Kalyani Transco vs M/S Bhushan Power And Steel Ltd

REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 1808 OF 2020

KALYANI TRANSCO …APPELLANT

VERSUS

M/S BHUSHAN POWER AND STEEL LIMITED AND OTHERS …RESPONDENTS

WITH

CIVIL APPEAL NOS. 2192-2193 OF 2020

CIVIL APPEAL NO. 2225 OF 2020

CIVIL APPEAL NO. 3020 OF 2020

CIVIL APPEAL NO. 6390 OF 2021

Signature Not Verified Digitally signed by NARENDRA PRASAD Date: 2025.09.26 11:29:13 IST Reason: 1 INDEX

I. INTRODUCTION.................................................................... 4 II. FACTS .................................................................................. 4 III. SUBMISSIONS .................................................................... 15 i. Appellants in Civil Appeal Nos. 2192 – 2193 of 2020 (erstwhile promoters) ............................................................... 16 ii. Appellants in Civil Appeal No. 2225 of 2020 (Jaldhi Overseas Pte. Limited) .............................................................. 23 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) ........................................................... 24 iv. Resolved Entity – BPSL ...................................................... 25 v. Resolution Professional ..................................................... 26 vi. Committee of Creditors ...................................................... 27 vii. Successful Resolution Applicant – JSW........................... 30 viii. Submissions in Rejoinder ................................................ 38 IV. ANALYSIS........................................................................... 39 a. Locus standi of the erstwhile promoters ......................... 39 b. Existence of the CoC after approval of the Resolution Plan by the Adjudicating Authority .............................................. 48 c. Grounds of Appeal .......................................................... 68 d. Legality of clause permitting CoC to extend the period for implementation of the Resolution Plan ................................. 74 e. Delay in implementation of the Resolution Plan ............. 78 f. Contravention of law ...................................................... 95 g. Upfront infusion of funds by the SRA – JSW ................. 100 h. Distribution of EBITDA.................................................. 107 i. Contingent claim of Jaldhi ........................................... 121 j. Pre-CIRP dues of Medi and Darcl ................................... 131 V. CONCLUSION ................................................................... 133

2 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) Insolvency and Bankruptcy Board of Regulations India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016

14. IBC or The Code Insolvency and Bankruptcy Code, 2016

15. India-Singapore India-Singapore Comprehensive CECA Economic Cooperation Agreement

16. IPC 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 National Company Law Tribunal, New Authority 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

3 JUDGMENT

B.R. GAVAI, CJI

I. INTRODUCTION

1. This batch of six appeals are filed under Section 62

of the Insolvency and Bankruptcy Code, 20161 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 in relation to the

Corporate Insolvency Resolution Proceedings3 of M/s

Bhushan Power and Steel Limited.4

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

was empowered to issue directions to the Indian Banks to

initiate CIRP against major corporate defaulters.

1 “IBC” or “the Code” for short.

2 “NCLAT” for short.

3 “CIRP” for short.

4 “BPSL” for short.

5 “RBI” for short.

4 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 of the defaulters identified by the RBI.

2.3. The Respondent No. 5 in the lead matter (Punjab

National Bank) filed Company Petition C.P. No. (IB)-202 (PB)

of 2017 under Section 7 of the IBC before the NCLT, which

was admitted vide order dated 26th July 2017 and the CIRP

commenced.

2.4. After the imposition of moratorium, the Interim

Resolution Professional6 on 28th July 2017 invited claims from

all the creditors and stakeholders. A huge number of claims

were raised by the stakeholders. For the Financial Creditors7,

the IRP admitted claims of Rs. 4,72,04,51,78,073.88/- (Forty-

Seven Thousand Two Hundred and Four Crores Fifty-One

Lakhs Seventy-Eight Thousand and Seventy-Three) and on the

other hand for the Operational Creditors, claims of

Rs.6,21,37,61,735/- (Six hundred and Twenty-one Crores

6 “IRP” for short.

7 “FC” for short.

5 Thirty-Seven Lakhs Sixty-One Thousand Seven hundred and

thirty-five) were admitted.

2.5. During the First Meeting of the Committee of

Creditors8 dated 1st September 2017, the IRP was confirmed

as the Resolution Professional9. Pursuant to an advertisement

published by the RP on 21st September 2017, thirteen

Potential Resolution Applicants10 including Respondent No. 2

in the lead matter (JSW Steel Ltd. ) submitted their Resolution

Plan to the RP.

2.6. In the 18th Meeting of the CoC dated 14th August

2018, the Resolution Plans were evaluated by the CoC and the

plan submitted by JSW Steel Ltd. emerged as the highest

evaluated plan based on the evaluation matrix formulated in

accordance with the Code and the relevant regulations. The

scores of every PRA were submitted to the NCLAT in a sealed

cover. Negotiations were held with JSW Steel Ltd. and based

on the said negotiations and discussions, a Consolidated

8 “CoC” for short.

9 “RP” for short.

10 “PRA” for short.

6 Resolution Plan11 was submitted by JSW Steel Ltd. on 3rd

October 2018.

2.7. On 7th October 2018, the RP called for a meeting of

the CoC for consideration and approval of the CRP. In the CoC

meeting held on 10th October 2018, the CRP submitted by JSW

Steel Ltd. was considered, and further negotiations took place

regarding the modifications to bring the CRP in compliance

with the amended Insolvency and Bankruptcy Board of India

(Insolvency Resolution Process for Corporate Persons)

Regulations, 201612. Pursuant to the negotiations, JSW Steel

Ltd. submitted the addendum letter dated 10th October 2018

whereby it amended and clarified certain terms of the CRP to

ensure compliance with the amended regulations.

2.8. After confirmation by the RP vide communication

dated 14th October 2018, to all the members of the CoC that

the CRP was in compliance with statutory requirements with

the Section 30(4) of the Code, the CoC approved the same by

the requisite majority and JSW Steel Ltd. was declared as the

SRA and which we shall refer to as SRA – JSW hereinafter.

11

“CRP” for short.

12 “IBBI (CIRP) Regulations” for short.

7 2.9. As per the communication dated 5th February 2018

by the RP, the SRA – JSW issued the Proposal Performance

Guarantee for an amount of Rs. 100 crore on 11th February

2019 and it was issued a Letter of Intent by the RP.

2.10. Thereafter, the RP filed the Company Application No.

254 (PB)/2019 in C.P. No. (IB)-202 (PB) of 2017 on 14th

February 2019 as per the mandate of Sections 30(6) and 31(1)

of the IBC, read with Regulation 39(4) of the IBBI (CIRP)

Regulations with a prayer to accept the Resolution Plan

submitted by the SRA – JSW which had been duly approved

by the CoC.

2.11. During the pendency of the aforesaid proceedings,

the Central Bureau of Investigation13 registered a First

Information Report14 being No. RCBD1/2019/E/0002 against

the Corporate Debtor – BPSL and its directors and other

related parties under Sections 420, 468, 471 and 477A read

with Section 120B of the Indian Penal Code, 186015 and

Section 13(2) read with Section 13(1)(d) of the Prevention of

13 “CBI” for short.

14 “FIR” for short.

15

“IPC” for short.

8 Corruption Act, 198816. Based on the said FIR, the Directorate

of Enforcement17, registered a case bearing No. ECIR/DLZO–

I/02/2019 on 25th April 2019 for offences punishable under

the Prevention of Money Laundering Act, 200218.

2.12. Various applications raising objections were filed in

the proceedings pending before the NCLT by the erstwhile

promoters and some OCs of the Corporate Debtor – BPSL. The

NCLT, vide common Judgment and Order dated 5th September

2019, dismissed the said applications and approved the

Resolution Plan of the SRA – JSW subject to certain

conditions.

2.13. Being aggrieved by some of the conditions imposed

by the NCLT, the SRA – JSW filed Company Appeal No. 957 of

2019 under Section 61 of the IBC before the NCLAT.

2.14. Meanwhile, the ED passed a Provisional Attachment

Order19 being No. 11 of 2019 dated 10th October 2019 and

provisionally attached the assets of the Corporate Debtor –

BPSL under Section 5 of the PMLA.

16

“PC Act” for short.

17 “ED” for short.

18 “PMLA” for short.

19 “PAO” for short.

9 2.15. Being aggrieved, the PAO was challenged by the SRA

– JSW before the NCLAT by way of a separate application in

the pending company appeal. Vide interim order dated 14th

October 2019, the NCLAT stayed the implementation

Resolution Plan as well as the PAO.

2.16. The CoC also challenged the said PAO before this

Court by filing SLP (C) Nos. 29327 – 29328 of 2019. Vide order

dated 18th December 2019, this Court issued notice and

stayed the PAO.

2.17. Meanwhile, various other stakeholders filed appeals

before the NCLAT challenging the final approval order of the

NCLT dated 5th September 2019.

2.18. The NCLAT vide common impugned judgment dated

17th February 2020 allowed the appeal filed by SRA – JSW and

modified some of the conditions that had been imposed by the

NCLT in the approval order and dismissed the appeals filed by

all the appellants herein challenging the approval order.

2.19. Being aggrieved by the common impugned judgment

of the NCLAT dated 17th February 2020, these appeals have

been filed.

10 2.20. A Civil Appeal No. 3362 of 2020 was filed by ED

challenging the common Impugned Judgment dated 17th

February 2020 passed by the NCLAT. The said appeal by the

ED as well as the SLPs filed by the CoC were heard along with

the present batch of appeals.

2.21. Vide order dated 6th March 2020, this Court

admitted the appeals and recorded the statement of the

learned Senior Counsel appearing on behalf of the CoC that

the CoC would return the amount received by it from the SRA

– JSW in case the appeals succeed.

2.22. Vide order dated 11th December 2024, this Court

disposed of Civil Appeal Nos. 14503 – 14504 of 2024 (arising

out of SLP (C) Nos. 29327 – 29328 of 2019) filed by the CoC

challenging the ED’s PAO and Civil Appeal No. 3362 of 2020

filed by the ED based on the affidavit filed by Mr. Dipin Goel,

Deputy Director, Directorate of Enforcement, New Delhi. It was

stated in the affidavit that Section 32A of the IBC was inserted

w.e.f. 28th December 2019 and it did not have retrospective

effect and hence, in view of the peculiar facts and

circumstances, the SRA – JSW be permitted to take control of

the attached properties treating the same as restitution under

11 Section 8(8) of the PMLA read with Rule 3A of the Prevention

of Money Laundering (Restoration of Property) Rules, 2016.

This Court, therefore, directed the ED to handover the control

of the properties of the Corporate Debtor – BPSL to the SRA –

JSW. However, it was clarified that this Court had not

expressed any opinion on the interpretation of Section 32A of

the IBC or on the powers of the ED to attach the property of

the Corporate Debtor – BPSL which is undergoing CIRP.

2.23. The remaining appeals, forming the present batch,

were heard at length on various dates and this Court vide

common final judgment and order dated 2nd May 2025

quashed and set aside the judgments and orders dated 5th

September 2019 and 17th February 2020 passed by the NCLT

and NCLAT respectively. This Court issued the following

directions vide the said final judgment and order:

“84. In that view of the matter, following order is passed:

(i) The judgments and orders dated 05.09.2019 and 17.02.2020 passed by the NCLT and NCLAT respectively are quashed and set aside.

(ii) The Resolution Plan of JSW as approved by the CoC stands rejected, being not in conformity with the provisions contained in 12 sub-section (2) of Section 30, read with sub-section (2) of Section 31.

(iii) In view of the provisions contained in sub-section (1) of Section 33, and in exercise of the jurisdiction conferred under Article 142 of the Constitution of India, the Adjudicating Authority i.e. the NCLT is directed to initiate the Liquidation Proceedings against the Corporate Debtor-BPSL under Chapter III of the IBC and in accordance with law.

(iv) The payments made by the JSW to the Financial Creditors and the Operational Creditors, as also the Equity contribution if any infused, under the garb of the implementation of the Resolution Plan, being subject to the outcome of the present set of Appeals, shall be dealt with by the parties as per the statement of Senior Advocate Dr. Abhishek Manu Singhvi appearing for the CoC, recorded in the order dated 06.03.2020.

(v) Since, we have rejected the Resolution Plan of JSW, we have not dealt with the issue of the EBITDA though raised and argued by the Learned Advocates for the parties. The question of law with regard to EBITDA is kept open.

85. The Civil Appeal No. 1808 of 2020 (Kalyani Transco vs. M/s. Bhushan Power and Steel Limited & Ors), Civil Appeal Nos. 2192-2193 of 2020 (Sanjay Singhal & Anr vs. Punjab National Bank & Ors, Etc.), Civil Appeal No. 2225 of 2020 (Jaldhi Overseas Pte. Ltd. vs. Mahender Kumar Khandelwal & Ors), Civil Appeal No. 3020 of 2020 (M/s. Medi Carrier Pvt. Ltd. vs. Mahendra Kumar 13 Khandelwal & Anr) and Civil Appeal No. 6390 of 2021 (CJ Darcl Logistics Ltd. vs. Mahendra Kumar Khandelwal & Anr) stand allowed to the aforesaid extent.”

2.24. Being aggrieved, Review Petitions bearing RP (C) No.

1432 of 2025 and connected matters came to be filed by the

aggrieved parties seeking recall of the final judgment and order

dated 2nd May 2025.

2.25. Vide order dated 29th July 2025, notice was issued

in the Review Petitions and the applications for hearing the

review petitions in open court were allowed.

2.26. On the next date of hearing, i.e. 31st July 2025, the

following order was passed:

“3. We are of the view that the common impugned judgment and order dated 02.05.2025 does not correctly consider the legal position as laid down by a catena of judgments, including the following:

……………

7. We, therefore, find that this is a fit case for recalling the judgment under review and reconsidering the matter afresh.

8. Having considered the submissions advanced by the learned senior counsel for the parties, we find that there is/are error(s) apparent on the face of the record warranting exercise of review jurisdiction vested in this Court.

9. Accordingly, the impugned judgment and order dated 02.05.2025 is recalled. The review petitions are allowed.

14 10. Needless to state that though we are allowing these review petition(s), all questions of law shall remain open for both parties to argue at the stage of final hearing.

……….”

2.27. While allowing the Review Petitions, all the questions

of law were kept open, as a result of which this batch of

appeals were listed for final hearing on 7th August 2025. On

11th August 2025, this Court upon conclusion of the

arguments reserved judgment.

III. SUBMISSIONS

3. We have extensively heard Shri Dhruv Mehta and

Shri Balbir Singh, learned Senior Counsel, Shri Arjun Asthana

and Shri Manu Beri, learned Counsel appearing for the

appellants. We have heard Shri Navin Pahwa, learned Senior

Counsel appearing for the Resolution Professional. We have

heard Shri Pinaki Misra, learned Senior Counsel appearing for

the Resolved Entity, i.e. BPSL. We have heard Shri Tushar

Mehta, learned Solicitor General appearing on behalf of the

CoC. We have also heard Shri Neeraj Kishan Kaul and Shri

Gopal Jain, learned Senior Counsel appearing for the SRA –

JSW.

15 i. Appellants in Civil Appeal Nos. 2192 – 2193 of 2020 (erstwhile promoters)

4. Before we proceed to record the submissions of the

learned counsel for the parties on merits, it will be relevant to

note that Shri Tushar Mehta, learned Solicitor General

appearing on behalf of the CoC and Shri Kaul, learned Senior

Counsel appearing on behalf of the SRA – JSW have raised

objections with regard to the very tenability of the appeals at

the behest of the erstwhile promoters-cum-directors.

5. Shri Dhruv Mehta, learned Senior Counsel for the

Appellants – erstwhile promoters, submitted that the

promoters were personal guarantors of the Corporate Debtor

and hence fall within the ambit of “persons aggrieved” under

Section 61 of the IBC. It is submitted that personal insolvency

proceedings have been initiated against them, which gives

them a clear locus to file the present appeals.

6. It was further submitted by Shri Dhruv Mehta that

the question of locus is no longer res integra. Reliance was

placed on paragraph 19.4 of Vijay Kumar Jain v. Standard

Chartered Bank and Others20, to submit that personal

20 (2019) 20 SCC 455

16 guarantors were held by this Court to be persons interested in

the Resolution Plan and were therefore included in the

“persons aggrieved” as per the IBC. Reference was also made

to paragraph 21 of the said judgment regarding the rights of

the erstwhile Board of Directors. He further relied on

paragraphs 74 and 75 of Glas Trust Company LLC v. Byju

Raveendran and Others21 to contend that the term “persons

aggrieved” must be given a broad and purposive interpretation

under Sections 61 and 62 of the IBC and any narrow

construction would frustrate the objective of the Code.

7. It was lastly submitted by Shri Dhruv Mehta on the

issue of locus that the appeals raise pure questions of law

based on undisputed facts and fall squarely within the ambit

of Section 61(3) of the IBC.

8. Shri Dhruv Mehta next raised the issue of

contravention of law by the SRA–JSW, submitting that Clause

3.1 of its Resolution Plan, which allows for an effective change

in the date of implementation, rendered the Plan imprecise

and indeterminate. It was contended that such an open-ended

clause is contrary to the IBC framework and ought not to have

21 2024 SCC OnLine SC 3032

17 been approved by the Adjudicating Authority. It was submitted

that if such open-ended Resolution Plans are permitted, it

would allow creditors to effect post-approval modifications,

thereby undermining the CIRP process.

9. It was further submitted by Shri Dhruv Mehta that

the concept of an “erstwhile CoC” finds no place within the

statutory scheme of the IBC. The Code mandates a strict, time-

bound resolution process, and permitting the CoC to

renegotiate or modify the Plan at the appellate stage would

defeat the legislative intent, unsettle vested rights under the

approved Plan, and delay its implementation.

10. Shri Dhruv Mehta placed reliance on the judgments

of this Court in Ebix Singapore Private Limited v.

Committee of Creditors of Educomp Solutions Limited &

Another22 and Deccan Value Investors L.P. and Another v.

Dinkar Venkatasubramanian and Another23 to submit that

the CoC’s powers are confined to assessing the viability and

feasibility of the Resolution Plan, and cease upon its approval.

