INTRODUCTION

The Hon’ble Supreme Court of India (“Hon’ble Court”) in one of its recent judgment passed in the matter of Kalyani Transco vs Bhushan Power and Steel Ltd., Company Appeal (AT) (Insolvency) No. 408 of 2024 reaffirmed the judicial restraint vis a vis commercial wisdom, while simultaneously emphasizing the sanctity of the statutory compliance under the provision of the Insolvency and Bankruptcy Code, 2016 (“IBC”). The decision defines the boundaries within which a Resolution Plan may be judicially challenged and simultaneously clarifies the accountability of the Resolution Professional (“RP”), the Committee of Creditors (“CoC”), and the Adjudicating Authorities. It is imperative to highlight that the Hon’ble Court revisited the balance between the statutory compliance as laid down in the provisions of IBC and the autonomy of the commercial wisdom of CoC. The Hon’ble Court has specifically stated that “Any interference in the paramount objective of the CoC of exercising its commercial wisdom would amount to the Court rewriting the law and going against the very objectives of the IBC ”. In addition to this, the Hon’ble Court also highlighted the fact that the approved Resolution Plan is required to satisfy the provisions of IBC as well.

KEY LEGAL FINDINGS – SCOPE OF CHALLENGE TO AN APPROVED RESOLUTION PLAN

The Hon’ble Court decisively clarified that the only ground to challenge an approved Resolution Plan are those as specified under Section 61(3) of IBC. Further, it also highlighted that the qualitative dimensions are also legitimate grounds for challenging an approved resolution plan, such as failure to abide by the provisions of Section 29A of IBC, non-compliance with Form H, CoC approval of the Resolution Plan in contravention to Section 30(2) of IBC. Thus, by way of this judgment, the Hon’ble Court clarified that statutory non-compliance is a legal ground to challenge the approved Resolution Plan, and the same is not a challenge to the commercial wisdom of CoC. It further highlights that the CoC’s commercial wisdom cannot be challenged unless the same is in contravention of the provisions of IBC. The Hon’ble Court, by way of the present judgment, aids in highlighting that an approved resolution plan may be challenged by any stakeholders who have been adversely affected by the approval of the same. The present judgment removes the ambiguity surrounding the locus of such challenges, where operational creditors, government officials, and ex-management were previously denied the right to appeal on technical grounds. The Hon’ble Court categorically held that a Successful Resolution Applicant (“SRA”) cannot challenge an approved Resolution Plan unless such challenge falls within the statutory grounds as enumerated under Section 61(3) of IBC. In the present case, JSW Steel Ltd, the SRA, preferred an appeal against the approved Resolution Plan on the grounds of operational and tax-related issues. However, the same was rejected by this Hon’ble Court on the ground that the SRA is not an “aggrieved person” and had also failed to establish any of the statutory grounds envisaged under the provision of Section 61(3) of IBC. It is essential to highlight that the present judgment confines the right of appeal strictly to those stakeholders who will be able to demonstrate tangible prejudice and bring their challenge within the limited statutory parameters. Thus, the present judgment will promote procedural discipline and enhance the predictability of outcomes under the IBC. The Hon’ble Court, by way of this judgment, has also highlighted the judicial boundaries of the Hon’ble National Company Law Appellate Tribunal (“NCLAT”). Post approval of the Resolution Plan by the Hon’ble National Company Law Tribunal (“NCLT”), the Directorate of Enforcement (“ED”) attached the assets of the Corporate Debtor even though the attachment of such property is prohibited once the Resolution Plan is approved under Section 32A of IBC. The Hon’ble NCLAT found that such attachment of property by ED was illegal for violating the provisions of Section 32A of IBC. The Hon’ble Court, at the time of examining the present case, although it did not examine the power of the ED to attach and retain the assets of the Corporate Debtor, did examine the power of the NCLAT to scrutinize the validity of the action undertaken by ED. The Hon’ble Court held that the Hon’ble NCLAT does not have the power to modify or rewrite an approved Resolution Plan, nor does it possess any power to exercise judicial review over the statutory bodies like ED. It was further held that any inference with the approved Resolution Plan beyond the limited ground specified under Section 61(3) of IBC is coram non judice and hence void. It is imperative to note that the interpretation in the present judgment will have a far-reaching impact on upcoming matters by deterring frivolous or expansive appeals that attempt to reopen the settled commercial decisions of the CoC or challenge plans on peripheral and superfluous grounds.

