1. Corporate insolvency resolution process — Approval of resolution plan — Challenges by erstwhile promoters and operational creditors regarding implementation timelines, payment priorities, and distribution of operating profits. (Para 1 , 2 )
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2025 Supreme(SC) 1745
SUPREME COURT OF INDIA
B.R. GAVAI, C.J.I., SATISH CHANDRA SHARMA, K. VINOD CHANDRAN, JJ.
Kalyani Transco – Appellant
Versus
M/s Bhushan Power And Steel Limited And Others – Respondents
Civil Appeal No. 1808 of 2020 With Civil Appeal No. 2192-2193 of 2020, Civil Appeal No. 2225 of 2020, Civil Appeal No. 3020 of 2020, Civil Appeal No. 6390 of 2021
Decided on : 26-09-2025
Advocates appeared:
For the Appellant(s) : Mr. Dhruv Mehta, Sr. Adv. Mr. Sandeep Bajaj, Adv. Mr. Soayib Qureshi, Adv. Mr. Anubhav Ray, Adv. Ms. Chetna Alagh, Adv. Ms. Anchal Kushwaha, Adv. Mr. Mayank Biyani, Adv. Ms. Ranjeeta Rohatgi, AOR Mr. Nikhil Sabri, Adv. Mr. Aman Qayoom Wani, Adv. Ms. Shrika Gautam, Adv. Mr. Arjun Asthana,Adv. Mr. Sidhartha Sharma,Adv. Ms. Shubhangi Gupta,Adv. Mr. Nachiket Chawla,Adv. Ms. Prachi Sharma,Adv. Mr. Arup Banerjee, AOR Mr. Diwakar Maheshwari,Adv. Ms. Pratiksha Mishra,Adv. Mr. Mayank Kshirsagar, AOR Mr. Sandeep Bajaj, Adv. Mr. Mayank Biyani, Adv. M/S. Law Associates, AOR Mr. Manu Beri, Adv. Mr. Varun Varma, Adv. Ms. Kudrat Mann, Adv. Mr. Upmanyu Tewari, AOR
For the Respondent(s): Mr. Tushar Mehta, Solicitor General Mr. L. Vishwanathan, Adv. Mr. Raunak Dhillon, Adv. Mr. Uday Khare, Adv. Ms. Aishwarya Gupta, Adv. Ms. Isha Malik, Adv. Mr. Nihaad Dewan, Adv. Mr. Anchit Jasuja, Adv. Ms. Bhawna Lakhina, Adv. Mr. Bhuvan Kapur, Adv. Mr. Aman Mehta, Adv. For M/s. Cyril Amarchand Mangaldas Mr. Neeraj Kishan Kaul, Sr. Adv. Mr. Gopal Jain, Sr. Adv. Ms. Nandini Gore, Adv. Mr. Rajendra Barot, Adv. Ms. Tahira Karanjawala, Adv. Mr. Vivek Shetty, Adv. Mr. Suharsh Sinha, Adv. Ms. Swati Bhardwaj, Adv. Mr. Akarsh Sharma, Adv. Ms. Manvi Rastogi, Adv. Mr. Pranav Garg, Adv. Ms. Sherna Doongaji, Adv. Mr. Akilesh Menezes, Adv. Mr. Harsh Sethi, Adv. Ms. Isha Patil, Adv. Mr. Deepak Joshi, Adv. Ms. Dhanya S. Krishnan, Adv. Mr. Varun Tyagi, Adv. For M/s. Karanjawala & Co. Mr. Tushar Mehta, Solicitor General Mr. K.M. Nataraj, A.S.G. Mr. Sudarshan Lamba, AOR Ms. Kanu Agrawal, Adv. Mr. Mohd. Akhil, Adv. Mr. Saurav Roy, Adv. Mr. Vinayak Sharma, Adv. Mr. Pratyush Shrivastava, Adv. Mr. S. S. Shroff, AOR Ms. Misha, Adv. Mr. Vaijayant Paliwal, Adv. Ms. Charu Bansal, Adv. Ms. Kirti Gupta, Adv. Mr. Soayib Qureshi, AOR Mr. Soumya Dutta, AOR Mr. Mukesh Kumar Maroria, AOR Dr. Vinod Kumar Tewari, AOR
For the Appellant(s) : Mr. Dhruv Mehta, Sr. Adv. Mr. Sandeep Bajaj, Adv. Mr. Soayib Qureshi, Adv. Mr. Anubhav Ray, Adv. Ms. Chetna Alagh, Adv. Ms. Anchal Kushwaha, Adv. Mr. Mayank Biyani, Adv. Ms. Ranjeeta Rohatgi, AOR Mr. Nikhil Sabri, Adv. Mr. Aman Qayoom Wani, Adv. Ms. Shrika Gautam, Adv. Mr. Arjun Asthana,Adv. Mr. Sidhartha Sharma,Adv. Ms. Shubhangi Gupta,Adv. Mr. Nachiket Chawla,Adv. Ms. Prachi Sharma,Adv. Mr. Arup Banerjee, AOR Mr. Diwakar Maheshwari,Adv. Ms. Pratiksha Mishra,Adv. Mr. Mayank Kshirsagar, AOR Mr. Sandeep Bajaj, Adv. Mr. Mayank Biyani, Adv. M/S. Law Associates, AOR Mr. Manu Beri, Adv. Mr. Varun Varma, Adv. Ms. Kudrat Mann, Adv. Mr. Upmanyu Tewari, AOR