22 (2022) 2 SCC 401 23 2024 SCC OnLine SC 4075 18

11. It is further submitted by Shri Dhruv Mehta that the

SRA–JSW violated Section 30(2) of the IBC read with

Regulation 38 of the IBBI (CIRP) Regulations by paying the FCs

before the OCs. The FCs were paid on 26th March 2021,

whereas payments to the OCs were made only thereafter, in

March 2022.

12. Shri Mehta also raised the issue of delay in

implementation of the plan, submitting that though the

Resolution Plan was approved on 5th September 2019 and was

to be implemented within 30 days, it was only partially

implemented after 540 days, and the OCs were paid after a

huge delay which exceeded 900 days.

13. Shri Dhruv Mehta submitted that the delay in

implementation of the Resolution Plan by SRA–JSW was

unjustified, as the provisional attachment by the ED was

merely on paper, with no actual possession taken. It is

contended that the SRA–JSW had full control of the assets

throughout since the PAO only referred to land, buildings, and

machinery valued at Rs. 4,025 crore, without any specific

attachment or notice of possession. Reliance is placed on

paragraph 199 of Ebix Singapore Private Limited (supra), to

19 submit that a similar contention of prejudice due to ED

proceedings had already been rejected by this Court.

14. Reliance has also been placed by Shri Dhruv Mehta

on the judgment of this Court in State Bank of India and

Others v. Consortium of Murari Lal Jalan and Florian

Fritsch and Another24 to submit that it has been held by this

Court that the timely implementation of the Resolution Plan is

necessary.

15. It is further submitted by Shri Dhruv Mehta that the

real cause for delay was the fluctuation in steel prices. Shri

Mehta pointed out that steel prices fell from Rs. 46,000/- per

metric ton in October 2018 to Rs. 35,000/- in September

2019, but rose sharply thereafter, reaching Rs. 55,000/- by

March 2021. It is contended that the SRA–JSW rushed to

implement the plan only when the prices rose and hence the

delay in implementation was not due to the ED proceedings

but was driven by market opportunism, as the timing of

implementation closely tracked steel price trends. It was

24 2024 SCC OnLine SC 3187

20 submitted that the SRA – JSW must pay interest for each day’s

delay in the implementation of the Resolution Plan.

16. Shri Dhruv Mehta then raised the issue of

distribution of Earnings Before Interest, Taxes, Depreciation,

and Amortisation25. It was submitted that EBITDA represents

the operating profits of the company and is widely recognised

as a key indicator of operational performance. It was

submitted that since the EBITDA is generated from the use of

pre-CIRP funds of the Corporate Debtor and creditor funds, it

forms a part of the company’s assets.

17. It is further submitted by Shri Dhruv Mehta that the

CoC, both before the NCLT and the NCLAT, consistently

maintained that the EBITDA earned during the CIRP was to

be distributed amongst the creditors or the stakeholders that

had infused capital before the infusion of funds by the SRA –

JSW. Thus, in its commercial wisdom, prior to approval of the

Resolution Plan, the CoC had clearly decided against the

EBITDA being retained in the company or being handed over

to the SRA – JSW.

25

“EBITDA” for short.

21

18. Shri Dhruv Mehta further submits that the NCLAT

erred in reversing the NCLT’s direction on the treatment of

EBITDA. It was submitted that the NCLAT failed to appreciate

that, unlike Committee of Creditors of Essar Steel India

Limited through Authorised Signatory v. Satish Kumar

Gupta and Others26 (hereinafter referred to as “Supreme

Court Essar”), the present Resolution Plan contains no

provision on the treatment or distribution of EBITDA, making

the two cases clearly distinguishable.

19. It was submitted by Shri Dhruv Mehta that the SRA

failed to infuse the committed amount of Rs. 26,550 crore,

having infused only Rs. 19,350 crore. This shortfall,

particularly in the Rs. 7,200 crore working capital infusion,

affects the scoring and renders the Plan only partially

implemented. It was further submitted that the SRA – JSW

contends that it issued Compulsorily Convertible

Debentures27 to satisfy the commitment of infusion. However,

neither the CoC nor the SRA – JSW have brought any

documentary evidence on record to show that any actual

26 (2020) 8 SCC 531 27 “CCD” for short.

22 infusion of funds was undertaken by the SRA – JSW. It was

further submitted that the CoC itself had specified that the

infusion must be in the form of pure equity and hence, the

CCDs issued by the SRA – JSW would not be as per the

requirements set by the CoC.

ii. Appellants in Civil Appeal No. 2225 of 2020 (Jaldhi Overseas Pte. Limited)

20. Shri Balbir Singh, learned Senior Counsel for

Appellant–Jaldhi, submitted that Jaldhi’s claims, based on

international arbitral awards, were initially admitted as

Operational Debts but were later reclassified as contingent

debts by the SRA–JSW. He contended that such

reclassification is arbitrary and unjust. Citing various

judgments including Swiss Ribbons Private Limited and

Another v. Union of India and Others28, India Resurgence

ARC Private Limited v. Amit Metaliks Limited and

Another29 and Supreme Court Essar, it was argued that

Jaldhi must be treated at par with other OCs and paid interest

for the inordinate delay.

28 (2019) 4 SCC 17 29 (2021) 19 SCC 672

23 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)

21. Shri Arjun Asthana, counsel for the Appellant – Medi

submitted that the appeal arises due to the non-payment of

pre-CIRP dues promised by the RP to incentivize Medi to

continue providing its services during CIRP. Medi, engaged

since 2012 for transport services, raised a claim of Rs. 9.51

crore after the CIRP was initiated. It was further submitted

that initially, the Appellant had refused to provide services

during the CIRP period. However, an agreement was entered

into with the RP, whereby Medi was promised 100% of its pre

– CIRP dues so as to incentivise it to provide services during

the CIRP.

22. It was submitted by Shri Asthana that Medi was duly

paid against its pre – CIRP due for about 10 months. However,

in August 2018, it claimed Rs. 7.76 crore for its services

provided during the CIRP. With no response from the RP, Medi

approached the NCLT. It is submitted that thereafter, a

corrigendum dated 1st October 2018 stated earlier payments

were wrongly classified by the accounting clerk as pre-CIRP

24 dues and the same were actually to be made against CIRP

services.

23. Shri Asthana further submitted that no bar exists

under the IBC to pay pre-CIRP dues if necessary to keep the

Corporate Debtor a going concern. Sections 14, 20(1), 23(1),

and 25(1) of the IBC impose a duty on the RP to manage

operations and Section 28(1)(k) of the IBC empowers the RP to

transfer operational debts, validating such payments. He

further submitted that barring all pre-CIRP payments would

render the CIRP being marred with irregularities, as many

such payments were admitted by the RP.

24. Shri Manu Beri, counsel for Appellant – Darcl is in a

similar position as the Appellant – Medi and has supported the

submission raised by it.

iv. Resolved Entity – BPSL

25. Shri Pinaki Misra, learned Senior Counsel for the

Resolved Entity (Bhushan Power and Steel Ltd.), submitted

that the company has been successfully revived post-

resolution and supported the submissions of the SRA – JSW.

25

v. Resolution Professional

26. Shri Navin Pahwa, learned Senior Counsel for the

Resolution Professional (RP), submitted that the Resolution

Plan, was in compliance with the IBC and the IBBI (CIRP)

Regulations. Since the liquidation value was nil, payments to

OCs, though ex gratia, were not required to be made in priority

over FCs. He submitted that the relevant amendment to

Regulation 38 of the IBBI (CIRP) Regulations mandating such

priority came into force only on 27th November 2019, i.e., after

the NCLT had approved the Resolution Plan, and hence the

Plan remained compliant with the law as it stood then.

27. As regards issues of delay in implementation, equity

infusion, and EBITDA, Shri Pahwa submitted that these were

not pressed against the RP and require no reply.

28. Responding to the contentions raised by Appellant –

Jaldhi, Shri Pahwa submitted that the RP had admitted

Jaldhi’s claim of Rs. 1,51,90,87,933/- as an OC, which was

duly reflected in the list. However, the SRA–JSW reclassified it

as a “Contingent Creditor” due to the pendency of the

proceedings regarding the international arbitral awards before

the Calcutta High Court. He submitted that the RP had no role

26 in this reclassification and was only required to ensure the

Plan’s completeness before placing it before the CoC.

29. Responding to the contentions raised in Appellants –

Medi and Darcl, Shri Pahwa submitted that no pre-CIRP dues

were disbursed by the RP. Payments of Rs. 40.77 crore were

made solely to honour post-dated cheques issued by the

erstwhile management to avoid criminal liability under the

Negotiable Instruments Act, 1881 as the IBC does not protect

against the same. An inadvertent mistake by an accounting

clerk led to the payments being reflected as pre – CIRP

payments, which was later rectified, with revised payment

advisories issued and adjustments made against the CIRP-

period dues. It was submitted that the Appellants – Medi and

Darcl – had provided services during the CIRP period

amounting to ₹1,54,82,86,309/- and ₹99,99,24,471/-

respectively, against which ₹1,54,82,86,309/- and

₹96,11,44,066/- had been paid, with the balance payable

under the Resolution Plan.

vi. Committee of Creditors

30. Shri Tushar Mehta, learned Solicitor General

appearing for the CoC, submitted that the erstwhile promoters

27 lacked locus under Sections 61 and 62 of the IBC, having

ceased to have any relationship with the Corporate Debtor

upon initiation of CIRP. He submitted that the grounds raised

by them do not fall within the scope of Section 61(3) of the IBC,

nor do they involve any question of law under Section 62 of

the IBC. He relied on the cases of K. Sashidhar v. Indian

Overseas Bank and Others30, Kalpraj Dharamshi and

Another v. Kotak Investment Advisors Limited and

Another31, Ghanshyam Mishra and Sons Private Limited

through the Authorised Signatory v. Edelweiss Asset

Reconstruction Company Limited through the Director

and Others32 and Ngaitlang Dhar v. Panna Pragati

Infrastructure Private Limited and Another33 to emphasize

that the "Commercial Wisdom" of the CoC is not subject to

judicial review.

31. It was submitted by Shri Tushar Mehta that the CoC

does not become functus officio upon NCLT’s approval of the

Plan. It continues to operate until the Plan is fully

implemented or any challenge to its approval attains finality.

30 (2019) 12 SCC 150 31 (2021) 1 SCC 401 32 (2021) 9 SCC 657 33 (2022) 6 SCC 172

28 Sections 21, 23, and 28 of the IBC, read with Regulation 38 of

the IBBI (CIRP) Regulations, support the continued existence

of the CoC and the authority of the Monitoring Committee.

32. It was submitted by Shri Tushar Mehta that the CoC

remains empowered to act from time to time. Based on a

proposal submitted in proceedings under Section 95 of the IBC

by the ex-promoters, the CoC held a meeting on 6th August

2025 and passed a resolution to allocate the EBITDA and

interest for delayed implementation to FCs. It was submitted

that since the SRA–JSW did not contribute to the EBITDA

earned during CIRP, and benefited from it after the

implementation of the Resolution Plan, it has no rightful claim

over the same.

33. Regarding the contentions raised against Clause 3.1

being in contravention of law, it was submitted by Shri Tushar

Mehta that this clause permitted the CoC, with 66% approval,

to extend the implementation period. It was submitted that

this was done to ensure successful implementation of the

Resolution Plan and was a valid exercise of commercial

wisdom, not open to judicial interference. He further

submitted that Clause 3.1(a) read with Clause 4 (iii) of the

29 Resolution Plan was inserted in compliance with Section

30(2)(d) of the IBC to provide for implementation and

supervision.

vii. Successful Resolution Applicant – JSW

34. Shri Neeraj Kishan Kaul, learned Senior Counsel for

the SRA–JSW, opened his submissions by questioning the

locus standi of the erstwhile promoters, contending that they

are not “persons aggrieved” within the meaning of the IBC. It

was submitted that the appeals raise frivolous objections

concerning the timeline of implementation, payments to OCs

and equity infusion, and are in fact attempts to interfere with

and derail the Resolution Process. Reliance was placed on

Arun Kumar Jagatramka v. Jindal Steel and Power

Limited and Another34 and Phoenix ARC Private Limited

v. Spade Financial Services Limited and Others35 to

submit that related parties such as erstwhile promoters must

be kept out of the CIRP to avoid the process from being

sabotaged.

34 (2021) 7 SCC 474 35 (2021) 3 SCC 475

30

35. Shri Kaul further submitted that the issues raised by

the Appellants do not fall within the exhaustive scope of

Section 61(3) of the IBC, and no substantial question of law

has been raised as per the mandate of Section 62 of the IBC.

It was submitted that the arguments concerning EBITDA do

not arise from any legal or regulatory mandate and were not

contemplated under the Request for Resolution Plan36 or the

Resolution Plan and that the Appellants have raised several

new grounds for the first time before this Court, including

those relating to implementation delays, equity infusion, and

payments to OCs.

36. It was submitted by Shri Kaul that the erstwhile

promoters, were responsible for the Corporate Debtor’s

insolvency and had acted in a mala fide and obstructive

manner during the CIRP. The NCLT, in its order dated 5th

September 2019, recorded findings of deliberate attempts to

delay the process by the erstwhile promoters and imposed

costs for the said conduct.

37. Regarding the contentions raised against Clauses

3.1(a) and 4(iii) of the Resolution Plan, Shri Kaul submitted

36 “RfRP” for short.

31 that the said Clauses merely permit the CoC to extend the

implementation timeline, which falls within its commercial

wisdom and complies with Regulation 38(2) of the IBBI (CIRP)

Regulations and that a challenge to the said Clauses has been

raised for the first time at the stage of oral arguments before

this Court, which cannot be permitted.

38. Regarding the issue of priority payments to OCs, it

was submitted by Shri Kaul that even though the liquidation

value payable to the OCs was nil, the SRA – JSW offered an ex

gratia payment to the OCs. It was submitted that as per the

law in force during the approval of the Resolution Plan by the

Adjudicating Authority, the OCs were to be paid only the

“amount due” as per the Resolution Plan in priority over the

FCs. Since, no amount was due to the OCs, they were not paid

in priority and the Resolution Plan was compliant with the law

as it stood. It was further submitted that the amendment to

Regulation 38(1) of the IBBI (CIRP) Regulations dated 27th

November 2019, is not applicable to the present case as the

same was brought into effect after the approval of the

Resolution Plan by the NCLT.

32

39. Regarding the contention of delay in implementation

of the Resolution Plan, Shri Kaul submitted that such delay

was caused by external factors not in control of the SRA – JSW.

He submitted that the NCLT’s modifications to the Plan vide

its order dated 5th September 2019 were unilateral in nature

and could not be brought in force without approval of the CoC.

It was further submitted that thereafter, a PAO dated 10 th

October 2019 was issued by the ED attaching assets of the

Corporate Debtor. He submitted that in the appeal filed by the

SRA – JSW against the unilateral modifications of the NCLT,

the NCLAT stayed the implementation of the Plan until 17th

February 2020.

40. It was further submitted by Shri Kaul that with the

insertion of Section 32A in the IBC through an ordinance

dated 28th December 2019, the SRA was entitled to protection

from criminal prosecution for acts of the erstwhile

management of the Corporate Debtor. It is submitted that

based on the PAO and the other criminal proceedings, the CoC

extended the implementation timeline, and the Plan was

implemented on 26th March 2021 with the payment of Rs.

33 19,350 crore made by the SRA – JSW to the FCs of the

Corporate Debtor.

41. Shri Kaul submitted that repeated clarifications were

sought by the SRA–JSW and the CoC from this Court

regarding the handover of the unencumbered assets of the

Corporate Debtor. He submitted that this Court, ultimately,

vide order dated 11th December 2024, directed that the

Corporate Debtor’s assets be handed over to the SRA – JSW

by the ED. He also submitted that in separate proceedings, the

Delhi High Court set aside criminal proceedings against the

resolved entity – BPSL, holding that no prosecution could lie

against it post – resolution. It was therefore submitted that the

entire period of delay could not be attributable to the SRA –

JSW as it required the possession of unencumbered assets of

the Corporate Debtor before it could implement the Resolution

Plan.

42. Shri Kaul submitted that the interest for delay

cannot be claimed by the CoC, as it had, itself, unconditionally

extended the timeline. It was submitted that the CoC had

admitted that the delay was attributable to the ED’s actions

and not to the SRA – JSW.

34

43. It was further submitted by Shri Kaul that the SRA–

JSW has fulfilled all its obligations under the Plan. An amount

of Rs. 100 crore was infused as equity, with the balance

infused via CCDs, which qualify as equity as per the judgment

of this Court in the case of IFCI Limited v. Sutanu Sinha

and Others37. It was therefore submitted that the CoC itself

confirmed full compliance and supported the SRA – JSW’s

position.

44. Regarding the issue of distribution of EBITDA, Shri

Kaul submitted that it is only an “accounting term” and does

not reflect actual profitability. After accounting for taxes,

interest, depreciation, and amortization, the Corporate Debtor

had incurred losses of Rs. 16,616 crore in total during the

CIRP period. He further submitted that neither the RfRP nor

the Resolution Plan provides for EBITDA distribution. The

Resolution Plan binds all stakeholders under Section 31(1) of

the IBC and no upward or downward movement of claims is

permissible unless expressly provided for by the Resolution

Plan. It was submitted that accepting such a novel claim for

distribution of EBITDA would be in contravention of the

37 2023 SCC OnLine SC 1529

35 judgment of this Court in the case of Ghanshyam Mishra

(supra).

45. It was further submitted by Shri Kaul that the CoC

resolution dated 6th August 2025 claiming entitlement to

EBITDA is ultra vires. He submitted that the CoC was aware

of the erstwhile promoters’ defences in the personal insolvency

proceedings since 2020, and the CIRP is entirely distinct from

personal insolvency proceedings under Section 95 of the IBC.

It was submitted that the NCLT, in its order dated 7th October

2024, has also recognized this distinction. He submitted that

no appeal was filed by the CoC against the NCLAT’s findings

on distribution of EBITDA, and hence, the CoC cannot

challenge the same at this stage.

