Legal Review and Analysis of Torrent Power Ltd vs Ashish Arjunkumar Rathi & Ors 2026 INSC 206

Synopsis

This landmark Supreme Court judgment reaffirms and strengthens the doctrine of commercial wisdom of the Committee of Creditors (CoC) under the Insolvency and Bankruptcy Code, 2016 (IBC). The appeals were filed by unsuccessful resolution applicants (Torrent Power, Vantage Point Asset Management, and Jindal Power) challenging the approval of a resolution plan submitted by Sarda Energy and Minerals Limited (SEML) for SKS Power Generation (Chhattisgarh) Limited. The primary grievance was that SEML was allegedly permitted to modify its commercial offer after the conclusion of the negotiation process, through clarifications sought by the Resolution Professional (RP). The Supreme Court, after a detailed examination, dismissed all appeals, holding that the clarifications did not amount to any modification of the resolution plan. More importantly, the Court delivered a powerful exposition on the primacy of the CoC's commercial wisdom, the limited scope of judicial review under Sections 61 and 62 of the IBC, and the imperative of ensuring finality and predictability in the insolvency resolution process to prevent value erosion through strategic litigation.

1. Basic Information of the Judgment

Case Title: Civil Appeal Nos. 11746-11747 of 2024 – Torrent Power Ltd. vs. Ashish Arjunkumar Rathi & Ors. (with connected appeals)

Citation: 2026 INSC 206

Court: Supreme Court of India

Jurisdiction: Civil Appellate Jurisdiction (under Section 62 of the IBC, 2016)

Coram: Justice B.V. Nagarathna (Author)

Date of Judgment: February 27, 2026

2. Legal Framework & Key Precedents

The judgment is a definitive exposition of the IBC, particularly the limits of judicial review and the doctrine of commercial wisdom.

Primary Legislation:
Insolvency and Bankruptcy Code, 2016 (IBC):
Section 30: Submission of resolution plan.
Section 31: Approval of resolution plan by the Adjudicating Authority (NCLT).
Section 61: Appeals to the National Company Law Appellate Tribunal (NCLAT). Sub-section (3) limits the grounds of appeal against an approved resolution plan to: (i) contravention of law, (ii) material irregularity by the RP, (iii) non-payment to operational creditors, (iv) non-payment of CIRP costs, and (v) non-compliance with Board criteria.
Section 62: Appeals to the Supreme Court, available only on a question of law.
Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations):
Regulation 39(1A): Deals with the negotiation process amongst resolution applicants.
Key Judicial Precedents:
Committee of Creditors of Essar Steel India Limited vs. Satish Kumar Gupta (2020) 8 SCC 531: The landmark judgment establishing that the commercial wisdom of the CoC is non-justiciable. The NCLT/NCLAT's role is supervisory, limited to ensuring compliance with Section 30(2).
K. Sashidhar vs. Indian Overseas Bank (2019) 12 SCC 150: Held that the subjective satisfaction of the CoC in voting on a resolution plan is not open to challenge. The grounds for appeal under Section 61(3) are exhaustive and do not include a challenge to the CoC's commercial wisdom.
Pratap Technocrats Private Ltd. vs. Monitoring Committee of Reliance Infratel Limited (2021) 10 SCC 623: Reiterated that the adjudicating authority's jurisdiction is statutorily defined and cannot be equated with a jurisdiction in equity to interfere with business decisions of the CoC.
Kalyani Transco vs. Bhushan Power & Steel Ltd. (2025 SCC OnLine SC 2093): A three-judge bench judgment (decided shortly before this case) that strongly reaffirmed that concurrent findings of the NCLT and NCLAT should not be interfered with unless they are in ignorance of mandatory provisions or are perverse. It also reiterated the non-justiciability of the CoC's commercial wisdom.
Swiss Ribbons Private Ltd. vs. Union of India (2019) 4 SCC 17: Highlighted that the primary focus of the IBC is time-bound revival of the corporate debtor to maximize asset value.

