New Delhi: The Supreme Court on Friday pulled up unsuccessful bidding companies in insolvency cases for challenging commercial decisions taken by lenders, warning that such attempts undermine the design of India’s bankruptcy framework.
A bench led by Justice B.V. Nagarathna made the observations while upholding the resolution plan of Sarda Energy & Minerals Ltd for SKS Power Generation (Chhattisgarh) Ltd.
The court dismissed appeals filed by Torrent Power Ltd, Jindal Power Ltd and Singapore-based Vantage Point Asset Management, which had challenged the approval of the plan.
The court said losing bidders cannot seek a second chance by portraying commercial decisions of the committee of creditors (CoC) as procedural flaws. Such litigation, it cautioned, delays resolution and weakens the time-bound structure of the Insolvency and Bankruptcy Code (IBC).
“Unsuccessful resolution applicants seek to reopen almost every commercial position under the guise of procedural impropriety. This converts the corporate resolution process into a protracted adversarial contest and erodes the value of the corporate debtor,” the court observed.
It further noted that such an approach incentivises delay, rent-seeking and strategic obstruction, and is fundamentally inconsistent with the economic logic and statutory design of the IBC.
The court upheld the CoC’s decision approving Sarda Energy’s plan, as well as the earlier rulings of the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT).
It clarified that there was no scope for the Supreme Court to interfere with a resolution plan that had already been duly approved and implemented in accordance with the law.
The observations come amid a growing trend of unsuccessful bidders—and in some cases former promoters—challenging resolution outcomes from the NCLT stage up to the Supreme Court, often delaying successful bidders from taking operational control of stressed companies.
The dispute dates back to 1 October 2024, when the NCLAT upheld the approval of Sarda Energy’s ₹1,950-crore bid to acquire SKS Power and rejected objections raised by Torrent Power, NTPC, Jindal Power and Vantage Point.
In April 2022, the Mumbai bench of the NCLT admitted a plea filed by Bank of Baroda to initiate insolvency proceedings against SKS Power after admitted claims of about ₹2,560 crore. Lenders, including State Bank of India and Bank of Baroda, had moved the tribunal over defaults. On 13 August 2024, the NCLT approved Sarda Energy’s resolution plan, which covered nearly the entire amount of financial creditors’ dues.
SKS Power operates a 4×300 MW coal-based thermal power plant at Binjkote and Durramuda in Raigarh district of Chhattisgarh.
Founded in 1973 and headquartered in Chhattisgarh, Sarda Energy & Minerals is the flagship company of the Sarda Group. The company is among India’s lowest-cost steel producers and one of the country’s largest manufacturers and exporters of ferroalloys.
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