46. Shri Kaul further submitted that the CoC, during

NCLAT proceedings, had acknowledged that there was no

provision for EBITDA distribution. In its resolution dated 4 th

July 2020, it decided that the EBITDA would remain with the

Corporate Debtor. It was submitted that this constitutes a

judicial admission and the CoC cannot be permitted to change

its stand at this stage of the proceedings before this Court.

36

47. Regarding the contentions of Appellant – Jaldhi, Shri

Kaul submitted that it was correctly classified as a contingent

creditor. It was further submitted that the NCLT found that it

had initially presented itself as such and that the IBC permits

sub-classification of OCs as contingent and crystallized

claims, where justified and the same has been affirmed by this

Court in the case of Supreme Court Essar.

48. It is submitted that Jaldhi treated itself as a

contingent creditor as it was under the impression that

contingent claims cannot be settled under a Resolution Plan.

It was only later that it changed its stance on a wrong

understanding that no distinction in the treatment of claims

amongst a class of OCs was permissible. It is therefore

submitted that the objectives of the IBC cannot be stretched

so far as to treat unequals as equals and the sub –

classification of OCs is permissible in law.

49. Shri Kaul submitted that Jaldhi had filed its claim

on the basis of certain international arbitral awards which

were passed in its favour. He submitted that as on the date of

the commencement of the CIRP, the appellant had not been

successful in the enforcement of the award and therefore the

37 claims remained contingent as foreign awards are not

automatically binding under Indian law. Pertinently, the

appellant had also withdrawn the enforcement proceedings

which were pending before the Calcutta High Court and the

same has been reflected in the orders dated 4th January 2022

and 22nd August 2023 passed by the High Court. It is therefore

submitted that once the enforcement petitions filed before the

Calcutta High Court were withdrawn, the foreign award could

not be enforced and was not binding under Indian law.

viii. Submissions in Rejoinder

50. In rejoinder, Shri Dhruv Mehta, learned Senior

Counsel for the erstwhile promoters submitted that EBITDA

represents the operating profit of the Corporate Debtor and is

not merely an accounting figure, as contended by the SRA–

JSW. It was submitted that the NCLAT, in the impugned

judgment, has also used the terms “profits” and “EBITDA”

interchangeably, reinforcing this interpretation. It was further

submitted that SRA–JSW, having not challenged the

impugned judgment, is precluded from now contesting the

NCLAT’s understanding of EBITDA.

38

51. Shri Dhruv Mehta lastly submitted that the assertion

by SRA – JSW that there were no profits during the CIRP

period is contrary to the record. The RP, in his affidavit,

confirmed the existence of EBITDA valued at Rs. 1,813 crores

for the relevant period. It was submitted that the deduction of

interest, taxes, depreciation, and amortization to claim the

absence of profit was stated to be misleading, as these

deductions do not involve actual cash outflow and hence do

not affect the liquidity available for distribution to the FCs.

IV. ANALYSIS

52. With the assistance of the learned Senior

Counsel/counsel for the parties, we have perused the entire

material placed on record.

a. Locus standi of the erstwhile promoters

53. At the outset, the SRA – JSW as well as the CoC have

heavily challenged the locus of the erstwhile promoters of the

Corporate Debtor. To support their argument, reliance has

been placed on Section 62 of the IBC, which reads thus:

“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

39 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.”

54. On a bare perusal of Section 62 of the IBC, it is clear

that the interpretation of the term “person aggrieved” is not

limited or defined. However, the objectives of the IBC itself

must be kept in mind while interpreting the said term. To

ascertain the objectives of the IBC, it will be apposite to

examine its preamble, which reads thus:

“An Act to consolidate and amend the laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms and individuals in a time-bound manner for maximisation of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the order of priority of payment of Government dues and to establish an Insolvency and Bankruptcy Board of India, and for matters connected therewith or incidental thereto.”

55. On a perusal of the said preamble, it can be seen that

the IBC was brought in to consolidate the laws related to the

reorganization and insolvency resolution of corporate persons

in a time – bound manner which would result in the promotion

40 of entrepreneurship and the balancing of the interests of all

shareholders. The main purpose of the enactment therefore is

to ensure that the company undergoing insolvency

proceedings is revived or liquidated expeditiously within a

stipulated timeframe.

56. The said objective of expeditious resolution can be

further found in the IBC under Section 12, which reads thus:

“12. Time-limit for completion of insolvency resolution process.—(1) Subject to sub-section (2), the corporate insolvency resolution process shall be completed within a period of one hundred and eighty days from the date of admission of the application to initiate such process. (2) The resolution professional shall file an application to the Adjudicating Authority to extend the period of the corporate insolvency resolution process beyond one hundred and eighty days, if instructed to do so by a resolution passed at a meeting of the committee of creditors by a vote of sixty-six per cent of the voting shares. (3) On receipt of an application under sub-section (2), if the Adjudicating Authority is satisfied that the subject matter of the case is such that corporate insolvency resolution process cannot be completed within one hundred and eighty days, it may by order extend the duration of such process beyond one hundred and eighty days by such further period as it thinks fit, but not exceeding ninety days:

Provided that any extension of the period of corporate insolvency resolution process under this section shall not be granted more than once: Provided further that the corporate insolvency resolution process shall mandatorily be completed within a period of three hundred and thirty days 41 from the insolvency commencement date, including any extension of the period of corporate insolvency resolution process granted under this section and the time taken in legal proceedings in relation to such resolution process of the corporate debtor:

Provided also that where the insolvency resolution process of a corporate debtor is pending and has not been completed within the period referred to in the second proviso, such resolution process shall be completed within a period of ninety days from the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019.”

57. A bare perusal of Section 12 of the IBC reveals that

precise timelines have been provided for all the different steps

that have to be taken during the CIRP of a company. The

proviso to Section 12 of the IBC states that any extension to

the fixed timelines may not be granted more than once. This

further shows that the IBC does not allow any undue delays

in the completion of the CIRP of a company.

58. It is thus clear that the IBC proposes to carry out the

Resolution Process of a Company expeditiously in a time –

bound fashion.

59. It was submitted by the SRA – JSW as well as the

CoC that after the CIRP is triggered, the erstwhile promoters’

relationship with the Corporate Debtor – BPSL ceases to exist

and they cannot be included in the definition of “person

42 aggrieved”. It was also submitted that the conduct of the

Appellants – erstwhile promoters in the CoC meetings, before

the NCLT, NCLAT and this Court would reveal that these

appeals are an attempt to interfere with the task of reviving

the Corporate Debtor undertaken by the SRA – JSW.

60. This Court, in the case of Arun Kumar Jagatramka

(supra), observed thus:

“41. The enactment of the IBC has marked a quantum change in corporate governance and the rule of law. First and foremost, the IBC perceives good corporate governance, respect for and adherence to the rule of law as central to the resolution of corporate insolvencies. Second, the IBC perceives corporate insolvency not as an isolated problem faced by individual business entities but places it in the context of a framework which is founded on public interest in facilitating economic growth by balancing diverse stakeholder interests. Third, the IBC attributes a primacy to the business decisions taken by creditors acting as a collective body, on the premise that the timely resolution of corporate insolvency is necessary to ensure the growth of credit markets and encourage investment. Fourth, in its diverse provisions, the IBC ensures that the interests of corporate enterprises are not conflated with the interests of their promoters; the economic value of corporate structures is broader in content than the partisan interests of their managements. These salutary objectives of the IBC can be achieved if the integrity of the resolution process is placed at the forefront. Primarily, the IBC is a legislation aimed at reorganisation and resolution of insolvencies. Liquidation is a matter of last resort. These objectives can be

43 achieved only through a purposive interpretation which requires courts, while infusing meaning and content to its provisions, to ensure that the problems which beset the earlier regime do not enter through the backdoor through disingenuous stratagems.” (Emphasis supplied)

61. It can thus be seen that this Court has observed that

one of the integral objectives of the IBC is to ensure that the

interests of the company undergoing CIRP are not influenced

by the interests of the erstwhile management and that this can

only be achieved by applying a purposive interpretation to the

provisions of the Code by not permitting the problems of the

earlier regime to enter the resolved/revived entity through the

backdoor.

62. The Appellants – erstwhile promoters have heavily

relied on the judgment of this Court in Vijay Kumar Jain

(supra), wherein this Court held thus:

“19.5. Further, under Regulation 37(1)(f), a resolution plan may provide for reduction in the amount payable to the creditors, which again vitally impacts the rights of a guarantor. Last but not the least, a resolution plan which has been approved or rejected by an order of the adjudicating authority, has to be sent to “participants” which would include members of the erstwhile Board of Directors — vide Regulation 39(5) of the CIRP Regulations.

44 Obviously, such copy can only be sent to participants because they are vitally interested in the outcome of such resolution plan, and may, as persons aggrieved, file an appeal from the adjudicating authority's order to the Appellate Tribunal under Section 61 of the Code. Quite apart from this, Section 60(5)(c) is also very wide, and a member of the erstwhile Board of Directors also has an independent right to approach the adjudicating authority, which must then hear such person before it is satisfied that such resolution plan can pass muster under Section 31 of the Code.” (Emphasis supplied)

63. In view of the aforesaid judgment of this Court, since

the Resolution Plan also affects the rights of the guarantors,

we find that the SRA – JSW and the CoC are not right in

submitting that the appeals at the instance of the appellants

would not be maintainable. In any case, rather than non-

suiting the appellants on the ground of locus, we propose to

decide the appeals on merits after considering the

submissions made on behalf of all the parties. However, while

doing so, it will also be apposite to consider the conduct of the

erstwhile promoters during the CIRP.

b. Conduct of Erstwhile Promoters

64. It is submitted by the SRA – JSW that Mr. Sanjay

Singal (erstwhile Promoter), had attended just one meeting of 45 the CoC himself and had attended just two meetings through

his authorized representatives. Furthermore, Mrs. Aarti

Singal, according to the SRA – JSW, had not attended even a

single meeting of the CoC. In this respect, it will also be

relevant to refer to the observations made by NCLT in its

Judgment and Order dated 5th September 2019 while

approving the Resolution Plan. The NCLT, after reproducing

the entire table showing the attendance of the erstwhile

management and exhibiting the lackluster participation of the

Appellants, observed thus:

“126. It appears to us that the Ex-Management and Promoters were moving places to delay the conclusion of proceedings before us. Accordingly, another set of written submissions was filed by Mr. Virendra Ganda, learned Senior Counsel by urging that the judgment of the Hon'ble Appellate Tribunal rendered in the case of Standard Chartered Bank v. Satish Kumar Gupta, R.P. concerning Essar Steel Limited in C.A. No. 287 /2019, 288/2019, 289/ 19 and 295/2019 decided on 04.07.2019 was placed before us. Numerous other applications have been filed after the order was reserved which have delayed and interrupted the pronouncement of the order and those applications are as under:

S. CA No. Filed By Date of No. filing 1. CA 1297(PB) Becquerel 03.05.2019 /2019 Industries Pvt. Ltd. 2. CA 973(PB) /2019 Sanjay Singal 21.05.2019 3. CA 1055(PB)/2019 Resolution 30.05.2019 Professional

46 4. CA 1056(PB)/2019 Sanjay Singal 30.05.2019 5. CA 1296(PB)/2019 PNB 11.06.2019 6. CA 1295(PB)/2019 JSW 10.07.2019

127. However, the Appellate Tribunal in Company Appeal (AT) (Insolvency) No. 198 of 2018 has issued directions on 04.02.2019 that Adjudicating Authority-NCLT may proceed with the pronouncement of the order. We have added this unusual para to this order with the object of showing how desperate and frustrated the Ex-

Management/Promoters are and how they are making efforts to cause delay. We do not say any further on this aspect.

128. As a sequel of the above discussion, CA No. 254(PB)/2019 is allowed and the resolution plan of JSW-Hl Resolution Plan Applicant is accepted. The objections raised by the Ex-Directors cum Promoters of the Corporate Debtor and Operational Creditors are hereby over-ruled. However, the acceptance and approval of the resolution plan shall be subject to the following:

a) …….

b) …….

c) CA No. 286(PB) /2019 filed by the erstwhile directors Mr. Sanjay Singhal and Mrs. Aarti Singhal seeking copies of the resolution plan is dismissed with a cost of Rs. 1 /- lac to be paid personally by Mr. Sanjay Singal and Ms. Aarti Singal in equal share;

……..” (Emphasis supplied)

65. It can thus be seen that after the NCLT had heard

the matter in detail, various applications had been filed by the

erstwhile management, including Mr. Sanjay Singal before

47 various forums. This had led to a delay in the pronouncement

of the approval order by the NCLT. A specific observation has

been made by the NCLT that the erstwhile promoters were

making efforts to cause delays which indicated how desperate

and frustrated they were. The NCLT also imposed a cost of Rs.

1 Lakh on the Appellants – erstwhile promoters as it concluded

that the application seeking copies of the Resolution Plan filed

by them was frivolous.

66. It can thus clearly be seen that the entire attempt of

the appellants has been to thwart the CIRP and to not permit

the same to be taken to a logical end. Having observed the

conduct of the Appellants, we shall now proceed to deal with

their contentions on merit.

c. Existence of the CoC after approval of the Resolution Plan by the Adjudicating Authority

67. It is submitted by Shri Dhruv Mehta appearing on

behalf of the Appellants – erstwhile promoters that the CoC

becomes functus officio after the approval of the Resolution

Plan by the Adjudicating Authority. He submitted that the IBC

does not recognize the concept of an “erstwhile CoC” and the

CoC is to work with the RP. He submitted that since the role

48 of the RP ends after the approval of the Resolution Plan, the

CoC cannot exercise its authority independently. Per contra,

Shri Tushar Mehta, appearing on behalf of the CoC submitted

that the CoC does not lose its authority after the approval of

the Resolution Plan. He submitted that the CoC remains in

existence until the Resolution Plan is fully implemented or a

challenge to the approval order passed by the Adjudicating

Authority attains finality, whichever comes later. It is

submitted that the provisions of the IBC and the IBBI (CIRP)

Regulations enable the CoC to set up a monitoring committee

to oversee the implementation of the Resolution Plan and thus

on a conjoint reading of the said provisions, it is clear that the

CoC remains in existence till the Resolution Plan is

implemented or the appeal is finally decided by this Court.

68. In this respect, it would be relevant to refer to

Sections 20, 21, 24, 28 and 30 of the IBC, which read thus:

“20. Management of operations of corporate debtor as going concern.—(1) The interim resolution professional shall make every endeavour to protect and preserve the value of the property of the corporate debtor and manage the operations of the corporate debtor as a going concern. (2) For the purposes of sub-section (1), the interim resolution professional shall have the authority—

49

(a) to appoint accountants, legal or other professionals as may be necessary;

(b) to enter into contracts on behalf of the corporate debtor or to amend or modify the contracts or transactions which were entered into before the commencement of corporate insolvency resolution process;

(c) to raise interim finance provided that no security interest shall be created over any encumbered property of the corporate debtor without the prior consent of the creditors whose debt is secured over such encumbered property:

Provided that no prior consent of the creditor shall be required where the value of such property is not less than the amount equivalent to twice the amount of the debt.

(d) to issue instructions to personnel of the corporate debtor as may be necessary for keeping the corporate debtor as a going concern; and

(e) to take all such actions as are necessary to keep the corporate debtor as a going concern.

21. Committee of creditors.—(1) The interim resolution professional shall after collation of all claims received against the corporate debtor and determination of the financial position of the corporate debtor, constitute a committee of creditors. (2) The committee of creditors shall comprise all financial creditors of the corporate debtor:

Provided that a financial creditor or the authorised representative of the financial creditor referred to in sub-section (6) or sub-section (6-A) or sub-section (5) of Section 24, if it is a related party of the corporate debtor, shall not have any right of representation, participation or voting in a meeting of the committee of creditors:

50 Provided further that the first proviso shall not apply to a financial creditor, regulated by a financial sector regulator, if it is a related party of the corporate debtor solely on account of conversion or substitution of debt into equity shares or instruments convertible into equity shares or completion of such transactions as may be prescribed, prior to the insolvency commencement date.

(3) Subject to sub-sections (6) and (6-A), where the corporate debtor owes financial debts to two or more financial creditors as part of a consortium or agreement, each such financial creditor shall be part of the committee of creditors and their voting share shall be determined on the basis of the financial debts owed to them.

(4) Where any person is a financial creditor as well as an operational creditor,—

(a) such person shall be a financial creditor to the extent of the financial debt owed by the corporate debtor, and shall be included in the committee of creditors, with voting share proportionate to the extent of financial debts owed to such creditor;

(b) such person shall be considered to be an operational creditor to the extent of the operational debt owed by the corporate debtor to such creditor.

(5) Where an operational creditor has assigned or legally transferred any operational debt to a financial creditor, the assignee or transferee shall be considered as an operational creditor to the extent of such assignment or legal transfer. (6) Where the terms of the financial debt extended as part of a consortium arrangement or syndicated facility provide for a single trustee or agent to act for all financial creditors, each financial creditor may—

51

(a) authorise the trustee or agent to act on his behalf in the committee of creditors to the extent of his voting share;

(b) represent himself in the committee of creditors to the extent of his voting share;

(c) appoint an insolvency professional (other than the resolution professional) at his own cost to represent himself in the committee of creditors to the extent of his voting share; or

(d) exercise his right to vote to the extent of his voting share with one or more financial creditors jointly or severally. (6-A) Where a financial debt—

(a) is in the form of securities or deposits and the terms of the financial debt provide for appointment of a trustee or agent to act as authorised representative for all the financial creditors, such trustee or agent shall act on behalf of such financial creditors;

(b) is owed to a class of creditors exceeding the number as may be specified, other than the creditors covered under clause (a) or sub-section (6), the interim resolution professional shall make an application to the Adjudicating Authority along with the list of all financial creditors, containing the name of an insolvency professional, other than the interim resolution professional, to act as their authorised representative who shall be appointed by the Adjudicating Authority prior to the first meeting of the committee of creditors;

(c) is represented by a guardian, executor or administrator, such person shall act as authorised representative on behalf of such financial creditors,

52 and such authorised representative under clause (a) or clause (b) or clause (c) shall attend the meetings of the committee of creditors, and vote on behalf of each financial creditor to the extent of his voting share.

