### Doctrine of Commercial Wisdom Reaffirmed: Judicial Review of CoC Decisions Limited to Statutory Compliance and Procedural Fairness Analysis and Findings The Supreme Court dismissed the appeals filed by unsuccessful resolution applicants challenging the approval of Sarda Energy and Minerals Limited’s (SEML) Resolution Plan. The Court held that clarifications sought by the Resolution Professional (RP) regarding bank guarantees and payment options, under the direction of the Committee of Creditors (CoC), did not constitute a "material irregularity" or a modification of the bid. The Court emphasized that the "commercial wisdom" of the CoC is paramount and non-justiciable. Judicial review by the NCLT or NCLAT is strictly confined to ensuring compliance with Section 30(2) and Section 61(3) of the IBC. The Court cautioned against "strategic litigation" by unsuccessful bidders, noting that excessive judicial interference erodes the value of the corporate debtor and undermines the IBC’s objective of time-bound insolvency resolution. Key Takeaways * Non-Justiciability: The CoC's assessment of a plan's viability, valuation, and feasibility belongs exclusively to its commercial domain; courts cannot substitute their own assessment. * RP Conduct: An RP acting on CoC instructions to seek clarifications from all applicants does not commit a material irregularity. * Predictability and Finality: Predictability in the insolvency process is essential for market stability, and finality must be protected to prevent value-destructive delays. * Appellate Limits: Appeals under Section 62 of the IBC are restricted to substantive questions of law arising from the limited grounds specified in Section 61(3).

SKS Power Generation (Chhattisgarh) Ltd. (Corporate Debtor) underwent Corporate Insolvency Resolution Process (CIRP) initiated by Bank of Baroda

Following an inter-se bidding process on 19.04.2023 governed by a specific "Process Note," seven resolution applicants submitted plans

Based on instructions from the Committee of Creditors (CoC), the Resolution Professional (RP) sought clarifications from all applicants via email on 08.05.2023

Sarda Energy and Minerals Limited (SEML) provided clarifications regarding bank guarantees (BGs) and deferred payment options

The CoC subsequently approved SEML’s plan with a 100% vote share

Unsuccessful applicants (Torrent, Vantage, and Jindal) challenged the approval, alleging SEML was allowed to modify its commercial offer after the bid deadline, constituting material irregularity

Both the NCLT and NCLAT dismissed these challenges, affirming the CoC's commercial wisdom

1. Whether the clarifications furnished by SEML regarding the treatment of bank guarantees and the option of upfront payment resulted in an unauthorized enhancement or modification of its Resolution Plan

2. Whether the Supreme Court can interfere with a Resolution Plan that has been approved by the CoC’s commercial wisdom and already implemented

The Court applied Section 30(2) and Section 31 of the IBC regarding the approval of resolution plans

and Section 61(3) and 62, which limit appellate grounds to "material irregularity" or "questions of law"

It relied on the "Doctrine of Commercial Wisdom" established in *K. Sashidhar v. Indian Overseas Bank*, which holds the CoC's subjective commercial decisions as non-justiciable

It further applied *Essar Steel India Ltd. v. Satish Kumar Gupta*, emphasizing the limited judicial review to ensuring statutory compliance rather than second-guessing viability

and *Kalyani Transco v. Bhushan Power & Steel Ltd.* regarding the sanctity of concurrent findings by NCLT and NCLAT

The Court found no "material irregularity" because the RP acted strictly on CoC instructions to seek clarifications from *all* applicants, not just SEML

Regarding BGs, the Court analyzed Clause 6.3.14 of SEML’s plan, noting it always committed the full ₹180.05 crores to the CoC; the clarification merely addressed the interim security of issuing banks for specific dormant BGs without increasing the total payout

Regarding the payment of ₹240 crores, the Court observed that SEML’s original plan offered the CoC an option to take a future value (₹301.64 crores over 3 years) or its present Net Present Value (₹240 crores upfront)

This was a clarification of existing terms rather than a post-bid modification

Consequently, the Court held that the appellants were attempting to reopen commercial evaluations—such as the trade-off between upfront cash and deferred interest—which fall exclusively within the CoC's domain

It held that SEML did not modify its plan post-negotiation; the communications were valid clarifications permitted under the RFRP and Process Note

The Court reiterated that once the CoC exercises its commercial wisdom in a non-arbitrary manner, and the plan is approved and implemented, the judiciary must refrain from interference to ensure the IBC's goals of finality and value maximization

No costs were imposed