For the Respondent(s): Mr. Tushar Mehta, Solicitor General Mr. L. Vishwanathan, Adv. Mr. Raunak Dhillon, Adv. Mr. Uday Khare, Adv. Ms. Aishwarya Gupta, Adv. Ms. Isha Malik, Adv. Mr. Nihaad Dewan, Adv. Mr. Anchit Jasuja, Adv. Ms. Bhawna Lakhina, Adv. Mr. Bhuvan Kapur, Adv. Mr. Aman Mehta, Adv. For M/s. Cyril Amarchand Mangaldas Mr. Neeraj Kishan Kaul, Sr. Adv. Mr. Gopal Jain, Sr. Adv. Ms. Nandini Gore, Adv. Mr. Rajendra Barot, Adv. Ms. Tahira Karanjawala, Adv. Mr. Vivek Shetty, Adv. Mr. Suharsh Sinha, Adv. Ms. Swati Bhardwaj, Adv. Mr. Akarsh Sharma, Adv. Ms. Manvi Rastogi, Adv. Mr. Pranav Garg, Adv. Ms. Sherna Doongaji, Adv. Mr. Akilesh Menezes, Adv. Mr. Harsh Sethi, Adv. Ms. Isha Patil, Adv. Mr. Deepak Joshi, Adv. Ms. Dhanya S. Krishnan, Adv. Mr. Varun Tyagi, Adv. For M/s. Karanjawala & Co. Mr. Tushar Mehta, Solicitor General Mr. K.M. Nataraj, A.S.G. Mr. Sudarshan Lamba, AOR Ms. Kanu Agrawal, Adv. Mr. Mohd. Akhil, Adv. Mr. Saurav Roy, Adv. Mr. Vinayak Sharma, Adv. Mr. Pratyush Shrivastava, Adv. Mr. S. S. Shroff, AOR Ms. Misha, Adv. Mr. Vaijayant Paliwal, Adv. Ms. Charu Bansal, Adv. Ms. Kirti Gupta, Adv. Mr. Soayib Qureshi, AOR Mr. Soumya Dutta, AOR Mr. Mukesh Kumar Maroria, AOR Dr. Vinod Kumar Tewari, AOR
Resolution plans under the Insolvency and Bankruptcy Code must be implemented strictly according to their terms without reopening claims not included in them, preserving the commercial wisdom of the Committee of Creditors.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 30, 31, and 32A - An appeal was filed by erstwhile promoters & operational creditors against rejection of a resolution plan and approval of the NCLT/NCLAT. The Supreme Court concluded the resolution plan was invalid, leading to liquidation under section 33 due to its non-conformance with the Code. (Paras 84, 85, 191)
(B) Resolution Plan Approval - The Supreme Court held that claims not part of a resolution plan could not be reopened post-approval, affirming the non-justiciability of the CoC's commercial decision. (Paras 164, 169)
Facts of the case:
The appeal arose after NCLT approved a resolution plan for a corporate debtor amidst numerous challenges, including FIRs against the management and intricacies of financial obligations. The corporate debtor failed to implement the resolution plan timely due to external legal proceedings and challenges to the approved plan. (Paras 2.1 - 2.27)
Findings of Court:
The Court found the resolution plan non-compliant with the IBC provisions leading to initiation of liquidation proceedings against the corporate debtor after quashing previous orders of the NCLT/NCLAT. The SRA's obligations under the resolution plan regarding payment priorities were also found inadequate. (Paras 84, 191)
Issues: The Court addressed whether the former promoters had locus standi to appeal, if the CoC could extend the implementation period of a resolution plan, & the treatment of claims on EBITDA. (Paras 6, 97, 130)
Ratio Decidendi: The decision stipulates that once a resolution plan is approved, it must be executed as per its provisions without reopening claims that were outside it. Commercial wisdom of the CoC is not subject to judicial scrutiny unless specific grounds under the IBC are met. (Paras 169, 190)