(6-B) The remuneration payable to the authorised representative—

(i) under clauses (a) and (c) of sub-section (6-A), if any, shall be as per the terms of the financial debt or the relevant documentation; and

(ii) under clause (b) of sub-section (6-A) shall be as specified which shall form part of the insolvency resolution process costs. (7) The Board may specify the manner of voting and the determining of the voting share in respect of financial debts covered under sub-sections (6) and (6-A).

(8) Save as otherwise provided in this Code, all decisions of the committee of creditors shall be taken by a vote of not less than fifty-one per cent. of voting share of the financial creditors:

Provided that where a corporate debtor does not have any financial creditors, the committee of creditors shall be constituted and shall comprise of such persons to exercise such functions in such manner as may be specified.

(9) The committee of creditors shall have the right to require the resolution professional to furnish any financial information in relation to the corporate debtor at any time during the corporate insolvency resolution process.

(10) The resolution professional shall make available any financial information so required by the committee of creditors under sub-section (9) within a period of seven days of such requisition.

x x x x

24. Meeting of committee of creditors.—(1) The members of the committee of creditors may meet in

53 person or by such electronic means as may be specified.

(2) All meetings of the committee of creditors shall be conducted by the resolution professional. (3) The resolution professional shall give notice of each meeting of the committee of creditors to—

(a) members of committee of creditors, including the authorised representatives referred to in sub-sections (6) and (6-A) of Section 21 and sub-section (5);

(b) members of the suspended Board of Directors or the partners of the corporate persons, as the case may be;

(c) operational creditors or their representatives if the amount of their aggregate dues is not less than ten per cent of the debt.

(4) The directors, partners and one representative of operational creditors, as referred to in sub-section (3), may attend the meetings of committee of creditors, but shall not have any right to vote in such meetings:

Provided that the absence of any such director, partner or representative of operational creditors, as the case may be, shall not invalidate proceedings of such meeting.

(5) Subject to sub-sections (6), (6-A) and (6-B) of Section 21, any creditor] who is a member of the committee of creditors may appoint an insolvency professional other than the resolution professional to represent such creditor in a meeting of the committee of creditors:

Provided that the fees payable to such insolvency professional representing any individual creditor will be borne by such creditor.

(6) Each creditor shall vote in accordance with the voting share assigned to him based on the financial debts owed to such creditor.

54 (7) The resolution professional shall determine the voting share to be assigned to each creditor in the manner specified by the Board.

(8) The meetings of the committee of creditors shall be conducted in such manner as may be specified.

x x x x

28. Approval of committee of creditors for certain actions.—(1) Notwithstanding anything contained in any other law for the time being in force, the resolution professional, during the corporate insolvency resolution process, shall not take any of the following actions without the prior approval of the committee of creditors namely—

(a) raise any interim finance in excess of the amount as may be decided by the committee of creditors in their meeting;

(b) create any security interest over the assets of the corporate debtor;

(c) change the capital structure of the corporate debtor, including by way of issuance of additional securities, creating a new class of securities or buying back or redemption of issued securities in case the corporate debtor is a company;

(d) record any change in the ownership interest of the corporate debtor;

(e) give instructions to financial institutions maintaining accounts of the corporate debtor for a debit transaction from any such accounts in excess of the amount as may be decided by the committee of creditors in their meeting;

(f) undertake any related party transaction;

(g) amend any constitutional documents of the corporate debtor;

(h) delegate its authority to any other person;

55

(i) dispose of or permit the disposal of shares of any shareholder of the corporate debtor or their nominees to third parties;

(j) make any change in the management of the corporate debtor or its subsidiary;

(k) transfer rights or financial debts or operational debts under material contracts otherwise than in the ordinary course of business;

(l) make changes in the appointment or terms of contract of such personnel as specified by the committee of creditors; or

(m) make changes in the appointment or terms of contract of statutory auditors or internal auditors of the corporate debtor. (2) The resolution professional shall convene a meeting of the committee of creditors and seek the vote of the creditors prior to taking any of the actions under sub-section (1).

(3) No action under sub-section (1) shall be approved by the committee of creditors unless approved by a vote of sixty-six per cent of the voting shares. (4) Where any action under sub-section (1) is taken by the resolution professional without seeking the approval of the committee of creditors in the manner as required in this section, such action shall be void. (5) The committee of creditors may report the actions of the resolution professional under sub-section (4) to the Board for taking necessary actions against him under this Code. Approval of committee of creditors for certain actions.

x x x x

30. Submission of resolution plan.—(1) A resolution applicant may submit a resolution plan along with an affidavit stating that he is eligible under Section 29-A to the resolution professional prepared on the basis of the information memorandum.

56 (2) The resolution professional shall examine each resolution plan received by him to confirm that each resolution plan—

(a) provides for the payment of insolvency resolution process costs in a manner specified by the Board in priority to the payment of other debts of the corporate debtor;

(b) provides for the payment of debts of operational creditors in such manner as may be specified by the Board which shall not be less than—

(i) the amount to be paid to such creditors in the event of a liquidation of the corporate debtor under Section 53; or

(ii) the amount that would have been paid to such creditors, if the amount to be distributed under the resolution plan had been distributed in accordance with the order of priority in sub-section (1) of Section 53, whichever is higher, and provides for the payment of debts of financial creditors, who do not vote in favour of the resolution plan, in such manner as may be specified by the Board, which shall not be less than the amount to be paid to such creditors in accordance with sub-section (1) of Section 53 in the event of a liquidation of the corporate debtor.

Explanation 1.—For the removal of doubts, it is hereby clarified that a distribution in accordance with the provisions of this clause shall be fair and equitable to such creditors.

Explanation 2.—For the purposes of this clause, it is hereby declared that on and

57 from the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019, the provisions of this clause shall also apply to the corporate insolvency resolution process of a corporate debtor—

(i) where a resolution plan has not been approved or rejected by the Adjudicating Authority;

(ii) where an appeal has been preferred under Section 61 or Section 62 or such an appeal is not time barred under any provision of law for the time being in force; or

(iii) where a legal proceeding has been initiated in any court against the decision of the Adjudicating Authority in respect of a resolution plan;]

(c) provides for the management of the affairs of the corporate debtor after approval of the resolution plan;

(d) the implementation and supervision of the resolution plan;

(e) does not contravene any of the provisions of the law for the time being in force;

(f) conforms to such other requirements as may be specified by the Board.

Explanation.—For the purposes of clause (e), if any approval of shareholders is required under the Companies Act, 2013 (18 of 2013) or any other law for the time being in force for the implementation of actions under the resolution plan, such approval shall be deemed to have been given and it shall not be a contravention of that Act or law.

(3) The resolution professional shall present to the committee of creditors for its approval such

58 resolution plans which confirm the conditions referred to in sub-section (2).

(4) The committee of creditors may approve a resolution plan by a vote of not less than sixty-six per cent of voting share of the financial creditors, after considering its feasibility and viability the manner of distribution proposed, which may take into account the order of priority amongst creditors as laid down in sub-section (1) of Section 53,including the priority and value of the security interest of a secured creditor], and such other requirements as may be specified by the Board:

Provided that the committee of creditors shall not approve a resolution plan, submitted before the commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017 (Ord. 7 of 2017), where the resolution applicant is ineligible under Section 29-A and may require the resolution professional to invite a fresh resolution plan where no other resolution plan is available with it:

Provided further that where the resolution applicant referred to in the first proviso is ineligible under clause (c) of Section 29-A, the resolution applicant shall be allowed by the committee of creditors such period, not exceeding thirty days, to make payment of overdue amounts in accordance with the proviso to clause (c) of Section 29-A:

Provided also that nothing in the second proviso shall be construed as extension of period for the purposes of the proviso to sub-section (3) of Section 12, and the corporate insolvency resolution process shall be completed within the period specified in that sub- section.

Provided also that the eligibility criteria in Section 29-A as amended by the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018 (Ord. 6 of 2018) shall apply to the resolution applicant who has not submitted resolution plan as on the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018.

59 (5) The resolution applicant may attend the meeting of the committee of creditors in which the resolution plan of the applicant is considered:

Provided that the resolution applicant shall not have a right to vote at the meeting of the committee of creditors unless such resolution applicant is also a financial creditor.

(6) The resolution professional shall submit the resolution plan as approved by the committee of creditors to the Adjudicating Authority.”

69. It can be seen that as per Section 20 of the IBC, the

IRP is required to make every endeavour to protect and

preserve the value of the property of the corporate debtor and

manage the operations of the corporate debtor as a going

concern. It will further be relevant to note that, under Section

21 of the IBC, the IRP, after collation of all claims received

against the Corporate Debtor and determination of the

financial position of the Corporate Debtor, is required to

constitute a CoC. Under Section 21 of the IBC, the CoC must

be comprised of all FCs of the Corporate Debtor. However,

proviso to sub-section (2) of Section 21 of the IBC provides that

if a financial creditor or the authorised representative of the

financial creditor referred to in sub-section (6) or sub-section

(6-A) or sub-section (5) of Section 24 of the IBC is a related

party of the corporate debtor, he shall not have any right of 60 representation, participation or voting in a meeting of the CoC.

No doubt that the second proviso thereof excludes certain

related parties of a corporate debtor from the applicability of

the first proviso. However, the same would not be relevant for

the purpose of the present matter.

70. Section 24 of the IBC deals with the meeting of the

creditors. Sub-section (1) of Section 28 of the IBC, which

begins with a non-obstante clause, requires that the RP,

during the CIRP, shall not take any of the actions therein

without the prior approval of the CoC. Such decisions are

required to be taken by the CoC after putting the matters

enumerated in sub-section (1) thereof to vote. Under sub-

section (4) of Section 30 of the IBC, the CoC considers approval

of resolution plan by a vote of not less than 66% of voting

share of the financial creditors.

71. For considering the submissions in this regard, it will

also be relevant to refer to certain provisions of the IBBI (CIRP)

Regulations. Clause (d) of Regulation 2 of the IBBI (CIRP)

Regulations, defines “committee” as a committee of creditors

established under Section 21 of the IBC.

61

72. Regulation 18 of the IBBI (CIRP) Regulations reads

thus:

“18. Meetings of the committee.—(1) A resolution professional shall convene a meeting of the committee before lapse of thirty days from the last meeting:

Provided that the committee may decide to extend the interval between such meetings subject to the condition that there shall be at least one meeting in each quarter.

(2) A resolution professional may convene a meeting, if he considers it necessary, on a request received from members of the committee and shall convene a meeting if the same is made by members of the committee representing at least thirty three per cent of the voting rights:

Explanation: For the purposes of sub-regulation (2) it is clarified that meeting(s) may be convened under this sub-regulation till the resolution plan is approved under sub-section (1) of Section 31 or order for liquidation is passed under Section 33 and decide on matters which do not affect the resolution plan submitted before the Adjudicating Authority. ……...”

73. It is to be noted that Explanation to clause (2) of

Regulation 18 of the IBBI (CIRP) Regulations came to be added

by Notification No. IBBI/2022-23/GN/REG093 dated 16th

September 2022. The said Explanation would reveal that it

clarified that for the purposes of clause (2) thereof the

meeting(s) may be convened under the said clause till the

Resolution Plan is approved under sub-section (1) of Section 62 31 of the IBC or an order for liquidation is passed under

Section 33 of the IBC. However, the only rider is that it shall

not decide on matters which do not affect the Resolution Plan

submitted before the Adjudicating Authority.

74. It will also be relevant to note that by Notification No.

IBBI/2023-24/GN/REG113 dated 15th February 2024 clauses

(4) and (5) of Regulation 38 were brought on the statute book,

which read thus:

“38. Mandatory contents of the resolution plan.— ………..

(4) The committee may consider the requirement of a monitoring committee for the implementation of the resolution plan.

(5) Where the committee considers that a monitoring committee for the implementation of the resolution plan is required, it may, while approving the resolution plan, decide to constitute the same with the resolution professional or propose another insolvency professional, or any other person as its members:

Provided that where the resolution professional is proposed to be part of the monitoring committee, the monthly fee payable to him shall not exceed the monthly fee received by him during the corporate insolvency resolution process.”

75. However, by way of Notification No. F.No. IBBI/2024-

25/GN/REG122 dated 3rd February 2025 with effect from 3rd

63 February 2025, clauses (4) and (5) of Regulation 38 of the IBBI

(CIRP) Regulations were substituted with Regulation 4 (a), (b)

and (c) which read thus:

“38. Mandatory contents of the resolution plan.— ………..

(4)(a) The committee shall consider setting up a monitoring committee for monitoring and supervising the implementation of the resolution plan.

(b) The monitoring committee may consist of the resolution professional or any other insolvency professional, or any other person, including representatives of the committee and representatives of resolution applicant(s), as its members:

Provided that where the resolution professional is proposed to be part of the monitoring committee, the monthly fee payable to him shall not exceed the monthly fee received by him during the corporate insolvency resolution process.

……..”

76. It can thus be seen that though under the old

Regulations, the CoC had an option to constitute the

monitoring committee, under the Regulations which are now

in effect, it has been made mandatory for the CoC to consider

setting up the monitoring committee for monitoring and

supervising the implementation of the Resolution Plan.

64

77. It can further be seen that the CoC is also

empowered to nominate either the RP or any other insolvency

professional or any other person including the representatives

of the committee and the representatives of resolution

applicant(s), as its members. It can thus be seen that the

legislative intent is to empower the CoC to monitor and

supervise the implementation of the resolution plan through

the monitoring committee.

78. We are of the view that if the contention of the

appellants that the CoC becomes functus officio is accepted,

then it would lead to an anomalous situation.

79. As per the IBC and as is the common experience,

after the Resolution Plan is accepted under Section 31 of the

IBC by the Adjudicating Authority, the same does not achieve

finality unless the appeals under Section 61 of the IBC by the

appellate authority and by this Court under Section 62 of the

IBC are decided. It also cannot be ignored that in certain

cases, the Resolution Plan may not be implemented and the

matter may lead to liquidation proceedings.

80. In the present matter itself, it can be seen that when

the matter was first decided by this Court by judgment and 65 order dated 2nd May 2025, this Court had directed the

liquidation proceedings to be initiated against the Corporate

Debtor. However, as has already been discussed hereinabove,

the dominant purpose of the IBC is to resort to the liquidation

proceedings as the last option. If the contention of the

erstwhile promoters-cum-directors that the CoC ceases to

exist after the Resolution Plan is accepted, then as already

discussed hereinabove, it will lead to an anomalous situation.

81. It may lead to a situation wherein though the

Resolution Plan is approved by the Adjudicating Authority,

however it is not implemented for ‘a’ reason or ‘b’ reason

thereby leaving the creditors high and dry. If the contention is

accepted, the creditors would not be in a position to take any

steps that are found necessary for realizing its dues from the

Corporate Debtor. The said situation may lead to a state of

limbo. Such cannot be the intention of the legislature which

has enacted the law with the dual purpose of making the

Corporate Debtor an on-going concern and realizing the dues

of the Corporate Debtor.

82. We are of the view that the Explanation to clause 2 of

Regulation 18 of the IBBI (CIRP) Regulations clarifies the

66 position. It empowers the CoC to hold meetings till either the

Resolution Plan is approved under Section 31(1) of the IBC or

an order for liquidation is passed under Section 33 of the IBC.

It is empowered to decide all the matters except the matters

which do not affect the Resolution Plan submitted before the

Adjudicating Authority.

83. It may not be out of place to mention that the CoC

has a vital interest in the Resolution Plan and that such an

interest would continue till the Resolution Plan is actually

implemented. It is only after the implementation of the

Resolution Plan that payment can be made to the creditors, of

their dues, in accordance with the Resolution Plan, which has

been approved by the Adjudicating Authority.

84. If the contention of the appellants is accepted, then

in a case like the present one wherein on account of variety of

reasons the Resolution Plan could not be implemented and the

creditors could not be paid their dues as per the Resolution

Plan, it would lead to an anomalous situation which could not

have been the intention of the legislature.

85. We are therefore of the view that in view of

Explanation to clause 2 of Regulation 18 of the IBBI (CIRP) 67 Regulations, the CoC continues to exist till the Resolution Plan

is implemented or an order of liquidation is passed under

Section 33 of the IBC. It will not be out of place to mention

that the cloud of uncertainty exists till a finality is given by

this Court in the proceedings under Section 62 of the IBC.

86. In the present case, it will be relevant to see that

though the Resolution Plan was implemented on 26th March

2021, there was a statement made by the learned Senior

Counsel for the CoC to the effect that in the event the appeals

succeed, the creditors would refund the amount. As such, till

the present appeals are decided, the CoC had a vital interest

in the proceedings. We are therefore unable to accept the

contention raised by the appellants (erstwhile promoters-cum-

directors of the Corporate Debtor) in that regard and the same

are liable to be rejected.

d. Grounds of Appeal

87. It is submitted by the SRA – JSW that the present

appeals basically arise out of the concurrent findings of fact.

It is not in dispute that the Resolution Plan submitted by the

SRA – JSW, which was submitted after following the entire

procedure prescribed under the IBC and IBBI (CIRP) 68 Regulations was duly approved by the CoC and was approved

by the Adjudicating Authority vide its Judgment and Order

dated 5th September 2019 with certain conditions. However,

while dismissing the appeals thereagainst preferred by Mr.

Sanjay Singal, Kalyani Transco, Jaldhi, Medi, Darcl, the State

of Odisha and others, the NCLAT allowed the appeal of the SRA

– JSW and clarified/modified some of the conditions laid down

by the NCLT. It is relevant to note that the NCLT vide its

Judgment and Order dated 5th September 2019, relying on the

judgment of NCLAT in Standard Chartered Bank v. Satish

Kumar Gupta, Resolution Professional of Essar Steel

Limited and Others38 (hereinafter referred to as “NCLAT

Essar”), while approving the Resolution Plan submitted by

SRA, had directed distribution of EBITDA generated during

the CIRP amongst the creditors of the Corporate Debtor.

