NCLAT dismissed Vedanta’s plea against Adani’s bid for Jaiprakash Associates, upholding the Committee of Creditors (CoC) commercial decision under the IBC framework.
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Key Background of the Case
- Insolvency Resolution under IBC: Jaiprakash Associates Ltd (JAL) underwent resolution under the Insolvency and Bankruptcy Code (IBC), 2016.
- The National Company Law Tribunal approved Adani’s resolution plan (March 2026).
About the Insolvency and Bankruptcy Code (IBC), 2016
- IBC was enacted in 2016 to provide a robust framework for debt resolution through Corporate Insolvency Resolution Process (CIRP) and liquidation.
- It seeks to maximize asset value and distribute fair proceeds among creditors.
- The IBC provides for a time-bound resolution of firms, addressing the issue of firm exit in India.
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- Competing Bids: Vedanta offered a higher total bid value, but Adani’s bid had higher upfront payment and shorter timeline.
- Lenders preferred certainty and quicker recovery over higher deferred value.
- Role of Committee of Creditors (CoC): CoC, dominated by National Asset Reconstruction Company Limited (~86% voting share), approved Adani’s plan.
- Reinforces the principle that Commercial wisdom of CoC is supreme and largely immune from judicial review.
- NCLAT Verdict: National Company Law Appellate Tribunal found no irregularity in resolution process
- Held that higher bid alone does not invalidate CoC’s decision.
- Emphasised limited judicial interference in economic decisions.
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About the Committee of Creditors (CoC)
- The Committee of Creditors (CoC) is the supreme decision-making body under the Insolvency and Bankruptcy Code, 2016.
- It supervises the Corporate Insolvency Resolution Process (CIRP) and determines whether a stressed company should be revived or liquidated.
- Composition: Constituted by the Interim Resolution Professional (IRP) after verification of claims.
- It comprises only financial creditors (banks, financial institutions).
- Operational creditors do not have voting rights but may attend meetings (if dues exceed a threshold).
- Role and Functions
- Takes control of the corporate debtor during CIRP through the Resolution Professional (RP).
- Evaluates resolution plans submitted by bidders.
- Decides between revival (resolution) or liquidation of the company.
- Ensures maximisation of value of assets and balanced stakeholder interests.
- Commercial Wisdom: The CoC exercises “commercial wisdom”, meaning its financial decisions are final and binding.
- The Supreme Court has held that courts have limited scope to interfere, except on procedural or legal grounds.
- Key Powers
- Appoint or replace the Resolution Professional (RP).
- Approve insolvency resolution costs.
- Approve or reject resolution plans (generally requiring ≥66% voting share).
- Take strategic decisions regarding restructuring, sale, or liquidation of assets.
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About National Company Law Appellate Tribunal (NCLAT)
- NCLAT is a quasi-judicial appellate body established under the Companies Act, 2013 (Section 410).
- It has been functional since 1st June 2016.
- Structure & Composition: Headed by a Chairperson, along with Judicial and Technical Members.
- Members appointed by the Central Government based on expertise in law, finance, and administration.
- Headquarters: New Delhi.
- Functions: Plays a key role in corporate insolvency resolution and competition law.
- Jurisdiction: Hears appeals against orders of
- National Company Law Tribunal (NCLT)
- Insolvency and Bankruptcy Board of India (IBBI)
- Competition Commission of India (CCI)
- National Financial Reporting Authority (NFRA)
- Powers & Procedure
- Has powers of a civil court (summon, evidence, documents).
- Orders are enforceable like civil decrees.
- Appeals from NCLAT lie with the Supreme Court of India.
- Mandated to dispose of cases within 6 months for speedy resolution.
About National Asset Reconstruction Company Limited (NARCL)
- National Asset Reconstruction Company Limited is India’s first “Bad Bank”, set up as an ARC under the Companies Act to tackle Non-Performing Assets (NPAs) in the banking system.
- Structure: Public Sector Banks (PSBs) hold 51% stake; private lenders hold the rest.
- It works alongside the India Debt Resolution Company Limited.
- NARCL acquires stressed assets
- IDRCL manages and resolves them
- Working Mechanism: It acquires stressed assets (> ₹500 crore) from banks.
- Payment Structure:
- 15% upfront cash
- 85% as Security Receipts (SRs)
- It is backed by ₹30,600 crore government guarantee to ensure minimum recovery.
- Role & Significance
- Cleans bank balance sheets by removing bad loans.
- Enables faster resolution and better value realisation.
- Improves credit flow and banking efficiency.
- Acts as a centralised aggregator of stressed assets.
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Conclusion
The case highlights the primacy of CoC’s commercial wisdom under IBC, the limited role of judiciary, and the growing influence of institutions like NARCL in India’s insolvency ecosystem.
5 May 2026
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