay, but a tangible loss of economic value for all stakeholders.

14.2 From an ex ante perspective also, the expectation of

expansive judicial review distorts incentives for future bidders.

Future resolution applicants may price legal uncertainty into their

bids, either by discounting their offers or by refraining from

participation in the CIRP altogether. This will weaken competition

in the resolution process and reduce recoveries for creditors.

57

14.3 Excessive review also encourages strategic litigation.

Stakeholders with little to no economic interest in the Corporate

Debtor may resort to litigation as a bargaining tool to delay

implementation of the Resolution Plan or extract concessions,

thereby converting the insolvency process into an adversarial

contest. Such conduct takes the process away from its objective of

value maximisation.

14.4 This Court, in Swiss Ribbons Private Ltd. vs. Union of

India, (2019) 4 SCC 17, underlined that the IBC prioritises time-

bound reorganisation to maximise asset value, revive corporate

debtors as going concerns, and ultimately strengthen credit

markets.

“27. …The Code is first and foremost, a Code for

reorganisation and insolvency resolution of corporate

debtors. Unless such reorganisation is effected in a time-

bound manner, the value of the assets of such persons will

deplete. Therefore, maximisation of value of the assets of

such persons so that they are efficiently run as going

concerns is another very important objective of the Code.

This, in turn, will promote entrepreneurship as the

persons in management of the corporate debtor are

removed and replaced by entrepreneurs. When, therefore,

a resolution plan takes off and the corporate debtor is

brought back into the economic mainstream, it is able to

repay its debts, which, in turn, enhances the viability of

credit in the hands of banks and financial institutions.

Above all, ultimately, the interests of all stakeholders are

looked after as the corporate debtor itself becomes a

58

beneficiary of the resolution scheme—workers are paid,

the creditors in the long run will be repaid in full, and

shareholders/investors are able to maximise their

investment. Timely resolution of a corporate debtor who is

in the red, by an effective legal framework, would go a long

way to support the development of credit markets. Since

more investment can be made with funds that have come

back into the economy, business then eases up, which

leads, overall, to higher economic growth and development

of the Indian economy. …

28. It can thus be seen that the primary focus of the

legislation 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. The Code is thus a beneficial legislation which

puts the corporate debtor back on its feet, not being a mere

recovery legislation for creditors. The interests of the

corporate debtor have, therefore, been bifurcated and

separated from that of its promoters/those who are in

management. Thus, the resolution process is not

adversarial to the corporate debtor but, in fact, protective

of its interests. The moratorium imposed by Section 14 is

in the interest of the corporate debtor itself, thereby

preserving the assets of the corporate debtor during the

resolution process. The timelines within which the

resolution process is to take place again protects the

corporate debtor's assets from further dilution, and also

protects all its creditors and workers by seeing that the

resolution process goes through as fast as possible so that

another management can, through its entrepreneurial

skills, resuscitate the corporate debtor to achieve all these

ends.

(Underlining by us)

14.5 From an institutional design point of view, the law must

secure three interdependent economic freedoms viz. entry into the

market, continuation of business operations under conditions of

59

competitive neutrality, and exit from the market. While easy entry

and operation enable risk-taking and value creation, exit performs

a critical function too by ensuring that failure, an inevitable by-

product of risk taking, is resolved efficiently rather than postponed

indefinitely. An efficient insolvency resolution system performs an

important allocative function: it preserves viable firms through

timely reorganisation while ensuring swift liquidation and exit of

non-viable businesses. Where insolvency laws are tardily enforced,

viable firms are driven into failure, and non-viable firms are

permitted to persist.

14.6 For the longest time under Indian law, the freedom of exit

remained under-institutionalised. The enactment of the IBC was a

decisive correction of this imbalance by introducing a predictable

and time-bound mechanism for insolvency resolution. While

predictability allows market participants to form stable

expectations about enforcement outcomes, finality curtails

strategic delay and rent-seeking, ensuring timely deployment of

capital and labour into more productive use.

14.7 Predictability and finality are thus essential to

maintaining a robust insolvency regime. Judicial intervention

60

beyond the narrow statutory confines undermines both

predictability and finality. Recognising this, the IBC deliberately

confines judicial review to strict statutory compliance under

Sections 30(2) and 61(3). Respecting these limits will preserve the

economic sense of the IBC and ensure that insolvency remains a

predictable, time-bound, and market-driven process.

15. With the above observations, the impugned judgment dated

01.10.2024 passed by the NCLAT is affirmed and consequently, the

appeals are dismissed. We however refrain from imposing costs.

……………………………………..J.

(B.V. NAGARATHNA)

……………………………………..J.

(R. MAHADEVAN )

NEW DELHI;

FEBRUARY 27, 2026.