However, since the judgment of the NCLAT in NCLAT Essar

was reversed by this Court in Supreme Court Essar, the

NCLAT, while disposing of the appeal filed by SRA – JSW,

relied on the Supreme Court Essar and directed the

Monitoring Committee to examine the RfRP and decide on

38 2019 SCC OnLine NCLAT 388

69 distribution of EBITDA. As such, the conditions made in

paragraph 128(j) of the judgment and order dated 5th

September 2019 passed by the Adjudicating Authority were

set aside and the Monitoring Committee with the help of RP

was directed to go through the RfRP issued in terms of Section

25 of the IBC.

88. It can thus be seen that except the finding on

distribution of EBITDA present appeals arise out of the

concurrent findings by the NCLT and the NCLAT.

89. 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.

90. The appeal provided under Section 61 of the IBC

before the appellate authority is available only on the following

five grounds:

(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;

70

(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.

91. It can thus be seen that an appeal against an order

approving a Resolution Plan would be available before the

NCLAT only when it is found that the approved resolution plan

is in contravention of the provisions of any law for the time

being in force or there has been any material irregularity in

exercise of powers by the resolution professional during the

corporate insolvency resolution period or that the debts owed

to OCs of the Corporate Debtor have not been provided for in

the resolution plan in the manner specified by the Board or

that the insolvency resolution process costs have not been

provided for repayment in priority to all other debts or the

resolution plan does not comply with any other criteria

specified by the Board.

71

92. A perusal of the material placed on record in the

present matter would reveal that the appeal before the NCLAT

in this matter does not fit in any of the aforesaid criteria.

Having said that, since an appeal before the NCLAT itself was

not made out, we find that the appeals before this Court on a

conjoint reading of Sections 61 and 62 are not tenable since

no question of law pertaining to any of the five grounds

specified in Section 61 of the IBC arises for consideration in

the present case.

93. Not only that, as we have already observed

hereinbefore, this is a case arising out of concurrent findings.

In this regard, we may gainfully refer to the recent judgment

of this Court in the case of Uttar Haryana Bijli Vitran Nigam

Limited and Another v. Adani Power (Mundra) Limited

and Another39 to which one of us (Gavai, J. as he then was)

was a party, wherein this Court while considering an almost

similar provision in the Electricity Act, 2003 (Section 125),

providing for an appeal before this Court only on a question of

law and where a case arose out of concurrent findings of fact,

has observed thus:

39 (2023) 14 SCC 731

72 “11. It will further be relevant to note that the present appeal arises out of concurrent findings of fact arrived at by both the authorities.

12. This Court, in Maharashtra State Electricity Distribution Co. Ltd. v. Adani Power Maharashtra Ltd., (2023) 7 SCC 401], after considering the relevant provisions under the Electricity Act, 2003 with regard to appointment, qualifications and Members of the CEA, CERC and the learned APTEL, held that these bodies are bodies consisting of experts in the field. After considering various judgments on the issue, this Court observed thus : (SCC p. 452, para 121) “121. Recently, the Constitution Bench of this Court in Vivek Narayan Sharma (Demonetisation Case-5 J.) v. Union of India, (2023) 3 SCC 1] has held that the Courts should be slow in interfering with the decisions taken by the experts in the field and unless it is found that the expert bodies have failed to take into consideration the mandatory statutory provisions or the decisions taken are based on extraneous considerations or they are ex facie arbitrary and illegal, it will not be appropriate for this Court to substitute its views with that of the expert bodies.”

13. In our opinion, the concurrent view taken by CERC and APTEL cannot be said to be a view taken in ignorance of the mandatory statutory provisions nor can it be said that it is based on extraneous consideration. The view also cannot be said to be ex facie arbitrary or illegal. As such, no interference would be warranted in the present appeal.”

94. It can thus be seen that this Court has taken a view

that when a concurrent view has been taken by two

73 adjudicating authorities provided under the special statute,

unless it is found that such a view was in ignorance of the

mandatory statutory provisions or was based on extraneous

consideration or was ex-facie arbitrary or illegal, an

interference would not be warranted.

95. In the present matter also the findings on all the

issues are concurrent. It is only insofar as the issue with

regard to distribution of EBITDA wherein the NCLAT has set

aside the directions of the NCLT. However, in order to avoid

repetition, we will not deal with the said issue here since in

the foregoing paragraphs, we have elaborately dealt with the

contentions qua the issue of distribution of EBITDA.

96. We are therefore of the view that the appellants could

have been non-suited on the short ground of concurrent

findings of the NCLT and the NCLAT alone. However, we

propose to deal with the other contentions raised by the

Appellants – erstwhile promoters on merits as well.

e. Legality of clause permitting CoC to extend the period for implementation of the Resolution Plan

97. The next issue which is pressed into service by the

learned Senior Counsel on behalf of the erstwhile promoters is

74 with regard to delay in implementation of the Resolution Plan.

Insofar as the clause in the Resolution Plan which empowered

the CoC to extend the date of implementation of the Resolution

Plan by 66% of the majority of the lenders forming part of the

erstwhile CoC is concerned, it is submitted that such an open-

ended clause is liable to be set aside in view of the judgment

of this Court in the case of Ebix Singapore Private Limited

(supra). The learned Senior Counsel for the erstwhile

promoters has also relied on Committee of Creditors of

AMTEK Auto Limited through Corporation Bank v. Dinkar

T. Venkatasubramanian and Others40.

98. This Court in the said case has held that once the

Resolution Plan has been submitted by an applicant and the

same has been accepted by the CoC, there cannot be any

alterations, amendments or modifications in the Resolution

Plan. However, we find that such is not the case here.

99. For appreciating the rival contentions, it will be

relevant to refer to clause 3 of the Resolution Plan which deals

with the stage of implementation and which reads thus:

40 (2021) 4 SCC 457

75 “3. Resolution Plan – Stage of Implementation 3.1 The Resolution Applicant proposes to:

(a) undertake all efforts to procure the satisfaction of each Conditions Precedent within a period of 30 days from the date of issuance of LOI and in any case prior to approval of the Resolution Plan by NCLT. The Resolution Applicant shall immediately after the NCLT Approval Date, notify the Monitoring Professional and the Steering Committee in writing (“CP Satisfaction Notice”) the date(s) on which it proposes to complete the steps set out in Schedule 2 (Steps for Implementation of the Resolution Plan) and if such steps are to be implemented with receipt of the Specified Approval mentioned in Paragraph 4(ii)(a)(II) or in the absence of the same (and in the manner specified in such paragraph) (“Effective Date”), which date shall in any event not exceed 30 (thirty) days from the NCLT Approval Date or such extended period which may be permitted by 66% majority of the lenders forming part of the erstwhile CoC; and”

100. It can thus be seen that clause 3 of the Resolution

Plan provided that steps for implementation of the Resolution

Plan are to be taken within 30 days from the NCLT approval

date or such extended period which may be permitted by 66%

majority of the lenders forming part of the erstwhile CoC.

However, our experience in matters like the present case,

shows that on account of various exigencies, it may not be

possible to implement the Resolution Plan within the

prescribed period. What has therefore been sought to be done

76 by the aforesaid clause is to reserve certain discretion in the

CoC to extend the period for implementation of the Resolution

Plan, provided that such an extension is approved by 66%

majority of the lenders forming part of the erstwhile CoC.

101. The aforesaid clause provides for the effective date

which shall not exceed 30 days from the NCLT approval date

or such extended period which may be permitted by 66%

majority of the lenders forming part of the erstwhile CoC. It

can thus be seen that clause (3) of the Resolution Plan neither

provided modification nor withdrawal from the Resolution

Plan. The said cannot therefore be stated to be an open ended

or indeterminate plan solely at the discretion of the resolution

applicant. Under the said clause, there is neither a provision

for withdrawal nor modification of the Resolution Plan nor are

there any negotiations envisaged under the said clause of the

Resolution Plan submitted by the SRA – JSW in the present

matter.

102. Insofar as the judgment in the case of Amtek Auto

(supra) is concerned, the SRA therein had sought to

renegotiate the clauses of its Resolution Plan in view of the

Covid-19 pandemic which was held by this Court to be

77 impermissible under the scheme of IBC. We find that such is

not the case here. Neither the SRA – JSW nor the CoC in the

present matter are renegotiating the terms of the Resolution

Plan. Hence the submission in this regard is liable to be

rejected.

f. Delay in implementation of the Resolution Plan

103. The next submission on behalf of the Appellants –

erstwhile promoters is with regard to the inordinate delay in

implementation of the Resolution Plan by the SRA – JSW. It is

submitted by the learned Senior Counsel that though the

Resolution Plan was approved by the Adjudicating Authority

on 5th September 2019, it was implemented on 26th March

2021 and was thus, delayed by a period of one and half years.

It is therefore submitted that on this ground alone, the appeals

deserve to be allowed and the Resolution Plan be set aside.

104. To consider the rival submissions in this regard, we

would have to trace the history of the present matter.

105. As can be seen from the documents placed on record,

there have been several impediments in the implementation of

the Resolution Plan by the SRA – JSW. After the Resolution

78 Plan was approved by the CoC on 15th October 2018 and an

application was filed by RP for approval of Resolution Plan on

14th February 2019. Thereafter, the CBI filed an FIR on 5th

April 2019 against the Corporate Debtor – BPSL and its

erstwhile management for large scale siphoning and diversion

of funds. Immediately thereafter, the SRA - JSW filed an

additional affidavit before the NCLT on 15th April 2019 seeking

protection from acts/omissions of the erstwhile management

of the Corporate Debtor for alleged breach under the

applicable laws including under IPC, PC Act and PMLA. Based

on the CBI’s FIR, the ED registered an ECIR bearing DLZO-

1/02/2019 against the Corporate Debtor – BPSL and its

erstwhile management.

106. The NCLT approved the Resolution Plan on 5th

September 2019 with certain modifications. It is pertinent to

note that the NCLT had not granted any relief qua the

protections sought by the SRA – JSW in respect of the

prosecution sought to be carried out against the erstwhile

management. Being aggrieved thereby, the SRA – JSW filed an

appeal before the NCLAT contending that it was not liable to

79 share the EBITDA with FCs and OCs and also that it should

be protected against criminal proceedings and attachments.

107. It can therefore be seen that unless the issue with

regard to sharing of EBITDA with FCs was finally decided by

the NCLAT, the Resolution Plan could not have been

implemented inasmuch as the direction of the NCLT had, in

effect, modified the Resolution Plan submitted by the SRA –

JSW.

108. It is further to be noted that in the meantime, on 10th

October 2019, the ED issued the PAO whereby it attached the

assets of the Corporate Debtor – BPSL at its Odisha Plant

worth over Rs.4,025 crore under the PMLA. On 14th October

2019, the NCLAT by an interim order stayed the

implementation of the Resolution Plan which stay remained in

operation until 17th February 2020. The NCLAT also stayed the

PAO issued by the ED. It is further to be noted that, despite

the stay of the PAO by the NCLAT, the ED continued with the

PMLA proceedings by filing Original Complaint under Section

8(1) of PMLA before the Adjudicating Authority under PMLA. It

is further to be noted that the CoC had filed an SLP before this

Court seeking interim stay on the PAO and this Court, vide

80 order dated 18th December 2019, had issued notice and stayed

the PAO. In the meantime, the ED had filed a Prosecution

Complaint against the Corporate Debtor – BPSL under PMLA

for the offences alleged to have been committed by the

erstwhile management. In the said proceedings, ED had

specifically contended that the Corporate Debtor – BPSL or the

SRA – JSW was not entitled to benefit of Section 32A of IBC.

109. On 17th February 2020, vide the Impugned

Judgment and Order, the NCLAT approved the Resolution

Plan of the SRA – JSW by modifying/clarifying some of the

conditions imposed by the NCLT. The NCLAT inter alia also

clarified that BPSL and its assets were entitled to protection

from criminal prosecution under Section 32A of IBC.

110. Being aggrieved by the order passed by the NCLAT,

Mr. Sanjay Singal (erstwhile promoter) filed an appeal before

this Court on 24th February 2020. The OCs of the Corporate

Debtor (Kalyani Transco, Jaldhi, Medi and Darcl) also filed

separate appeals before this Court. On 29th February 2020,

the CoC filed a separate IA in the pending appeal filed by it

praying for release of the attachment and quashing of

consequential proceedings under PMLA by ED in view of

81 Section 32A of IBC. On 5th March 2020, the SRA – JSW filed

an additional affidavit before this Court pointing out that it

was essential to handover unencumbered and clean assets of

the Corporate Debtor to it. It was also submitted that handing

over of unencumbered assets was integral to the Resolution

Plan and such control over the assets of the Corporate Debtor

by SRA – JSW could not be subject to any conditions. In the

present appeals filed by erstwhile promoters of Corporate

Debtors – BPSL and its OCs, this Court recorded the following

observations on 6th March 2020:

“…..Dr. A.M. Singhvi, learned senior counsel appearing for the Committee of Creditors states that in case he receives money, he will return the said amount within two months, if the appeal succeeds.”

111. On 19th March 2020, the CoC issued a notice to the

SRA – JSW demanding implementation of the Resolution Plan

within 7 days. The SRA – JSW replied to the said notice

requesting to handover unencumbered and clean assets of the

Corporate Debtor which were free from ED attachment and

criminal prosecution. It appears that in the meantime there

were negotiations between the CoC and the SRA – JSW. It was

the stand of the SRA – JSW that though it was willing to go

82 ahead with the implementation of the Resolution Plan, it was

not obligated to implement the Resolution Plan until there was

clarity in respect of handover of clean and unencumbered

assets of the Corporate Debtor.

112. It is apparent from the record that the CoC filed an

application on 30th May 2020 in the appeal pending before this

Court seeking certain directions. Apart from seeking

implementation of the Resolution Plan, the CoC also sought

for a declaration for setting aside of the PAO and any

consequential proceedings, including ED’s prosecution. In the

meantime, it appears that, there was an exchange of

communication between the SRA – JSW and the CoC with

regard to distribution of EBITDA amongst the creditors. It is

also to be noted that the NCLT had on 5th September 2019

directed the EBITDA to be shared by the SRA – JSW with the

FCs and OCs and though the said direction was set aside by

the NCLAT vide impugned judgment, the present matter was

still pending before this Court till 2nd May 2025 when it was

finally decided by this Court in the earlier round.

113. In the earlier proceedings before this Court, it was

the consistent stand of the SRA – JSW that the RfRP issued by

83 the RP for the CIRP did not provide for the distribution of

EBITDA amongst the creditors. It was therefore their stand

that it was not liable to share the EBITDA with the Creditors.

However, the setting aside of the direction qua distribution of

EBITDA by NCLAT was also challenged by the erstwhile

promoters of the Corporate Debtor – BPSL in the proceedings

before this Court. It is also relevant to note that there was a

lack of clarity in the stand taken by the CoC before the NCLAT

in this regard.

114. It, however, appears from the material placed on

record that during the pendency of the proceedings before this

Court, there was an exchange of communications between the

SRA – JSW and the CoC with regard to extension of the

effective date of implementation of the Resolution Plan. It

further appears that there were discussions between the SRA

– JSW and the members of the CoC which culminated into a

resolution of the CoC passed on 26th February 2021 by a

majority of 97.25% voters by which it was provided that the

SRA – JSW was to implement the Resolution Plan on or before

31st March 2021. On 19th March 2021, the CoC filed an

affidavit before this Court to bring on record the said

84 development. On 26th March 2021, the SRA – JSW

implemented the Resolution Plan by paying Rs.19,350 crore to

the FCs of the Corporate Debtor.

115. It can thus be seen that the delay in implementation

of the Resolution Plan is on account of various reasons.

Initially, the NCLAT, vide interim order dated 14th October

2019, stayed the approval order of the NCLT dated 5th

September 2019 till 17th February 2020 insofar as it relates to

payment to the creditors. On account of pendency of the

proceedings before the NCLAT, the CoC was not in a position

to handover unencumbered assets to the SRA – JSW as

required under the Resolution Plan. It is further to be noted

that during the pendency of the said proceedings, an

Ordinance came to be promulgated on 28th December 2019

which brought in certain amendments to the IBC.

116. As can be seen from the preamble of the said

Ordinance, it has been brought for three purposes. Firstly, to

give the highest priority in repayment to last mile funding to

corporate debtors to prevent insolvency in case the company

goes into CIRP or liquidation. The second purpose was to

provide immunity against prosecution of the Corporate Debtor

85 to prevent action against the property of such Corporate

Debtor and the SRA subject to the fulfilment of certain

conditions. The third one was to fill the critical gaps in the

corporate insolvency framework. By way of the said

amendment, Section 32A of the IBC came to be added, which

reads thus:

“32A. Liability for prior offences, etc.—(1) Notwithstanding anything to the contrary contained in this Code or any other law for the time being in force, the liability of a corporate debtor for an offence committed prior to the commencement of the corporate insolvency resolution process shall cease, and the corporate debtor shall not be prosecuted for such an offence from the date the resolution plan has been approved by the Adjudicating Authority under Section 31, if the resolution plan results in the change in the management or control of the corporate debtor to a person who was not—

(a) a promoter or in the management or control of the corporate debtor or a related party of such a person; or

(b) a person with regard to whom the relevant investigating authority has, on the basis of material in its possession, reason to believe that he had abetted or conspired for the commission of the offence, and has submitted or filed a report or a complaint to the relevant statutory authority or Court:

Provided that if a prosecution had been instituted during the corporate insolvency resolution process against such corporate debtor, it shall stand discharged from the date of approval of the resolution

86 plan subject to requirements of this sub-section having been fulfilled:

Provided further that every person who was a “designated partner” as defined in clause (j) of Section 2 of the Limited Liability Partnership Act, 2008 (6 of 2009), or an “officer who is in default”, as defined in clause (60) of Section 2 of the Companies Act, 2013 (18 of 2013), or was in any manner incharge of, or responsible to the corporate debtor for the conduct of its business or associated with the corporate debtor in any manner and who was directly or indirectly involved in the commission of such offence as per the report submitted or complaint filed by the investigating authority, shall continue to be liable to be prosecuted and punished for such an offence committed by the corporate debtor notwithstanding that the corporate debtor's liability has ceased under this sub-section. (2) No action shall be taken against the property of the corporate debtor in relation to an offence committed prior to the commencement of the corporate insolvency resolution process of the corporate debtor, where such property is covered under a resolution plan approved by the Adjudicating Authority under Section 31, which results in the change in control of the corporate debtor to a person, or sale of liquidation assets under the provisions of Chapter III of Part II of this Code to a person, who was not—

(i) a promoter or in the management or control of the corporate debtor or a related party of such a person; or

(ii) a person with regard to whom the relevant investigating authority has, on the basis of material in its possession reason to believe that he had abetted or conspired for the commission of the offence, and has submitted or filed a report or a complaint to the relevant statutory authority or Court.

