India's Supreme Court upholds Sarda Energy's Rs 1,950 crore SKS Power resolution plan
The decision establishes the committee of creditors' commercial judgment as primary in insolvency resolutions and confines judicial intervention to supervisory review for statutory compliance and procedural fairness. Implemented plans approved by NCLT and NCLAT face narrowed scope for interference.
Change
India's Supreme Court upheld Sarda Energy's Rs 1,950 crore resolution plan for SKS Power and dismissed appeals from Torrent Power, Jindal Power and Vantage Point Asset Management.
Why it matters
The judgment restricts courts from substituting their commercial assessment for decisions taken by the Committee of Creditors (CoC), narrowing permissible grounds for judicial reversal of insolvency resolutions. It also shields resolution plans that have been approved and implemented by the National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) from later interference.
Implications
- — Legal teams representing rival bidders must prioritise raising and preserving objections at the Committee of Creditors and during National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) proceedings, because post-implementation appeals to the Supreme Court are likely to be dismissed.
- — Committee of Creditors' financial and legal advisers must document and retain contemporaneous commercial reasons for their voting decisions, because courts will decline to re-assess those commercial judgments later.
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