Every resolution produces a disappointed constituency — operational creditors trimmed, bidders edged out, promoters displaced — and each disappointment arrives at the tribunals dressed as law. The question this appeal renewed is the Code's oldest: when the CoC has approved a plan by the statutory majority, what exactly can a court examine?
The Key Question Before the Court
How far can the NCLT and NCLAT go in reviewing a resolution plan the Committee of Creditors has approved?
Business Judgment Belongs to Those Who Bear the Loss
The judgment restates the premise of K. Sashidhar and Essar Steel: the financial creditors who vote on a plan stake their own recoveries on its wisdom, and the Code deliberately makes their collective commercial judgment non-justiciable on merits. Whether a plan pays enough, distributes fairly among classes beyond the statutory minimums, or chooses one bidder's certainty over another's promise — these are CoC calls, insulated from substitution by tribunals or courts.
The Perimeter: Sections 30(2) and 61(3)
What remains for adjudication is compliance, not wisdom: the NCLT confirms the plan meets Section 30(2) — the statutory minimums for operational creditors and dissenting financial creditors, implementability, legality — and the NCLAT's appellate scrutiny runs only on Section 61(3)'s enumerated grounds (material irregularity, contravention of law, defects in the plan's compliance). A challenge that cannot plead itself into those provisions is not a ground but a grievance — and fails accordingly.
What the Court Actually Held
- The CoC's commercial wisdom on a resolution plan is decisive and not open to merits review.
- NCLT scrutiny is confined to Section 30(2) compliance; NCLAT appeals to Section 61(3) grounds.
- Challenges outside the statutory perimeter fail at the threshold.
Why This Judgment Matters
- It polices the tribunal-level drift toward re-valuing plans that has stretched CIRP timelines.
- Resolution applicants and CoCs gain predictability — the approved plan's exposure is mapped by two provisions.
- It harmonises with the Bhushan Power restatement, making 2025–26 the years finality returned to the Code.
- Objectors are channelled to raise compliance defects early, at the approval stage, where they belong.
What Should Advocates Take Away From the Judgment?
For Resolution Applicants and CoCs
- Document Section 30(2) compliance meticulously — the statutory minimums and legality checks are the plan's only true vulnerabilities.
For Objecting Creditors and Bidders
- Frame every challenge within Section 30(2)/61(3) language — irregularity, contravention, non-compliance; valuation grievances dressed as law will be dismissed as such.
Key Takeaways
- CoC commercial wisdom is the Code's decision rule.
- Judicial review of plans runs only on Sections 30(2) and 61(3).
- Tribunals cannot re-value or redistribute.
- Compliance objections must be raised, and proved, within the perimeter.
Frequently Asked Questions
Not on adequacy grounds — quantum is commercial wisdom; the NCLT checks only Section 30(2) compliance, including the statutory minimums for operational and dissenting creditors.
Only Section 61(3)'s: material irregularity in the exercise of powers, contravention of law, and defects of the enumerated kinds — not the plan's merits.
At the approval stage, on the Section 30(2) minimums and process compliance — the one terrain where the statute lets the grievance become a ground.
Conclusion
The judgment keeps the Code's bargain intact: creditors decide, courts verify — and the distance between those verbs is where India's resolution market lives.
Practical takeaway: Plead Sections 30(2) and 61(3) or do not appeal — after this ruling, everything else is commercial wisdom.
Read the full judgment: Torrent Power Ltd. v. Ashish Arjunkumar Rathi & Ors. — (2026) 02 SC CK 1814 →
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