87 Explanation.—For the purposes of this sub-section, it is hereby clarified that,—

(i) an action against the property of the corporate debtor in relation to an offence shall include the attachment, seizure, retention or confiscation of such property under such law as may be applicable to the corporate debtor;

(ii) nothing in this sub-section shall be construed to bar an action against the property of any person, other than the corporate debtor or a person who has acquired such property through corporate insolvency resolution process or liquidation process under this Code and fulfils the requirements specified in this section, against whom such an action may be taken under such law as may be applicable.

(3) Subject to the provisions contained in sub- sections (1) and (2), and notwithstanding the immunity given in this section, the corporate debtor and any person who may be required to provide assistance under such law as may be applicable to such corporate debtor or person, shall extend all assistance and co-operation to any authority investigating an offence committed prior to the commencement of the corporate insolvency resolution process.”

117. It can thus be seen that Section 32A of the IBC which

begins with a non-obstante clause provides that the liability of

the Corporate Debtor for an offence committed prior to the

commencement of the CIRP shall cease, and the Corporate

Debtor shall not be prosecuted for such an offence from the

88 date the Resolution Plan has been approved by the

Adjudicating Authority under Section 31 of the IBC, if the

Resolution Plan results in the change in the management or

control of the Corporate Debtor or if the erstwhile promoter or

any other person who has been retained has not been found

to have abetted or conspired in the commission of the offence.

It further provides that no action shall be taken against the

properties of the Corporate Debtor in relation to an offence

committed prior to the commencement of the CIRP of the

Corporate Debtor, where such property is covered under a

Resolution Plan approved by the Adjudicating Authority under

Section 31 of the IBC.

118. It is to be noted that in the present case, even after

the IBC was amended and Section 32A of the IBC was brought

into the statute, the ED was proceeding further with its

prosecution of the Corporate Debtor. On account of the

pendency of such proceedings, the CoC was not in a position

to hand over the unencumbered assets as required under the

Resolution Plan.

119. It is further to be noted that only on 11th December

2024 when the appeals of the ED came to be disposed of by

89 this Court, there was some clarity with regard to the properties

of the Corporate Debtor. However, in the meantime, in view of

the resolution passed by the CoC dated 26th February 2021 by

a majority of 97.25% voters, the Resolution Plan was already

implemented by the SRA – JSW.

120. It will be relevant to note that the CoC and the SRA

– JSW were on same page, and were of the view that unless

the assets of the Corporate Debtor – BPSL were not released

and the issue with regard to criminal proceedings were not

clarified, the implementation of the Resolution Plan would not

have been possible. It will be relevant to refer to a joint letter

dated 28th February 2020 submitted before this Court by both

the CoC and the SRA – JSW. Relevant extract of which reads

thus:

“5. This is a matter involving implementation of a Resolution Plan for recovery of an amount of INR 19,350 crores. The plan is approved by 100% of the lenders. The implementation is presently underway (new Board has already been appointed) and would require a period of at least 20 days for implementation after the decision of this Hon’ble Supreme Court. In view of the actions of ED after the NCLAT’s judgment. If the issue concerning the release of assets of BPSL and criminal proceedings against BPSL by the ED is not urgently clarified by the Hon’ble Supreme Court, the implementation of the Resolution Plan would be affected.”

90

121. A perusal of the communications exchanged between

the parties would reveal that the negotiations were not with

regard to the terms and conditions of the Resolution Plan but

to ensure the immediate implementation of the Resolution

Plan. It can thus be seen that the negotiations took place due

to the consistent efforts made by the lenders of the Corporate

Debtor forming part of the CoC for ensuring implementation

of the Resolution Plan. As already discussed hereinabove, the

CoC in its meeting held on 26th February 2021 passed a

resolution to extend the date of implementation of the

Resolution Plan to 31st March 2021. The said decision of the

CoC was communicated to SRA – JSW vide letter dated 5th

March 2021. The CoC also brought this fact to the notice of

this Court by placing on record an affidavit. The CoC had

categorically affirmed in its note of submissions dated 19th

April 2024 that the SRA – JSW had in fact implemented the

Resolution Plan in entirety and that the amounts had been

distributed amongst all creditors of the Corporate Debtor as

per the Resolution Plan.

122. The appeal filed by the ED was disposed of by this

Court vide Order dated 11th December 2024 and the ED was

91 directed to handover the unencumbered assets of the

Corporate Debtor to the SRA – JSW.

123. It can thus be seen that the contention of the

appellants that there was inordinate and deliberate delay in

implementing the Resolution Plan by the SRA – JSW is without

substance.

124. It can also be seen that on account of various factors

like the NCLT directing the EBITDA to be shared with the

creditors, the NCLAT in an appeal staying the order of the

NCLT, after the decision of the NCLAT the pendency of the

proceedings before this Court, and the PAO being passed by

the ED with regard to properties of the Corporate Debtor, the

implementation of the Resolution Plan was jeopardized. Only

after this Court disposed of the appeal filed by the ED on 11th

December 2024, there was a clarity with regard to various

issues.

125. No doubt that while admitting the appeals on 6th

March 2021, this Court had recorded the submission of the

CoC that it would return the amount received from the SRA –

JSW in case the appeals succeed. However, even after that, for

a period of more than one year, the situation was ambiguous 92 and there were parallel negotiations between the CoC and the

SRA – JSW. Only after 26th February 2021 when the CoC

resolved by a majority of 97.25% voters to extend the time to

implement the Resolution Plan till 31st March 2021 and after

26th March 2021 when the Resolution Plan was implemented,

the SRA – JSW started running the concern. However, with

regard to the proceedings initiated by ED, the situation, in

spite of Section 32A of the IBC being brought in the statute

book, remained uncertain till 11th December 2024.

126. It can thus be seen that the delay is neither

attributable to the CoC nor to the SRA – JSW. As a matter of

fact, both the SRA – JSW and the CoC were making consistent

efforts to get the matter sorted out before this Court so as to

ensure the expeditious implementation of the Resolution Plan.

127. Insofar as the reliance placed by the Appellants –

erstwhile – promoters on the judgment of this Court in the case

of Murari Lal Jalan (supra) is concerned, it can be seen that

in the said case, the Resolution Plan had not been

implemented for a period of almost 5 years after being

approved. Not only that, various directions given by various

forums, including the directions given by this Court were not

93 implemented. In the said case, this Court, vide order dated

18th January 2024, had directed the Resolution Applicant to

infuse an amount of Rs.150 crore in cash on or before 31st

January 2024. It is to be noted that this was the fourth

extension granted by this Court in the said matter. The

aforesaid direction issued by this Court was also not

implemented. Again, an application for extension of period was

made before this Court. The same was also rejected vide order

dated 2nd February 2024. In this factual background, this

Court found that the order of the NCLAT upholding the order

of the NCLT was not sustainable.

128. In the facts of the present matter, both the CoC and

the SRA – JSW found it difficult to implement the Resolution

Plan on account of various issues including the PMLA

proceedings initiated against the Corporate Debtor - BPSL and

its management, the provisional attachment of properties and

the unilateral directions of NCLT to distribute EBITDA etc. It

is further to be noted that both the CoC and the SRA - JSW

were jointly making efforts before this Court for

implementation of the Resolution Plan which was in fact

implemented on 26th March 2021.

94

129. In that view of the matter, we find that the facts in

the case of Consortium of Murai Lal Jalan and Florian

Fritsch and Another (supra) are clearly different from the

present case as the delay in implementation of the Resolution

Plan in that case was clearly attributed towards the SRA

therein.

g. Contravention of law

130. It is pertinent to note that the Appellants – erstwhile

promoters have raised the contention that the Resolution Plan

submitted by the SRA – JSW was not in compliance with the

provisions of the IBC and the IBBI (CIRP) Regulations as it did

not envisage the payment to the OCs before the FCs. Per

contra, the SRA – JSW has submitted that the Resolution Plan

was compliant with the law as it stood at the time of

submission of the Resolution Plan and that any subsequent

changes in law shall not affect the validity of the Resolution

Plan.

131. In order to test the contention on this ground, we

must, parallelly, go through the timeline of the approval of the

Resolution Plan by the CoC, and the amendments to the IBBI

(CIRP) Regulations.

95

132. In this regard, it will be relevant to refer to Regulation

38(1)(b) of the said Regulations as it stood before the

amendments, and at the time of submission of the Resolution

Plan by the SRA – JSW, which reads thus:

“38. Mandatory contents of the resolution plan.

1. ………

(a)…

(b) liquidation value due to operational creditors and provide for such payment in priority to any financial creditor which shall in any event be made before the expiry of thirty days after the approval of a resolution plan by the Adjudicating Authority;

and

(c)…..”

133. The original Regulation thus mandated that the

Resolution Plan must contain provisions to pay the

liquidation value due to the OCs in priority over the FCs. The

SRA – JSW had formulated the Resolution Plan as per this

original Regulation and had submitted it to the CoC for

consideration.

134. Only thereafter, the amendment dated 5th October

2018 was brought in, which amended Regulation 38(1). The

amended Regulation reads thus:

96

“38. Mandatory contents of the resolution plan.

(1) The amount due to the operational creditors under a resolution plan shall be given priority in payment over financial creditors.

………..”

135. The amended Regulation mandated that any

amount due to the OCs under a Resolution Plan would be

given priority over the FCs. The term “liquidation value” was

done away with by way of the aforesaid amendment.

136. When this amendment was brought in, the

Resolution Plan was yet to be approved by the CoC.

Considering this amendment, the SRA – JSW issued an

addendum dated 10th October 2018 which amended Clause

1.4(ii) of the Resolution Plan. It was stated that other than the

liquidation value due to the workmen of Rs. 9.86 crore, the

liquidation value due to the OCs is nil. It was further stated

that the SRA – JSW is proposing to make an additional

payment to the OCs despite they having no entitlement as per

the IBC. It was lastly stated that the SRA – JSW was ready to

make further payments to the OCs under the Resolution Plan,

if the NCLT directs so.

97

137. After considering the addendum to the Resolution

Plan, the CoC approved the amended Resolution Plan. The RP

then submitted the Resolution Plan to the NCLT, and the

Resolution Plan was duly approved on 5th September 2019.

138. After approval by the NCLT, Regulation 38(1) of the

IBBI (CIRP) Regulations was again amended on 27th November

2019. This amended form of the Regulation, which still stands

reads thus:

“38. Mandatory contents of the resolution plan.

(1) The amount payable under a resolution plan -

(a)to the operational creditors shall be paid in priority over financial creditors; and …………”

139. It can thus be seen that the Regulation after its latest

amendment states that any amount payable under the

Resolution Plan shall be paid to the OCs in priority to the FCs.

140. We are of the considered view that the latest

amendment dated 27th November 2019 can have no bearing

on the present matter as the same has been enacted after

approval of the Resolution Plan by the NCLT on 5th September

2019. Furthermore, it is trite law that unless an amendment

98 explicitly provides for retrospective application, the same

cannot be applied retrospectively.

141. Regarding the contention of the Appellant – erstwhile

promoters that the OCs were paid after the FCs in

contravention of the Regulations, we must examine the

amendment dated 5th October 2018. This amendment clearly

stated that the OCs are to be paid the amount due as per the

Resolution Plan in priority over the FCs.

142. As per the Resolution Plan including the addendum

issued by the SRA – JSW, the amount due to the OCs was nil,

as the claims raised by the FCs were far in excess of the

liquidation value of the Corporate Debtor. However, the SRA –

JSW had proposed an ex – gratia payment to the OCs to the

tune of 50% of their claims (Rs. 350 crore). The SRA – JSW

had further stated that it would pay additional amounts, if so

directed by the NCLT. In that view of the matter, we find that

the payments that were made by the SRA – JSW to the OCs

after the FCs in the present matter is not in contravention of

law. The payments made to the OCs in the present matter are

not amounts due as per the Resolution Plan and are ex –

gratia payments. We do not wish to go into the question as to

99 whether the latest amendment dated 27th November 2019

would mandate even such ex – gratia payments to the OCs

being made before the payments to the FCs as we have

categorically held that the latest amendment would have no

effect on the Resolution Plan in the present case inasmuch as

the same was approved by the NCLT on 5th September 2019

i.e. before the amendment dated 27th November 2019 came

into effect.

143. It is also to be noted that the said issue has not been

raised by any of the OCs of the Corporate Debtor either before

the NCLT or before the NCLAT. It is only sought to be raised

by the erstwhile promoters-cum-directors. We therefore find

that the erstwhile promoters-cum-directors are not directly

concerned with the said issue and a contention in that regard

on their behalf, in our view, is not merited and liable to be

rejected.

h. Upfront infusion of funds by the SRA – JSW

144. The Appellants – erstwhile promoters have also

raised the contention that the SRA – JSW has not honoured

its commitment of “upfront infusion of funds” as per the

Resolution Plan submitted by it. It is submitted by the 100 appellants that a total upfront commitment of Rs. 8,550 crore

as equity was made by the SRA – JSW as per Schedule 3 of

the Resolution Plan. It is submitted that however only Rs. 100

crore out of the said Rs. 8,550 crore was infused by the SRA –

JSW. It is submitted that on the basis of this upfront infusion

of funds, the SRA – JSW got additional marks and crossed the

score of the next highest bidder (Tata Steel) and since this

infusion has not been made, the Resolution Plan has not been

fully implemented. Per contra, the SRA – JSW submitted that

the entire amount of the remaining commitment was brought

in by way of CCDs. It is further submitted that the CCDs are

to be treated the same as equity instruments and therefore,

the obligation for the upfront infusion of funds has been

complied with as per the Resolution Plan. It is also submitted

by the SRA – JSW that this Court need not go into the issue of

the scoring matrix/marking system as that is the exclusive

domain of the CoC and the “commercial wisdom” of the CoC

cannot be challenged by the erstwhile management.

145. We find that the issue regarding CCDs being

construed as equity instruments or not is no more res integra.

101 This Court, in Narendra Kumar Maheshwari v. Union of

India and Others41, has observed thus:

“98. Our attention was drawn to Section 2(12) of the Companies Act under which a debenture need not be secured at all. In that light the guidelines should be interpreted. Therefore, it was submitted, guideline 10, reasonably interpreted, means that such security should be provided as is customarily adopted in corporate practice in the matter of issuing debentures. It has to be borne in mind that the debentures issued in the present case are compulsorily convertible. Therefore, no repayment of principal is really involved. The question of security becomes relevant for the purpose of payment of interest on these debentures and the payment of principal only in the unlikely event of winding up. The debentures need not necessarily be secured. Guidelines do not provide for quantum and nature of the security. A debenture has been defined to mean essentially as an acknowledgement of debt, with a commitment to repay the principal with interest (Palmer's Company Law, p. 672, 24th edn.). Reference, in this connection, may be made to British India Steam Navigation Co. v. IRC [(1881) 7 QBD 165, 172 and 173 : 44 LT 378] . A debenture may contain charge only on a part of the assets of the company (Re Colonial Trusts Corporation [(1879) 15 Ch 465] ) or it may not contain any charge on any of its assets (See Speyer Brothers v. IRC [(1907) 1 KB 246] ;

and Lemon v. Austin Friars Investment Trust Ltd. [(1926) 1 Ch 15] A debenture may, therefore, be secured or unsecured (Palmer's Company Law, p. 675, 24th edn.). An ordinary debenture has to be distinguished from a ‘mortgage debenture’ which necessarily creates a mortgage on the assets of a company (See Palmer's Company Law, p. 706).

41 1990 Supp SCC 440

102 A compulsorily convertible debenture does not postulate any repayment of the principal. Therefore, it does not constitute a ‘debenture’ in its classic sense. Even a debenture, which is only convertible at option has been regarded as a ‘hybrid’ debenture by Palmer's Company Law (para 44.07 at page 676). In this connection, reference may be made to the “Guidelines for the Protection of Debenture Holders” issued on January 14, 1987 which have recognised the basic distinction between a convertible and a non-convertible debenture. It is apparent that these were issued for the purpose of ensuring the serviceability and repayment of debentures on time. It has been asserted before us that the compulsorily convertible debentures in corporate practice was adopted in India some time after the year 1984. Wherever the concept of compulsorily convertible debentures is involved, the guidelines treat these as “equity”. This is clear from guideline IV(i) read with IV(iii) of the Guidelines for Issue of Cumulative Convertible Preference Shares and guidelines 8 and 11 of the Employees Stock Option Guidelines. These two sets of guidelines clearly indicate that any instrument which is compulsorily convertible into shares, is regarded as a “equity” and not as a loan or debt. Even a non-convertible debenture need not be always secured. In fact, modern tendency is to raise loan by unsecured stock, which does not create any charge on the assets of the company (The Encyclopaedia of Forms and Precedents, 4th edn. Vol. 6 para 17 at pages 1094, 1095 and para 22 at pages 1097-1098). Whenever, however, a security is created, it is invariably in the form of a floating charge (See The Encyclopaedia of Forms and Precedents, 4th edn. Vol. 6 para 25 at page 1099). It follows, therefore, that the secured debenture almost invariably contains a floating charge. In addition to the floating charge, debentures are frequently secured by trust deed

103 also as had happened in the present case where specific property, land, etc. has been mortgaged to trustees.” (Emphasis supplied)

146. It can be seen that this Court has, in unambiguous

terms, held that “Convertible Debentures” stand on a different

footing than other types of debentures. It has been held that

since CCDs do not involve any repayment and have to be

mandatorily converted into equity shares at the time of

maturity, they must be treated as Equity Instruments.