3. Relevant Facts of the Case

CIRP Initiation: CIRP against SKS Power Generation (Chhattisgarh) Ltd. (Corporate Debtor) was admitted on 29.04.2022.
Bidding Process: A negotiation process was conducted on 19.04.2023, governed by a Process Note. All resolution applicants, including the appellants (Torrent, Vantage, Jindal) and the successful applicant (SEML), submitted their final commercial offers.
Submission of Resolution Plans: The final date for submitting resolution plans was 30.12.2022. After extensions, revised plans were submitted by 28.04.2023.
Clarifications Sought (08.05.2023): The CoC, through the RP, sought clarifications from all resolution applicants via email. The queries to SEML specifically related to:
The treatment of Bank Guarantees (BGs) listed in its plan, particularly BGs at Item Nos. 6 and 7 (amounting to approx. ₹76.61 crores) and the corresponding margin money.
An option in its plan regarding a deferred payment of ₹240 crores (via NCDs) or an upfront "discounted amount" of ₹240 crores. The query was whether "discounted amount" meant a value lower than ₹240 crores.
SEML's Clarifications (10.05.2023): SEML clarified that:
The entire margin money of ₹180.05 crores was always intended to go to the CoC. For BGs being continued (₹103.39 cr), it would infuse fresh margin money. For BGs being extinguished (₹76.61 cr), the existing margin money would be released to the CoC. To protect issuing banks in the interim, it would provide replacement margin money until the BGs were formally cancelled. The total payment to the CoC remained ₹180.05 crores.
The ₹240 crores was already the discounted (net present) value of the deferred payment of ₹301.64 crores. If the CoC chose the upfront option, it would receive ₹240 crores, not a further discounted amount. The offer remained the same; it was just clarifying the meaning of "discounted amount."
Voting and Approval: The CoC, with 100% vote share, approved SEML's resolution plan on 16.05.2023. The RP filed for approval before the NCLT.
Litigation by Unsuccessful Applicants: Torrent, Vantage, and Jindal filed various IAs before the NCLT and appeals before the NCLAT, alleging that SEML was allowed to modify its bid. Their challenges were consistently rejected by both the NCLT and the NCLAT.
Present Appeals: The unsuccessful applicants appealed to the Supreme Court under Section 62 of the IBC.

4. Issues Before the Supreme Court

The Court framed two broad issues (para 7):

Whether the clarifications furnished by SEML pursuant to queries raised by the RP resulted in any enhancement or modification of its resolution plan?
Whether, given that the resolution plan had been approved by the NCLT and NCLAT and was already implemented, any interference was permissible by the Supreme Court?

5. Ratio Decidendi & Court's Reasoning

The Supreme Court dismissed all appeals. The core reasoning is a powerful reaffirmation of the IBC's core principles:

No Modification of the Resolution Plan: The Court meticulously analyzed the emails and the resolution plan clauses. It held:
On Bank Guarantees: The total payment to the CoC from margin money was always ₹180.05 crores. The clarification only addressed the timing and mechanism for ensuring banks were not left unsecured while BGs were being cancelled. This did not enhance the offer.
On Upfront Payment: The plan always offered the CoC a choice: either ₹301.64 crores deferred (with interest) or the discounted (NPV) value of ₹240 crores upfront. The clarification merely confirmed that "discounted amount" meant the present value, not a further reduction. The offer remained unchanged.
Appeals Fail at the Threshold under Section 62: The Court held that an appeal to the Supreme Court under Section 62 is only on a "question of law." The appellants' grievances were essentially factual disputes about whether SEML's plan was modified. The NCLT and NCLAT had concurrently found no modification. This is a finding of fact, not a question of law. Furthermore, none of the grounds for appeal under Section 61(3) (which the NCLAT could entertain) were made out. There was no material irregularity by the RP, as the RP had acted strictly on the instructions of the CoC in seeking clarifications from all applicants.
Concurrent Findings are Binding: Relying on Kalyani Transco, the Court held that when the NCLT and NCLAT have rendered concurrent findings of fact, the Supreme Court will not ordinarily interfere unless those findings are perverse, based on no evidence, or in ignorance of mandatory provisions. No such perversity was found.
Primacy of CoC's Commercial Wisdom is Absolute: The Court delivered a strong sermon on this doctrine. It cited K. Sashidhar, Essar Steel, and Pratap Technocrats to reiterate that the commercial wisdom of the CoC is non-justiciable. The CoC, comprising financial creditors with maximum skin in the game, is best placed to evaluate the feasibility and viability of competing plans. Courts cannot substitute their assessment for that of the CoC. The appellants' challenge was, in substance, an attack on the CoC's decision to prefer SEML's plan over theirs, which is impermissible.
Need for Finality and Predictability: The Court added a crucial policy dimension. It warned against the "strategic use of the judicial system by unsuccessful resolution applicants" to reopen commercial decisions. It highlighted that:
Ex post, excessive judicial review delays resolution, increases costs, and erodes the going-concern value of the corporate debtor.
Ex ante, the expectation of such review distorts future bidding, as applicants may price in legal uncertainty or refrain from participating, ultimately harming creditor recoveries.

6. Legal Principles Established & Clarified

While the judgment largely follows established law, it provides significant clarifications and emphases:

"Question of Law" under Section 62 is Narrow: It reaffirms that an appeal under Section 62 is not a second appeal on facts. The Supreme Court will not re-appreciate evidence or disturb concurrent findings of fact by the NCLT and NCLAT unless a clear legal error is demonstrated. Disputes over whether a clarification amounted to a modification are factual, not legal.
"Material Irregularity by the RP" (Section 61(3)(ii)) is a Narrow Ground: The Court clarified that if the RP acts on the specific instructions of the CoC, such conduct cannot be characterized as a "material irregularity." To hold otherwise would be to indirectly subject the CoC's decisions to judicial review.
Economic Rationale for Non-Justiciability: The judgment provides a powerful economic and policy-based justification for the doctrine of commercial wisdom, linking it to the need for predictability, finality, and value maximization. It explicitly condemns strategic litigation by unsuccessful bidders as a tool to delay and derail the CIRP.
Sanctity of the Process Note and RFRP: The Court held that clarifications sought by the CoC, even after the formal close of bidding, are permissible as long as they do not amount to a substantive modification of the commercial offer and are sought uniformly. The CoC's power to seek clarifications is inherent in its role of evaluating plans.