CIRP IS A TIME-BOUND PROCESS

Apart from judicial restraint, statutory compliance, and commercial wisdom of CoC, the Hon’ble Court, in the present judgment, has once again reinforced the time-bound framework of the CIRP as the cornerstone of IBC as envisaged under Section 12 of IBC, which mandates the completion of the process of CIRP within the stipulated period to ensure speed and effective resolution. The Hon’ble Court observed that any kind of unwarranted interference with an approved Resolution Plan or any attempt to reopen concluded proceedings would defeat the very objective of IBC, which is to ensure finality, certainty, and timely resolution of corporate distress. It was emphasised that the authorities must adhere strictly to the statutory timelines prescribed under the IBC, and that post-approval challenges beyond the limited grounds under the provisions of Section 61(3) cannot be permitted, as they would derail the resolution process and frustrate the legislative intent of maintaining a swift and efficient mechanism for insolvency. Thus, the present judgment thereby strengthens the sanctity of timelines and procedural finality as essential to sustain investors’ confidence and to ensure a successful implementation of resolution plans within the spirit of IBC.

ROLE OF MONITORING COMMITTEE POST APPROVAL OF RESOLUTION PLAN

A critical aspect emerging from the present judgment is the recognition of the continued significance of the CoC post approval of the Resolution Plan. While the CoC’s primary role in IBC concludes upon the approval of the plan by the Hon’ble NCLT under Section 31 of IBC, however, the present judgment implicitly highlights that the CoC’s functional existence remains crucial for the purpose of monitoring and facilitating the effective implementation of the approved Resolution Plan. The Hon’ble Court’s observations underscore that the objectives of the IBC are primarily the principles of value maximization, revival of the corporate debtor, and protection of stakeholders’ interests, which cannot be achieved if the implementation of the Resolution Plan is delayed or rendered impractical. From a practical point of view, the absence of an institutional mechanism post approval of the Resolution Plan often may lead to administrative and operational bottlenecks, causing significant delays in execution of the Plan. At this stage, the CoC’s continuous oversight can serve as a vital accountability framework to ensure that the SRA adheres to the timelines and commitments made in the Resolution Plan. To bridge the gap between the approval and execution of the Resolution Plan, it is essential that the CoC, acting as the monitoring committee, serves as a governance mechanism. Without such continuity, the IBC’s emphasis on resolving within defined timelines risks being undermined, reducing the process to a procedural formality rather than a substantive economic revival. Thus, the Court’s reasoning reinforces that the CoC’s extended involvement, even in a supervisory or advisory capacity, it is essential to uphold the Code’s core philosophy of timely, effective, and value-oriented resolution.

SHAPING THE FUTURE OF RESOLUTION PLAN JURISPRUDENCE

The ruling in the present Judgment will contribute to jurisprudential clarity by establishing that once a Resolution Plan secures approval under Section 31 of IBC, it cannot be revisited except on the narrow grounds defined under Section 61(3) of IBC. This will ensure not only the sanctity of the CIRP but also enhance investor confidence by assuring that approved plans are insulated from prolonged litigation and regulatory uncertainty. Thus, the present judgment is poised to aid as a guiding precedent, streamlining appellate scrutiny and promoting finality, certainty, and commercial pragmatism in future insolvency proceedings.

CONCLUSION

The present judgment signifies a defining moment in insolvency jurisprudence by restoring predictability, structure, and statutory discipline to the appellate procedure under the IBC. The Hon’ble Court clearly elucidates who may appeal and on what grounds, and further eliminates long standing ambiguities that had beset the post approval phase of resolution plans. The Hon’ble Court reaffirms that the provisions of Sections 61(3) and 62 are exhaustive and jurisdictionally confined, the Hon’ble Court ensures that challenges to an approved Resolution Plan are limited only to legal and procedural infirmities, and not to the CoC’s commercial wisdom. Simultaneously, the Hon’ble Court draws a firm line of accountability for RP, and CoC members, highlighting that commercial autonomy will not be able to override statutory compliance. Crucially, ruling in the present judgment clarifies that an SRA cannot invoke an appellate jurisdiction merely to renegotiate conditions imposed by the Hon’ble NCLT, and that Hon’ble NCLAT cannot transgress its limited appellate role by venturing into issues of criminal investigation or third-party rights. In doing so, the Hon’ble Court not only resolves the confusion surrounding the maintainability of the appeals but also reinforces the integrity of the CIRP as a time-bound, creditor-protective, and law-driven mechanism. Going forward, the present judgment will serve as a guiding precedent leading future resolution plan challenges towards legal rigour, procedural transparency, and admiration for the legislative framework of IBC.

The Bhushan Power & Steel Precedent: Strengthening Procedural & Commercial Wisdom Integrity in the Approval of Resolution Plans

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ABOUT AUTHORS

VARSHA BANERJEE

PRINCI JAISWAL