Supreme Court says repeated challenges by unsuccessful bidders erode IBC’s framework
New Delhi: The Supreme Court on Friday struck down companies making unsuccessful bids in insolvency cases to challenge business decisions taken by lenders, warning that such attempts undermine the design of India’s insolvency framework.
A bench headed by Justice BV Nagarathna held that Sarda Energy & Minerals Ltd was charged with SKS Power Generation (Chhattisgarh) Ltd. He made observations while supporting the solution plan for
The court rejected objections filed by Torrent Power Ltd, Jindal Power Ltd and Singapore-based Vantage Point Asset Management, which objected to approval of the plan.
The court said losing bidders cannot seek a second chance by citing the commercial decisions of the committee of creditors (CoC) as procedural flaws. He warned that such cases delay resolution and weaken the time-bound nature of the Insolvency and Bankruptcy Code (IBC).
“Unsuccessful resolution applicants are trying to reopen almost every business position under the guise of irregularities. This turns the corporate resolution process into a protracted contentious contest and erodes the value of the corporate debtor,” the court said.
He also noted that such an approach encourages delay, rent-seeking and strategic obstruction and is fundamentally inconsistent with the economic logic and legal design of the IBC.
Besides the CoC’s order approving Sarda Energy’s plan, the court also upheld earlier orders of the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT).
He explained that the Supreme Court has no opportunity to intervene in a solution plan that has already been duly approved and implemented in accordance with the law.
The observations come at a time when there is a growing trend of unsuccessful bidders and, in some cases, former promoters challenging resolution outcomes from the NCLT stage to the Supreme Court, often delaying successful bidders from taking operational control of stressed companies.
The dispute dates back to October 1, 2024, when the NCLAT approved Sarda Energy’s approval. ₹A bid of ₹ 1,950 crore was made to acquire SKS Power and objections raised by Torrent Power, NTPC, Jindal Power and Vantage Point were rejected.
In April 2022, the Mumbai bench of NCLT accepted Bank of Baroda’s plea to initiate insolvency proceedings against SKS Power. ₹2,560 crore. Lenders, including State Bank of India and Bank of Baroda, had approached the court over the defaults. On August 13, 2024, NCLT approved Sarda Energy’s resolution plan covering almost the entire dues of financial creditors.
SKS Power operates 4×300 MW coal-fired thermal power plants at Binjkote and Durramuda in Raigarh district of Chhattisgarh.
Established 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 is one of the country’s largest ferroalloy producers and exporters.