7. Judicial Examination & Analytical Concepts

Textual Interpretation of the Resolution Plan: The Court's primary analytical tool was a close, textual reading of SEML's resolution plan clauses and the subsequent clarifications. It compared the two to conclude that there was no substantive change.
Doctrine of Commercial Wisdom: This doctrine was the central pillar of the judgment. The Court did not just state it; it explained its statutory and economic foundations, drawing on a long line of precedents.
Principle of Concurrent Findings: The Court applied this well-settled principle of appellate law to show deference to the specialized tribunals (NCLT, NCLAT) on questions of fact.
Purposive Interpretation of IBC: The entire judgment is infused with a purposive interpretation of the IBC, aimed at furthering its core objectives of time-bound resolution, value maximization, and finality. The Court used this purpose to reject challenges that would undermine these goals.

8. Critical Analysis & Final Outcome

Final Decision & Directions:
The Supreme Court dismissed all appeals.
The impugned judgment of the NCLAT dated 01.10.2024 was affirmed.
The approval of SEML's resolution plan by the CoC, NCLT, and NCLAT was upheld.
The Court, while dismissing the appeals, refrained from imposing costs.
Significance & Impact:
Bulwark Against Frivolous Litigation: This judgment is a powerful deterrent against unsuccessful resolution applicants using litigation as a tactic to delay or renegotiate the outcome of a CIRP. It sends a clear message that the IBC process must move forward with certainty.
Strengthens CoC's Position: It further entrenches the CoC's position as the ultimate decision-making authority in the CIRP, insulating its commercial judgments from judicial second-guessing, provided the statutory process is followed.
Clarity on Scope of Judicial Review: It provides crystal-clear guidance to all stakeholders—the NCLT, NCLAT, and litigants—on the extremely limited scope of judicial review in challenges to approved resolution plans. Appeals must be confined to the narrow grounds in Section 61(3) and, to this Court, on pure questions of law.
Affirms Economic Rationale of IBC: By explicitly linking the doctrine of commercial wisdom to economic efficiency and value maximization, the judgment strengthens the intellectual and policy foundations of the IBC.
Critical Viewpoint: The judgment is a tour de force of insolvency jurisprudence. It is not merely a dismissal of appeals; it is a definitive statement on the philosophy of the IBC. The detailed factual analysis demonstrating that SEML's clarifications were not modifications is impeccable. However, the judgment's true power lies in its broader pronouncements on finality, predictability, and the economic costs of judicial interference. By strongly condemning strategic litigation, the Supreme Court has acted as a guardian of the IBC's core objectives. This judgment will be cited for decades as the authoritative word on the limits of judicial review and the inviolability of the CoC's commercial wisdom.

(MCQs)

1. Under which section of the Insolvency and Bankruptcy Code, 2016, can an appeal be filed to the Supreme Court, and on what ground?
a) Section 61, on any ground specified in sub-section (3).
b) Section 62, only on a question of law.
c) Section 60, on any question of fact or law.
d) Section 32, on the ground of public interest.

2. According to the Supreme Court, what is the primary reason for the doctrine that the commercial wisdom of the Committee of Creditors (CoC) is non-justiciable?
a) The CoC members are appointed by the government and are accountable to the public.
b) The CoC, being comprised of financial creditors, is best placed to evaluate the commercial viability of competing resolution plans.
c) The NCLT and NCLAT lack the legal expertise to review such decisions.
d) The resolution professional, and not the CoC, is the final authority on the plan.

3. In the present case, what was the core factual dispute raised by the appellants regarding SEML's resolution plan?
a) That SEML was not eligible to be a resolution applicant.
b) That the CoC did not have a valid meeting to vote on the plan.
c) That SEML was allowed to substantively modify its commercial offer (regarding bank guarantees and upfront payment) after the conclusion of the negotiation process, through the guise of clarifications.
d) That the resolution plan was not accompanied by the required performance bank guarantee.

4. Which recent three-judge bench decision was relied upon by the Supreme Court for the proposition that concurrent findings of the NCLT and NCLAT should not be interfered with unless they are perverse or in ignorance of law?
a) Swiss Ribbons Pvt. Ltd. vs. Union of India
b) Essar Steel India Ltd. vs. Satish Kumar Gupta
c) Kalyani Transco vs. Bhushan Power & Steel Ltd.
d) K. Sashidhar vs. Indian Overseas Bank