147. This Court, recently, in IFCI Limited (supra), has

placed reliance on Narendra Kumar Maheshwari (supra)

and observed thus:

“24. A reading of the impugned judgment, specifically the rationale from paragraph 19 onwards shows that the issue has been correctly crystallised as to whether compulsorily convertible debentures could be treated as a debt instead of an equity instrument. In that sense, it was observed that treating them as a debt would tantamount to breach of the concessional agreement and the common loan agreement. The investment was clearly in the nature of debentures which were compulsorily convertible into equity and nowhere is it stipulated that these compulsorily convertible debentures would partake the character of financial debt on the happening of a particular event.” (Emphasis supplied)

104

148. It can thus be seen that this Court has reaffirmed its

view that if a CCD is to be compulsorily converted at the time

of maturity, without any obligation of repayment of a debt. It

has been held that it must be treated the same as an equity

instrument. We are therefore of the view that the CCDs infused

by the SRA – JSW are to be treated the same as an equity

infusion.

149. To examine as to whether the commitment for the

upfront infusion was actually satisfied by the SRA – JSW

through the CCDs, we must also consider the stand of the

CoC. It is submitted by the CoC that the reconstituted Board

of the resolved entity – BPSL held a meeting on 26th March

2021 attended by the Steering Committee, i.e., the three

largest FCs of the Corporate Debtor. In the said meeting, the

issuance of CCDs valued at Rs. 8,450 crore to a company

named Piombino Steel Limited, which is a part of the group of

the SRA – JSW was approved. The CCDs issued have a term

of five years after which they are to be mandatorily converted

into equity shareholding. Furthermore, the holders of the

CCDs also have the right to convert the debentures to equity

even during the five – year term. It is submitted by the CoC

105 that in light of this factor, the commitment of upfront infusion

of equity has been duly complied with by the SRA – JSW.

150. Such a stand of the CoC in our view, categorically

depicts the compliance of the SRA – JSW with its commitment

of upfront infusion as per the Resolution Plan. The CCDs

issued satisfy the test of compulsory conversion as laid down

by this Court in the case of Narendra Kumar Maheshwari

(supra) and therefore have to be treated as equity instruments.

151. Not only that but it has been the consistent view of

this Court in a catena of judgments including K. Shashidhar

(supra) that the commercial wisdom of the CoC cannot be

interfered with either by the Adjudicating Authority, the

Appellate Authority or this Court.

152. Therefore, in view of the factual position as well as

the law laid down by this Court with regard to the CCDs being

equivalent to equity instruments and the specific stand of the

CoC, we do not find that there is any merit in the contention

of the appellants in this regard and the same is liable to be

rejected.

106 i. Distribution of EBITDA

153. The next question is with regard to the entitlement

of the lenders to EBITDA.

154. It is to be noted that, for the first time, after the

review petitions were allowed by this Court on 31st July 2025,

an additional affidavit has been filed by the CoC dated 7th

August 2025 contending that the lenders are entitled to

EBITDA under the Resolution Plan.

155. In this respect, it will be relevant to note that when

the NCLT held that the lenders were entitled to EBITDA, the

same was on the basis of the judgment of the NCLAT in NCLAT

Essar. However, by the time the NCLAT decided the

proceedings in this matter, this Court had delivered its

judgment in Supreme Court Essar.

156. At this stage, it will be apposite to refer to paragraphs

107-108 of the judgment of this Court in Supreme Court

Essar, which read thus:

“107. For the same reason, the impugned NCLAT judgment [Standard Chartered Bank v. Satish Kumar Gupta, 2019 SCC OnLine NCLAT 388] in holding that claims that may exist apart from those decided on merits by the resolution professional and by the Adjudicating

107 Authority/Appellate Tribunal can now be decided by an appropriate forum in terms of Section 60(6) of the Code, also militates against the rationale of Section 31 of the Code. A successful resolution applicant cannot suddenly be faced with “undecided” claims after the resolution plan submitted by him has been accepted as this would amount to a hydra head popping up which would throw into uncertainty amounts payable by a prospective resolution applicant who would successfully take over the business of the corporate debtor. All claims must be submitted to and decided by the resolution professional so that a prospective resolution applicant knows exactly what has to be paid in order that it may then take over and run the business of the corporate debtor. This the successful resolution applicant does on a fresh slate, as has been pointed out by us hereinabove. For these reasons, NCLAT judgment must also be set aside on this count.

Utilisation of profits of the corporate debtor during CIRP to pay off creditors

108. The RFP issued in terms of Section 25 of the Code and consented to by ArcelorMittal and the Committee of Creditors had provided that distribution of profits made during the corporate insolvency process will not go towards payment of debts of any creditor — see Clause 7 of the first addendum to the RFP dated 8-2-2018. On this short ground, this part of the judgment of NCLAT is also incorrect.”

157. From the aforesaid, it can be seen that this Court

has, in unequivocal terms, held that a Successful Resolution

Applicant cannot be faced with “undecided” claims after the

Resolution Plan submitted by it has been accepted as that

108 would amount to “hydra heads popping up” which would

throw into uncertainty the amounts payable by a prospective

resolution applicant who would successfully take over the

business of the corporate debtor. This Court has, in

unambiguous terms, held that the RfRP issued in terms of

Section 25 of the IBC and considered by the CoC had provided

that distribution of profits made during the CIRP would not go

towards payment of debts of any creditor. This Court therefore

set aside the judgment of the NCLAT in NCLAT Essar in that

regard.

158. Relying on the judgment of this Court in the case of

Supreme Court Essar, the NCLAT, vide the impugned

judgment and order, held thus:

“126. The aforesaid decision having been reversed by the Hon’ble Supreme Court, we hold that the distribution on the profit made during the ‘Corporate Insolvency Resolution Process’ should be made in terms of addendum to the RFP as held by the Hon’ble Supreme Court.

127. We accordingly, set aside the part of the conditions as made in Paragraph 128 (j) of the impugned order dated 5th September 2019 which relates to distribution of profit during the ‘Corporate Insolvency Resolution Process’. The Monitoring Committee with the help of the ‘Resolution Professional’ will now go through the RPF issued in terms of Section 25 of the ‘I&B Code’ and as consented to by the ‘Resolution Applicant’

109 (‘JSW Steel Limited’) will make distribution of profit accordingly. The condition imposed at paragraph 128(j) stands substituted with the aforesaid observations.”

159. It is to be noted that the said judgment was not

assailed by the CoC before this Court. Not only that, when the

appeals field by the promoters were first heard and the

appellants sought to raise the ground qua correctness with

regard to treatment of EBITDA by NCLAT, a specific stand

opposing the same was taken by the CoC.

160. It will be relevant to refer to the submissions filed by

the CoC of BPSL before this Court on an affidavit, which read

thus:

“II. The distribution of EBITDA can only be in accordance with the law settled by this Hon’ble Court in the SC Essar Steel Judgment

41. It has been contended by the Appellants that the EBITDA should be distributed to the creditors of BPSL as,

(a) The SC Essar Steel Judgment was passed in the facts of the said case wherein a specific clause for distribution of EBTIDA existed in the process document and hence the said judgment cannot be made applicable to the present case, and

(b) The CoC in giving up on the EBITDA generated had directly impacted the Appellants.

110 42. Brief background in this regard, is as follows:

(a) Directions by the Hon’ble NCLT: The NCLT Plan Approval Order dated 05.09.2019 directed the RP to redistribute the profits earned by the Corporate Debtor in accordance with judgment passed by the Hon’ble NCLAT in the matter of Standard Charted Bank v. Satish Kumar Gupta, RP of Essar Steel Ltd. and Ors. Company Appeal (AT) (Insolvency) No. 242 of 2019 (“NCLAT Essar Judgment”) dated 04.07.2019 (Para 211) which directed distribution of profits on a pro-rata basis between the Financial Creditors and the Operational Creditors [Para 128 (j) @ Pg. 1026, C.C. Vol 3]

(b) Impugned Judgment dated 17.02.2020 : The Hon’ble NCLAT overruled the NCLT Plan Approval Order by placing reliance on the judgment of the Hon’ble Supreme Court in Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta & Ors., 2019 SCC OnLine SC 1478 dated 15.11.2019 i.e. the SC Essar Steel Judgment, which overturned the NCLAT Essar Judgment in respect of the direction on distribution of profits, and directed the monitoring committee with the help of the Resolution Professional to go through the RFRP and make distribution of EBITDA accordingly. [Para 126, 127 @ Pg. 457, C.C. Vol. 2].

43. In light of the directions contained in the Impugned Judgment, the lenders of BPSL convened a meeting on July 04, 2020 to discuss treatment of EBITDA. Upon consideration of the terms of the RFRP, it was noted that there is no provision under the RFRP which required the 111 EBITDA generated in the company during the CIRP Period, to be distributed amongst the lenders and therefore, such EBITDA may remain in the company.

The CoC undertakes to place the minutes of the meeting of the lenders dated July 4, 2020 on record in a sealed cover, if called upon / directed by this Hon’ble Court.

44. In addition to the RFRP issued for BPSL being silent on distribution of profits during CIRP, it is relevant to note that the Resolution Plan contemplates for the SRA to take over the assets and liabilities of the Corporate Debtor as a ‘going concern’, which would include the profits or losses that may be generated by the company during CIRP. [C.C. Vol. 2 @ Pg. 517 (iv)]

45. To conclude, in view of the fact that,

(a) RFRP was silent on distribution of EBITDA generated during CIRP, and

(b) the Resolution Plan contemplated the SRA taking over the assets and liabilities of BPSL as a ‘going concern’, the lenders of BPSL forming part of the Coc, in compliance of the Impugned Judgment and in accordance with the law settled under the SC Essar Steel Judgment, noted that the EBITDA generated during CIRP may remain with the company. To this extent, the distribution of EBITDA generated during CIRP was in accordance with law.

46. It is also relevant to note that no contrary stand has been taken by the CoC with respect to treatment of EBITDA. In this regard, it is stated that,

(i) the reply affidavit filed by the CoC in October 2019 before the Hon’ble NCLAT stating that EBITDA generated during CIRP should accrue to the

112 benefit of the lenders, was filed at a time when the NCLAT Essar Steel Judgment dated 04.07.2019 held the field of law with respect to distribution of EBITDA i.e. it should be distributed to the creditors.

(ii) Pertinently, in the facts of the said case, there was a specific provision for appropriation of a portion of the EBITDA by the CoC in the process document.

(iii) Subsequently, the SC Essar Steel Judgment dated 15.11.2019 overturned the NCLAT Essar case, and held that for distribution of profits, provisions in the process document have to be followed.

(iv) In view of the aforesaid judgment, the Impugned Judgment dated 17.02.2020 reversed the findings of the NCLT Plan Approval Order that relied on the NCLAT Essar Steel Judgment with respect to distribution of EBITDA, and directed for the SC Essar Steel Judgment to be followed.

Accordingly, the monitoring committee with the help of the Resolution Professional was directed to go through the RFRP and make distribution of EBITDA.

(v) Accordingly, in compliance of the Impugned Judgment, lenders which comprised the erstwhile CoC convened on 04.07.2020 to deliberate on the issue of EBITDA. It was concluded that since

(i) RFRP is silent on the treatment of EBITDA; and (ii) in view of the SC Essar Steel Judgment, EBITDA may be retained with the Corporate Debtor.

113 As such, it is submitted that the stand of the lenders comprising the erstwhile CoC with respect to EBITDA has been in conformity to law and cannot be said to be contrary to its earlier stand.

47. In view of the aforesaid, it is stated that distribution of EBTIDA was in accordance with law.”

161. It can clearly be seen that the CoC had taken a

specific stand that the directions by the NCLT were issued

when the NCLAT Essar was holding the field. It has also taken

a stand that the NCLAT overruled the NCLT directions with

regard to distribution of profit during the CIRP and directed

the Monitoring Committee with the help of the RP to go

through the RfRP and make distribution of EBITDA

accordingly on the basis of the judgment of this Court in

Supreme Court Essar. It has also been specifically stated that

after the impugned Judgment and Order of NCLAT dated 17th

February 2020 was passed, the lenders of the Corporate

Debtor – BPSL had convened a meeting on 4th July 2020 to

discuss the treatment of EBITDA. It has been stated that,

upon consideration of the terms of the RfRP in the said

meeting, it was noted that there was no provision under the

RfRP which required the EBITDA generated in the company

during the CIRP period to be distributed amongst the lenders 114 and therefore it was decided that such EBITDA be retained in

the company. The submissions also show that a specific stand

has been taken that the Resolution Plan contemplates for the

SRA – JSW to take over the assets and liabilities of the

Corporate Debtor as a “going concern”, which would include

the profits and losses that may be generated by the company

during CIRP. The submissions would further show that a

specific stand has been taken that the lenders of the Corporate

Debtor – BPSL forming part of the erstwhile CoC in accordance

with the law settled in the case of Supreme Court Essar had

decided that the EBITDA generated during the CIRP would

remain within the company. As such, the CoC has accepted

the position as laid down by the NCLAT in Supreme Court

Essar.

162. The submissions would clearly show that the stand

taken by the CoC before the NCLAT in this matter with regard

to EBITDA treatment was on the basis of the judgment of the

NCLAT in NCLAT Essar. It has also been specifically stated

that subsequently the Supreme Court Essar overruled the

NCLAT Essar and held that for distribution of profits,

provisions in the process document have to be followed. It has

115 been reiterated on more than one occasion that since the RfRP

was silent on the treatment of EBITDA generated during CIRP

and in view of Supreme Court Essar, EBITDA may be

retained with the Corporate Debtor.

163. When the CoC had taken a specific stand before this

Court in the present appeals and also reiterated the very same

stand when the review petitions were pressed into service, in

our view, it would not be permissible for the CoC to make a

volte face and take a stand which is totally contrary to the one

taken by it before this Court when the appeal was earlier heard

and decided by this Court on 2nd May 2025 and when the

review petitions were heard and decided on 31st July 2025.

164. It will also be relevant to refer to the following

observations of this Court in the case of Ghanshyam Mishra

and Sons Private Limited (supra) to which one of us (Gavai,

J., as he then was), which read thus:

“102.1. That once a resolution plan is duly approved by the adjudicating authority under sub- section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the corporate debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the

116 adjudicating authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan.”

165. The law laid down by this Court in the case of

Ghanshyam Mishra and Sons Private Limited (supra)

has been laid down after considering the earlier judgments

in the cases of Supreme Court Essar (supra), Kalpraj

Dharamshi and Another (supra), Innoventive

Industries Limited v. ICICI Bank and Another42 and

Karad Urban Cooperative Bank Limited v. Swwapnil

Bhingardevay and Others43.

166. It is pertinent to note that the view taken by this

Court in the case of Ghanshyam Mishra and Sons Private

Limited (supra) has been followed by this Court in the cases

of K.N. Rajakumar v. V. Nagarajan and Others44, Ruchi

Soya Industries Limited and Others v. Union of India and

Others45, Greater Noida Industrial Development Authority

v. Prabhjit Singh Soni and Another46, Vaibhav Goel and

42 (2018) 1 SCC 407 43 (2020) 9 SCC 729 44 (2022) 4 SCC 617 45 (2022) 6 SCC 343 46 (2024) 6 SCC 767

117 Another v. Deputy Commissioner of Income Tax and

Another47 and Electrosteel Steel Ltd. (now ESL Steel Ltd.)

v. Ispat Carrier P. Ltd.48.

167. If the stand of the CoC, which is sought to be taken

at this stage, is to be accepted, it will unsettle the position

which has been accepted by this Court that once a Resolution

Plan is duly approved by the Adjudicating Authority under

sub-section (1) of Section 31 of the IBC, the claims as provided

in the Resolution Plan shall stand frozen and will be binding

on the Corporate Debtor, its employees, members, creditors

including the Central Government etc.

168. We are of the considered view that unless there is a

specific provision with regard to distribution of EBITDA in the

RfRP, permitting the CoC to raise a new stand at this stage will

be totally inconsistent with the avowed object for which the

IBC was incorporated.

169. Though it is sought to be urged on behalf of the SRA-

JSW that the Corporate Debtor was running into losses till the

Resolution Plan was implemented, we do not propose to go into

47 2025 SCC OnLine SC 592 48 2025 SCC OnLine SC 829

118 that issue. As already held by us, the scope of interference

against the concurrent findings of fact in the present appeals

would be very limited. No doubt that insofar as EBITDA is

concerned, the findings are not concurrent. It has already

been discussed hereinabove that the directions of the NCLT

with regard to EBITDA treatment were on the basis of NCLAT

Essar whereas the findings of the NCLAT were on the basis of

Supreme Court Essar. We, therefore, do not propose to dwell

into the question as to whether the Corporate Debtor was

running into losses or not. Be that as it may, when a

Resolution Plan is approved, the SRA takes over the

management of the Corporate Debtor with the possibilities of

turning a loss-making concern into a profit earning concern or

the risk of the Corporate Debtor running into further losses.

These decisions fall under the umbrella of “commercial

wisdom” of the CoC. Once the Resolution Plan has been

approved by the CoC and the Adjudicating Authority under

Section 31(2), permitting any claims to be reopened which

were not a part of the RfRP or Resolution Plan, in our view, will

be doing violence to the provisions of IBC. In that view of the

119 matter, the arguments of the CoC as well as the original

promoters in this regard are liable to be rejected.

170. Insofar as the contention of the learned Solicitor

General, appearing on behalf of the CoC with regard to the

additional affidavit being filed by the erstwhile promoter Mr.

Sanjay Singal for adjustment of EBITDA against his personal

guarantees would be giving a cause of action to raise a claim

for EBITDA at this stage is concerned, we find the same also

to be without substance.

