Torrent Power Supreme Court Judgment (2026): CoC Commercial Wisdom and Limits of Judicial Review under IBC

Case Summary

• Case: Torrent Power Ltd. v. Ashish Arjunkumar Rathi & Others; Civil Appeals Nos.11746-11747, 11689-11690, 12994-12995 of 2024 (2026 INSC 206)

• Date of Judgment: 27 February 2026

• Bench: Honourable Justice B.V. Nagarathna; Honourable Justice R. Mahadevan

• Senior Counsel / Advocates (selected): Dr Abhishek Manu Singhvi (for Torrent); Mr Kapil Sibal (for Vantage Point Asset Management Pte. Ltd.); counsel for SKS Power’s Resolution Professional (RP); counsel for Sarda Energy and Minerals Ltd. (SEML); counsel for the Committee of Creditors (CoC)

• Statutes and Regulations: Insolvency and Bankruptcy Code, 2016 (IBC) Sections 7, 30(2), 30(6), 31(1), 61, 62; Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 Regulation 39(1A); RFRP / Process Note governing inter se bidding

• Principal issues: (i) whether clarifications sought and furnished after the negotiation process altered SEML’s commercial offer; (ii) whether judicial interference was permissible after NCLT and NCLAT approval and implementation of the resolution plan

• Cited authorities: Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta, (2020) 8 SCC 531; K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150; Swiss Ribbons Pvt. Ltd. v. Union of India, (2019) 4 SCC 17; Pratap Technocrats Pvt. Ltd. v. Monitoring Committee of Reliance Infratel Ltd., (2021) 10 SCC 623; Kalparaj Dharamshi v. Kotak Investment Advisors Ltd., (2021) 10 SCC 401; Kalyani Transco v. Bhushan Power & Steel Ltd., 2025 SCC OnLine SC 2093

Introduction and Overview

The Supreme Court in Torrent Power Ltd. v. Ashish Arjunkumar Rathi & Ors. reaffirms, in robust terms, the established primacy of the Committee of Creditors’ commercial wisdom under the IBC. The judgment is a careful exposition of jurisprudence that circumscribes judicial review when a resolution plan, having satisfied the statutory requirements, is approved by the requisite majority of financial creditors. The bench, comprising Honourable Justice B.V. Nagarathna and Honourable Justice R. Mahadevan, disposes of competing commercial grievances by unsuccessful bidders and lays emphasis on the limited role of courts in a creditor driven insolvency architecture.

Factual and Procedural Background

SKS Power underwent CIRP following a Section 7 petition. Multiple resolution applicants participated; SEML’s plan received 100% CoC support. After the CoC directed process of clarifications, the RP placed SEML’s addendum before the CoC. Unsuccessful bidders, Torrent, Vantage and Jindal, challenged the process, alleging post bid modification including increased bank guarantee cover and conversion of deferred payment into an upfront payment and discrimination. Both the NCLT and the NCLAT rejected these contentions; the Supreme Court affirmed.

Core Legal Holdings

Two interrelated propositions animate the Court’s reasoning: (i) the circumscribed scope of Section 61(3) appeals and Section 62 IBC appeals to this Court; and (ii) the doctrine of commercial wisdom.

On jurisdictional limitations, the Court reinforces that appeals under Section 62 are confined to a question of law and that Section 61(3) prescribes limited grounds of challenge including contravention of law, material irregularity by the RP, non provision for operational creditors, CIRP costs prioritisation, or non compliance with Board criteria. The bench found that the appellants’ case did not fall within Section 61(3) and hence no maintainable question of law arose for this Court under Section 62.

On substance, the Court examined the emails exchanged between the RP and the applicants and the specific clauses in SEML’s Plan. It concluded that the so called clarifications did not amount to any enhancement or modification of SEML’s offer. The margin money of Rs.180.05 crore was always earmarked for the CoC; the Rs.103.39 crore figure referred to incremental fresh infusion for particular BGs to be continued and not the quantum payable to creditors. Similarly, the Rs.240 crore figure represented the net present value of a deferred stream; the CoC was merely offered the option to take present value instead of NCDs. The Court therefore found no material irregularity.

The Court reiterates a core maxim: the commercial wisdom of the CoC cannot be interfered with. It warns against recharacterising commercial disagreements as procedural defects to obtain a second bite at the cherry through litigation. As the judgment states, excessive judicial review in the CIRP carries significant economic costs that run counter to the objects of IBC.

Practical Implications for Insolvency Professionals

• For RPs: meticulous documentation is essential. When clarifications are sought at the CoC’s direction, ensure contemporaneous records demonstrate that the RP acted on explicit CoC instructions and that identical communications were issued to all applicants. The Court emphasised that an RP acting on CoC directives cannot be accused of material irregularity.

• For CoC members and advisors: clauses in RFRP and Process Notes that reserve the CoC’s right to exercise commercial discretion should be clear and unequivocal. The bench drew attention to the RFRP clause which expressly preserved the CoC’s autonomy to choose plans that conform to its commercial judgment.

• For resolution applicants: beware of strategic litigation as a delay tactic. An unsuccessful bidder’s disagreement over valuation or commercial choices is unlikely to succeed unless it can demonstrate material irregularity by the RP or a statutory non compliance identified in Section 61(3). Mere allegations that another bidder increased its offer after the negotiation process will not suffice where the Plan and addendum, read as a whole, show no enhancement.

• For tribunals and appellate courts: the judgment provides a template for dealing with complaints of post bid clarifications. A close textual reading of the Plan, correspondence, annexures and RFRP is required to determine whether a change was substantive or merely explanatory.

Key Judicial Observations

• 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.

• The commercial wisdom of the CoC cannot be interfered with by the NCLT, the NCLAT or this Court.

• Excessive judicial review in the CIRP carries significant economic costs that run counter to the objects of IBC.

Critical Observations

While the judgment trenchantly protects the commercial autonomy of the CoC, practitioners should note that the protective canopy is not absolute. The Court repeatedly recognises a limited but real supervisory role for adjudicating authorities to ensure that the CoC has considered going concern value, maximisation of assets and stakeholder interests and that the process has not been vitiated by arbitrariness, perversity, or manifest procedural breach. Accordingly, litigants with credible evidence of selective treatment, clandestine amendments, or RP overreach may still find redress but the evidentiary threshold remains high.

Conclusion

Torrent Power reasserts settled law on the limited ambit of judicial review under the IBC and articulates practical guardrails for CIRP participants. For legal advisers in India, the judgment is both a guide and a warning: guard process integrity with diligent paperwork and resist attempts to recast commercial disappointment as procedural misconduct. The decision preserves the creditor driven architecture of the IBC and underscores the premium the statute places on speed, finality and market-oriented decision making.

Extract from the Judgment

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; (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 a 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 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.