Result: The appeals were dismissed, with the NCLAT’s ruling being upheld and liquidation proceedings mandated. (Paras 191)
Legal Category Hierarchy
-
insolvency and bankruptcy law
- corporate insolvency resolution process
- stakeholders' rights
- arbitration law
- criminal law
Table of Contents
2. Dispute over locus standi of promoters — CoC's authority post-approval — Legality of implementation extensions — Priority of operational creditor payments — Entitlement to operating profits. (Para 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33 , 34 , 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42 , 43 , 44 , 45 , 46 , 47 , 48 , 49 , 50 , 51 )
3. Promoters as guarantors are aggrieved persons — CoC remains active until plan implementation — Implementation delays justified by legal stays — CCDs constitute equity infusion. (Para 53 , 54 , 55 , 56 , 57 , 58 , 59 , 60 , 61 , 62 , 63 , 67 , 68 , 69 , 70 , 71 , 72 , 73 , 74 , 75 , 76 , 77 , 78 , 79 , 80 , 81 , 82 , 83 , 84 , 85 , 86 , 97 , 98 , 99 , 100 , 101 , 102 , 103 , 104 , 105 , 106 , 107 , 108 , 109 , 110 , 111 , 112 , 113 , 114 , 115 , 116 , 117 , 118 , 119 , 120 , 121 , 122 , 123 , 124 , 125 , 126 , 127 , 128 , 129 , 130 , 131 , 132 , 133 , 134 , 135 , 136 , 137 , 138 , 139 , 140 , 141 , 142 , 143 , 144 , 145 , 146 , 147 , 148 , 149 , 150 , 151 , 152 , 153 , 154 , 155 , 156 , 157 , 158 , 159 , 160 , 161 , 162 , 163 , 168 , 169 , 170 , 171 , 172 , 173 , 174 , 175 , 176 , 177 , 178 , 179 , 180 , 181 , 182 , 183 , 184 )
4. Commercial wisdom of the Committee of Creditors is non-justiciable — Approved resolution plans are binding — Claims not part of the plan cannot be reopened post-approval. (Para 89 , 90 , 91 , 92 , 157 , 164 , 165 , 166 , 167 )
5. Appeals dismissed — Impugned judgment upholding the resolution plan affirmed. (Para 191 )
6. Do erstwhile promoters have the locus standi to challenge a resolution plan under the IBC?
Yes, if the erstwhile promoters are personal guarantors, they are considered persons aggrieved because the resolution plan vitally impacts their rights, granting them the locus to file appeals. (Para 53 , 62 , 63 )
7. Does the Committee of Creditors (CoC) become functus officio immediately after the Adjudicating Authority approves the resolution plan?
No, the CoC continues to exist until the resolution plan is fully implemented or an order for liquidation is passed, ensuring that creditors are not left in a state of limbo. (Para 67 , 82 , 85 , 86 )
8. Are Compulsorily Convertible Debentures (CCDs) treated as debt or equity for the purpose of fund infusion in a resolution plan?
CCDs that are mandatorily convertible into equity shares at maturity, without any obligation for repayment of principal, are treated as equity instruments rather than debt. (Para 145 , 146 , 148 , 150 )
9. Can creditors claim distribution of EBITDA generated during the CIRP if the Resolution Plan and RfRP are silent on it?
No, a successful resolution applicant cannot be faced with undecided claims post-approval. If the RfRP is silent on the distribution of profits, such EBITDA is not distributable to creditors. (Para 156 , 157 , 168 , 169 )