171. It is to be noted that the proceedings against the

erstwhile promoters/guarantors under Section 95 of the IBC

have been pending since 2021 and the lenders have been

parties to the said proceedings. The NCLT vide its order dated

7th October 2024 has categorically held that the CIRP of the

Corporate Debtor – BPSL and Section 95 proceedings in this

matter were completely independent proceedings. On perusal

of the material on record, it is revealed that this issue was

never raised by the CoC either before this Court in the present

appeal in the first round or during the hearing of the review

petitions. In that view of the matter, permitting the CoC to

raise this issue at this stage of the appeals by way of an

120 additional affidavit dated 7th August 2025 would be totally

unjust.

j. Contingent claim of Jaldhi

172. We now examine the contentions raised by the

Appellant – Jaldhi. It is submitted that the Appellant was the

largest OC of the Corporate Debtor – BPSL and has been

wrongly classified as a “contingent creditor”. It is submitted

that the Appellant holds four international arbitral awards in

its favour and the RP has admitted its claims to the tune of

Rs.1,51,37,57,761.65/-. It is submitted that such a re-

classification of the appellant is against settled law is hugely

detrimental to it as OCs were eligible to 50% of their

crystallized claims whereas contingent creditors were to be

paid only 10% as per the Resolution Plan. Per contra, the SRA

– JSW submitted that Jaldhi has been rightly classified as a

contingent creditor as it has treated itself as a contingent

creditor before the NCLT and had later changed its stance. It

is further submitted that the appellant withdrew various

proceedings filed for enforcement by it before the Calcutta

High Court in order to pursue an alternative remedy and

121 therefore, the foreign awards could not be deemed to be

binding under Indian law.

173. We must firstly examine the stand taken by the

Appellant – Jaldhi before the NCLT from the approval order

passed by the NCLT on 5th September 2019.

“106. The contentions raised by Mr. A.S Chadha, learned senior counsel appointed by the Adjudicating Authority-NCLT to represent the cause of Operational Creditors, have been that the resolution plan has illegally classified 'Jaldhi' as contingent creditor entitling to be paid only 10 °/o of its claim subject to a cap of Rs. 35 crores, if it crystalized within two years from the date of approval of the resolution plan by the CoC. It is evident that Jaldhi is an operational creditor and its claim has been admitted by Resolution Professional to the extent of Rs. 151.3 crores. Jaldhi has been maintaining that it has made a claim of Rs. 151.9 crores on the basis of 3 Arbitration Awards in its favour and against the corporate debtor and that it has initiated execution proceeding by filing 3 execution petitions before Hon'ble High Court of Calcutta. Those proceedings were pending when the· CIR Process was initiated on 26.07.2017. Later on, different submissions were made and it was claimed that its claim is contingent liability but not an operational debt and that contingent liability can never be resolved under a resolution plan. It was thus argued that the resolution applicant has to assume a risk to contingent .liability devolving on the corporate debtor in future. In a separate application filed, Jaldhi again shifted which is stand by arguing that although its claim had been admitted by the RP but the resolution plan categorises its claim has an identified contingent liability. It was contended that it is operational creditor and its claim as a 122 contingent liability then it cannot be dealt with 1n the resolution plan.”

174. It can thus be seen that the stance adopted by the

appellant is varying and inconsistent. On one hand, the

Appellant – Jaldhi had claimed to be a contingent creditor and

raised the contention that its dues could not have been settled

under the Resolution Plan and that SRA – JSW would have to

assume the risk in case the contingent liability crystallizes in

the future. On the other hand, subsequently, the Appellant

shifted its stand and claimed itself to be an OC which was

entitled to equal treatment with other OCs under the

Resolution Plan.

175. Before we examine whether the international arbitral

awards would be treated as contingent or crystallized debts,

we must first examine the status of foreign awards in light of

the provisions of the Arbitration and Conciliation Act, 199649.

Section 49 of the Arbitration Act reads thus:

“Section 49: Enforcement of foreign awards. Where the Court is satisfied that the foreign award is enforceable under this Chapter, the award shall be deemed to be a decree of that Court”

49 “Arbitration Act” for short.

123 176. It can thus be seen that the foreign award will be

deemed to be a decree of the court only when the court is

satisfied that the foreign award is enforceable under Part-II

Chapter-I of the Arbitration Act. Therefore, a foreign award

would not be automatically enforceable in India. For it to be

enforceable in India, the court is required to be satisfied that

such an award is enforceable under Part-II Chapter-I of the

Arbitration Act.

177. It is relevant to note that though the appellants had

initiated proceedings for the execution of international arbitral

award in its favour before the Calcutta High Court, the

appellants did not prosecute the said proceedings, and the

said proceedings were dismissed as withdrawn. Had the

appellants pursued the said proceedings before the Calcutta

High Court, the SRA – JSW would have had an opportunity of

contesting the said proceedings. Not permitting the said

proceedings to proceed in accordance with law, in our view,

would not permit the appellants to contend that their claims

had crystalised and settled as OCs entitling them to claim

under the Resolution Plan.

124

178. It is further to be noted that the provisions of the IBC

only differentiate between the OCs and the FCs. This was the

reason that the RP in the present case admitted the claim

raised by the Appellant – Jaldhi as an OC of the Corporate

Debtor. However, after the admission of a claim, the SRA –

JSW had classified the Appellant as a contingent creditor.

Even though such a classification was made by the SRA –

JSW, the same had been duly approved by the CoC who has

the power to sanction the Resolution Plan or enter into

negotiations to modify it prior to its approval. Such a decision

squarely falls under the protected umbrella of the “commercial

wisdom” of the CoC which has been given paramount status

by this Court in the case of K. Sashidhar (supra). It will be

relevant to take note of the relevant paragraphs of the said

judgment which read thus:

“52. As aforesaid, upon receipt of a “rejected” resolution plan the adjudicating authority (NCLT) is not expected to do anything more; but is obligated to initiate liquidation process under Section 33(1) of the I&B Code. The legislature has not endowed the adjudicating authority (NCLT) with the jurisdiction or authority to analyse or evaluate the commercial decision of CoC much less to enquire into the justness of the rejection of the resolution plan by the dissenting financial creditors. From the legislative history and the background in which the I&B Code has 125 been enacted, it is noticed that a completely new approach has been adopted for speeding up the recovery of the debt due from the defaulting companies. In the new approach, there is a calm period followed by a swift resolution process to be completed within 270 days (outer limit) failing which, initiation of liquidation process has been made inevitable and mandatory. In the earlier regime, the corporate debtor could indefinitely continue to enjoy the protection given under Section 22 of the Sick Industrial Companies Act, 1985 or under other such enactments which has now been forsaken. Besides, the commercial wisdom of CoC has been given paramount status without any judicial intervention, for ensuring completion of the stated processes within the timelines prescribed by the I&B Code. There is an intrinsic assumption that financial creditors are fully informed about the viability of the corporate debtor and feasibility of the proposed resolution plan. They act on the basis of thorough examination of the proposed resolution plan and assessment made by their team of experts. The opinion on the subject-matter expressed by them after due deliberations in CoC meetings through voting, as per voting shares, is a collective business decision. The legislature, consciously, has not provided any ground to challenge the “commercial wisdom” of the individual financial creditors or their collective decision before the adjudicating authority. That is made non-justiciable.

53. ….…..

54. …..….

55. Whereas, the discretion of the adjudicating authority (NCLT) is circumscribed by Section 31 limited to scrutiny of the resolution plan “as approved” by the requisite per cent of voting share of financial creditors. Even in that enquiry, the grounds on which the adjudicating authority can reject the resolution plan is in reference to matters specified in Section 30(2),

126 when the resolution plan does not conform to the stated requirements. Reverting to Section 30(2), the enquiry to be done is in respect of whether the resolution plan provides : (i) the payment of insolvency resolution process costs in a specified manner in priority to the repayment of other debts of the corporate debtor, (ii) the repayment of the debts of operational creditors in prescribed manner, (iii) the management of the affairs of the corporate debtor, (iv) the implementation and supervision of the resolution plan, (v) does not contravene any of the provisions of the law for the time being in force, (vi) conforms to such other requirements as may be specified by the Board. The Board referred to is established under Section 188 of the I&B Code. The powers and functions of the Board have been delineated in Section 196 of the I&B Code. None of the specified functions of the Board, directly or indirectly, pertain to regulating the manner in which the financial creditors ought to or ought not to exercise their commercial wisdom during the voting on the resolution plan under Section 30(4) of the I&B Code. The subjective satisfaction of the financial creditors at the time of voting is bound to be a mixed baggage of variety of factors. To wit, the feasibility and viability of the proposed resolution plan and including their perceptions about the general capability of the resolution applicant to translate the projected plan into a reality. The resolution applicant may have given projections backed by normative data but still in the opinion of the dissenting financial creditors, it would not be free from being speculative. These aspects are completely within the domain of the financial creditors who are called upon to vote on the resolution plan under Section 30(4) of the I&B Code.

56. …….……

57. …….……

58. Indubitably, the inquiry in such an appeal would be limited to the power exercisable by the

127 resolution professional under Section 30(2) of the I&B Code or, at best, by the adjudicating authority (NCLT) under Section 31(2) read with Section 31(1) of the I&B Code. No other inquiry would be permissible. Further, the jurisdiction bestowed upon the appellate authority (NCLAT) is also expressly circumscribed. It can examine the challenge only in relation to the grounds specified in Section 61(3) of the I&B Code, which is limited to matters “other than” enquiry into the autonomy or commercial wisdom of the dissenting financial creditors.

Thus, the prescribed authorities (NCLT/NCLAT) have been endowed with limited jurisdiction as specified in the I&B Code and not to act as a court of equity or exercise plenary powers.

59. In our view, neither the adjudicating authority (NCLT) nor the appellate authority (NCLAT) has been endowed with the jurisdiction to reverse the commercial wisdom of the dissenting financial creditors and that too on the specious ground that it is only an opinion of the minority financial creditors. The fact that substantial or majority per cent of financial creditors have accorded approval to the resolution plan would be of no avail, unless the approval is by a vote of not less than 75% (after amendment of 2018 w.e.f. 6-6-2018, 66%) of voting share of the financial creditors. To put it differently, the action of liquidation process postulated in Chapter III of the I&B Code, is avoidable, only if approval of the resolution plan is by a vote of not less than 75% (as in October 2017) of voting share of the financial creditors. Conversely, the legislative intent is to uphold the opinion or hypothesis of the minority dissenting financial creditors. That must prevail, if it is not less than the specified per cent (25% in October 2017; and now after the amendment w.e.f. 6-6-2018, 44%). The inevitable outcome of voting by not less than requisite per cent of voting share of financial creditors to disapprove the proposed

128 resolution plan, de jure, entails in its deemed rejection.

60. ………..

61. ………..

62. The argument, though attractive at the first blush, but if accepted, would require us to rewrite the provisions of the I&B Code. It would also result in doing violence to the legislative intent of having consciously not stipulated that as a ground — to challenge the commercial wisdom of the minority (dissenting) financial creditors. Concededly, the process of resolution plan is necessitated in respect of corporate debtors in whom their financial creditors have lost hope of recovery and who have turned into non-performer or a chronic defaulter. The fact that the corporate debtor concerned was still able to carry on its business activities does not obligate the financial creditors to postpone the recovery of the debt due or to prolong their losses indefinitely. Be that as it may, the scope of enquiry and the grounds on which the decision of “approval” of the resolution plan by CoC can be interfered with by the adjudicating authority (NCLT), has been set out in Section 31(1) read with Section 30(2) and by the Appellate Tribunal (NCLAT) under Section 32 read with Section 61(3) of the I&B Code. No corresponding provision has been envisaged by the legislature to empower the resolution professional, the adjudicating authority (NCLT) or for that matter the appellate authority (NCLAT), to reverse the “commercial decision” of CoC much less of the dissenting financial creditors for not supporting the proposed resolution plan. Whereas, from the legislative history there is contra indication that the commercial or business decisions of the financial creditors are not open to any judicial review by the adjudicating authority or the appellate authority.” (Emphasis supplied)

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179. It can thus be seen that this Court has held that the

legislature purposefully did not include a means to challenge

the commercial wisdom exercised by the CoC. This makes a

challenge to the same non – justiciable. It has been further

held that a challenge cannot be raised against the decision

making of the CoC unless and until the grounds for challenge

as given in the Code are satisfied. 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.

180. We are therefore of the opinion that in the present

matter as well, the CoC exercised its commercial wisdom while

approving the Resolution Plan whereby the Appellant – Jaldhi

was classified as a contingent creditor and such a decision is

deemed to be non – justiciable by this Court in view of K.

Sashidhar (supra) which has been subsequently followed in

a catena of judgments. The NCLT, and the NCLAT have also

approved the Resolution Plan, and in light of the settled

principle of law, we find no question of law being raised by the

Appellant – Jaldhi and therefore, the appeal filed by it is liable

to be dismissed.

130 k. Pre-CIRP dues of Medi and Darcl

181. Two OCs of the Corporate Debtor namely Medi and

Darcl have raised contentions regarding their claims by filing

appeals before this Court against the impugned judgment.

Since the contentions raised by these two OCs are similar in

nature, we are dealing with their appeals together.

182. It was submitted by the Appellants that they were

promised their payments of pre – CIRP dues by the RP as an

incentive for continuing to do business with the Corporate

Debtor during the CIRP period in order to keep it a ‘going

concern’. It was stated by the learned counsel that after

payments for the pre – CIRP dues were received for 10 months

during the CIRP period, the RP issued a corrigendum and

stated that the payments for the pre – CIRP dues were given

due to a “mistake” committed by the accounting clerk and that

the same would be adjusted towards the services of the

Appellants during the CIRP period. In the said corrigendum, it

was also stated by the RP that the pre – CIRP dues paid to the

Appellants would be treated as per the Resolution Plan. Per

Contra, the RP submitted that the payments made to the

Appellants were nothing, but a mistake made by an

131 accounting clerk and that no pre – CIRP payments were

actually made by the RP. The Appellants have been paid the

amounts for the services rendered by them during the CIRP

and their pre – CIRP dues were to be paid as per the Resolution

Plan. It was submitted that once the NCLT and the NCLAT

have given a similar finding on the issues, no interference by

this Court would be warranted.

183. On perusal of the record, we find that there is

nothing produced by the appellants to show any agreement

with the RP after the CIRP commenced. Even though the RP

admits that payments towards pre – CIRP dues were in fact

made, it is also candidly accepted by the RP that the same was

a mistake on the part of an accounting clerk. Upon discovering

this mistake, the RP had quickly taken steps to mitigate the

same and the payments were adjusted towards the services

rendered by the Appellants during the CIRP period.

184. We further find that there is nothing on record that

shows that the CoC had approved such pre – CIRP payments

and such payments to the appellants find no mention

anywhere in the Resolution Plan. This Court has, time and

again, held through a catena of judgments that any and all

132 payments made to creditors relating to the pre – CIRP dues

must be done only in accordance with the Resolution Plan and

with the express agreement of the CoC. Therefore, we do not

find any new question of law being raised through the present

appeals and thus, they are liable to be dismissed.

V. CONCLUSION

185. Before we conclude the present matter, we may just

point out the disastrous results which may have ensued in the

event the contentions raised in the present appeals of the

promoters-cum-directors of the Corporate Debtor were

accepted or if the stand of the CoC with regard to EBITDA was

accepted.

186. On the basis of the details given in RfRP, the

resolution applicants submitted their bids. The RfRP does not

provide for treatment of EBITDA. After a prolonged delay on

account of variety of reasons enumerated hereinabove, the

Resolution Plan was implemented. The Corporate Debtor in

the present case was running into substantial losses which

has now become a profit – making entity earning substantial

profits. The SRA – JSW invested huge amounts in

modernization and expansion of the entity (Corporate Debtor).

133 Not only that but thousands of employees have been earning

their livelihood on account of the Corporate Debtor running as

an on-going concern due to the Resolution Plan being

implemented by the SRA – JSW.

187. As such, the very purpose for which the IBC was

enacted—namely, to ensure that the Corporate Debtor

continues as a going concern—has not only been achieved, but

the Corporate Debtor has been transformed from a loss-

making to a profit-making entity. If, after the implementation

of the Resolution Plan, the SRA – JSW has converted a loss-

making entity into the one making profits, can it be penalised

for that? Suppose if instead of the Corporate Debtor being

converted into a profit-making entity, the losses would have

increased, can the Corporate Debtor claim refund of the

amount paid? If we permit the claim not to be part of the

Resolution Plan which has been approved by the CoC and the

NCLT to be raised at such a belated stage, it could open a

Pandora’s Box and the very purpose of the IBC providing

sanctity to the finality of the Resolution Plan duly approved

would stand vitiated.

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188. In any case, the issue is no more res integra. This

Court, in the case of Supreme Court Essar has clearly held

that such could not have been the intention of the legislature

as this would amount to hydra heads popping up after the

approval of the Resolution Plan. It has been categorically held

that the SRA cannot be forced to deal with claims that are not

a part of the RfRP issued in terms of Section 25 of the IBC or

a part of its Resolution Plan.

189. No doubt that if RfRP had specifically dealt with the

manner in which the EBITDA would be distributed, it would

have been a different matter. Admittedly, in the present case,

neither the RfRP nor the Resolution Plan dealt with it.

Permitting the erstwhile promoters or the CoC to raise an

argument in that regard at such a belated stage would amount

to doing violence to the very intention with which the IBC was

enacted.

190. We therefore do not find any merit in the contention

of either the ex-promoters-cum-directors of the Corporate

Debtor or the CoC in that regard. If such a contention is

accepted, it will frustrate the very purpose for which the IBC

came to be enacted.

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191. In that view of the matter, we do not find any merit

in the appeals. The appeals are therefore dismissed. The

Impugned Judgment dated 17th February 2020 passed by the

NCLAT is upheld.

192. Pending application(s), if any, shall stand disposed

of in the above terms.

..............................CJI (B.R. GAVAI)

.............................................J (SATISH CHANDRA SHARMA)

.............................................J (K. VINOD CHANDRAN)

NEW DELHI;

SEPTEMBER 26, 2025.

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