10. Are international arbitral awards automatically treated as crystallized debts under the IBC?
No, a foreign award is deemed a decree only when a court is satisfied it is enforceable under the Arbitration Act. Without such satisfaction, claims may be classified as contingent. (Para 175 , 176 , 177 )
JUDGMENT :
B.R. GAVAI, CJI
| INDEX | |
| I. | INTRODUCTION |
| II. | FACTS |
| III. | SUBMISSIONS |
| i. | Appellants in Civil Appeal Nos. 2192 – 2193 of 2020 (erstwhile promoters) |
| ii. | Appellants in Civil Appeal No. 2225 of 2020 (Jaldhi Overseas Pte. Limited) |
| iii. | Appellants in Civil Appeal No. 3020 of 2020 (M/s. Medi Carrier Private Limited) and Civil Appeal No. 6390 of 2021 (CJ Darcl Logistics Limited) |
| iv. | Resolved Entity – BPSL |
| v. | Resolution Professional |
| vi. | Committee of Creditors |
| vii. | Successful Resolution Applicant – JSW |
| viii. | Submissions in Rejoinder |
| iv. | ANALYSIS |
| a. | Locus standi of the erstwhile promoters |
| b. | Existence of the CoC after approval of the Resolution Plan by the Adjudicating Authority |
| c. | Grounds of Appeal |
| d. | Legality of clause permitting CoC to extend the period for implementation of the Resolution Plan |
| e. | Delay in implementation of the Resolution Plan |
| f. | Contravention of law |
| g. | Upfront infusion of funds by the SRA – JSW |
| h. | Distribution of EBITDA |
| i. | Contingent claim of Jaldhi |
| j. | Pre-CIRP dues of Medi and Darcl |
| V. | CONCLUSION |
| LIST OF ABBREVIATIONS | ||
| 1. | Arbitration Act | Arbitration and Conciliation Act, 1996 |
| 2. | BPSL | M/s Bhushan Power and Steel Limited |
| 3. | CBI | Central Bureau of Investigation |
| 4. | CCD | Compulsorily Convertible Debentures |
| 5. | CIRP | Corporate Insolvency Resolution Proceedings |
| 6. | CoC | Committee of Creditors |
| 7. | CRP | Consolidated Resolution Plan |
| 8. | Darcl | CJ Darcl Logistics Limited |
| 9. | EBITDA | Earnings Before Interest, Taxes, Depreciation, and Amortisation |
| 10. | ED | Directorate of Enforcement |
| 11. | FC | Financial Creditors |
| 12. | FIR | First Information Report |
| 13. | IBBI | (CIRP) Regulations Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 |
| 14. | IBC or The Code | Insolvency and Bankruptcy Code, 2016 |
| 15. | India-Singapore CECA | India-Singapore Comprehensive Economic Cooperation Agreement |
| 16. | INDIAN PENAL CODE , 1860 | |
| 17. | IRP | Interim Resolution Professional |
| 18. | Jaldhi | Jaldhi Overseas Pte. Limited |
| 19. | JSW | JSW Steel Limited |
| 20. | Medi | M/s. Medi Carrier Private Limited |
| 21. | NCLAT | National Company Law Appellate Tribunal, New Delhi |
| 22. | NCLT or Adjudicating Authority | National Company Law Tribunal, New Delhi, Principal Bench |
| 23. | OC | Operational Creditor |
| 24. | PAO | Provisional Attachment Order |
| 25. | PC Act | Prevention of Corruption Act, 1988 |
| 26. | PMLA | Prevention of Money Laundering Act, 2002 |
| 27. | PRA | Prospective Resolution Applicants |
| 28. | RBI | Reserve Bank of India |
| 29. | RfRP | Request for Resolution Plan |
| 30. | RP | Resolution Professional |
| 31. | SRA | Successful Resolution Applicant |
I. INTRODUCTION
1. This batch of six appeals are filed under Section 62 of the Insolvency and Bankruptcy Code, 20161[“IBC” or “the Code” for short.] by erstwhile promoters and various Operational Creditors of the Corporate Debtor against the common final impugned judgment and order dated 17th February 2020 passed by the National Company Law Appellate Tribunal, New Delhi2[“NCLAT” for short.] in relation to the Corporate Insolvency Resolution Proceedings3[“CIRP” for short.] of M/s Bhushan Power and Steel Limited. 4[“BPSL” for short.]
II. FACTS
2. The relevant facts which give rise to these appeals are:
2.1. The Banking Regulation Act, 1949 was amended w.e.f. 4th May 2017 to the effect that the Reserve Bank of India5[“RBI” for short.] was empowered to issue directions to the Indian Banks to initiate CIRP against major corporate defaulters.
2.2. The RBI, vide circular dated 13th June 2017, identified 12 large scale corporate defaulters, with outstanding debts valued at Rs. 5,000 crore and above, now infamously known as the “dirty dozen”. The Corporate Debtor – BPSL was one o
