Corporate Insolvency Law under IBC – Supreme Court of India Judgments
Corporate Matters Under Insolvency Law
Handled by the Supreme Court of India
Blog by:
Jayprakash B. Somani
Advocate, Supreme Court of India & IP
Cell: PA 9322188701
www.jayprakashsomani.com
www.supremecourtlawfirm.com
Statutory Context: Insolvency and Bankruptcy Code, 2016 (IBC)
The Supreme Court’s corporate insolvency jurisprudence primarily arises from the following key provisions of the Insolvency and Bankruptcy Code, 2016:
Section 7 – Application by financial creditor
Section 9 – Application by operational creditor
Section 10 – Application by corporate debtor
Section 14 – Moratorium
Section 29A – Eligibility of resolution applicants
Section 30 – Approval of resolution plan
Section 31 – Effect of approved resolution plan
Section 33 – Liquidation
Sections 43–51 – Avoidance transactions
Sections 60–62 – Adjudication and appeals
These provisions collectively form the Corporate Insolvency Resolution Process (CIRP) framework under the Code.
1. Supreme Court on the Integrity of CIRP as a “Complete Code”
Mohammed Enterprises (Tanzania) Ltd. v. Farooq Ali Khan & Ors. (2025)
Core Holding:
The Supreme Court held that the Corporate Insolvency Resolution Process (CIRP) under the IBC is a complete statutory code. High Courts cannot interfere under Article 226 when specific remedies are available within the IBC, such as appeals before the NCLAT and the Supreme Court.
Key Principle:
Courts should not bypass the structured appellate hierarchy provided under the IBC while adjudicating insolvency matters.
This judgment reaffirmed earlier jurisprudence recognizing the exclusivity of the IBC’s appellate framework (NCLAT ? Supreme Court).
2. Supreme Court on the Bhushan Power & Steel Resolution Saga
Kalyani Transco v. Bhushan Power & Steel Ltd. / JSW Steel
This dispute emerged as one of the most significant corporate insolvency matters of 2025, wherein the Supreme Court revisited its own conclusions.
May 2025 Judgment – A Landmark Intervention
The Supreme Court set aside an already approved resolution plan for Bhushan Power & Steel Ltd. (BPSL), notwithstanding approval by the CoC, NCLT, and NCLAT, citing serious statutory non-compliance and misrepresentations under the IBC.
The Court ordered liquidation under Section 33 and exercised powers under Article 142 to grant comprehensive relief, including directing the return of funds to creditors.
The ruling underscored that statutory compliance and transparency are non-negotiable in insolvency proceedings.
Subsequent Review and Clarification
In mid-2025, considering economic and investment implications, the Supreme Court agreed to review its earlier order and listed the matter for fresh consideration.
This demonstrated that even apex court decisions may be revisited where consistency, precedent, or statutory interpretation warrants reconsideration.
Legal Significance:
The case highlights the Supreme Court’s readiness to scrutinize CoC decisions and approved resolution plans not merely on the basis of commercial wisdom, but on strict adherence to statutory requirements, including Section 29A eligibility, disclosure obligations, and procedural compliance.
3. Finality of Approved Resolution Plans
Vaibhav Goel v. Deputy Commissioner of Income Tax & Ors. (2025)
The Supreme Court reaffirmed the “clean slate” doctrine, holding that once a resolution plan is approved under Section 31, all claims against the corporate debtor not provided for in the plan stand extinguished.
This principle applies equally to statutory dues, including income tax liabilities and other governmental claims not incorporated in the approved plan.
The ruling provides certainty to resolution applicants and investors that the corporate debtor emerges free from past liabilities post-approval.
4. Supreme Court on Powers of the Committee of Creditors (CoC)
Piramal Capital & Housing Finance Ltd. v. 63 Moons Technologies Ltd.
The Supreme Court upheld the commercial wisdom of the CoC in approving a resolution plan that allocated recoveries from avoidance transactions exclusively to financial creditors.
The Court held that the NCLT and NCLAT exceeded their jurisdiction by modifying the plan and reiterated that judicial intervention is unwarranted so long as statutory requirements are fulfilled.
Takeaway:
Commercial discretion of the CoC is to be respected, provided the resolution plan complies with the IBC.
5. Scope of IBC Remedies vis-à-vis Other Forums
The Supreme Court has consistently ruled that the IBC constitutes an exclusive statutory regime for insolvency resolution.
High Courts should ordinarily refrain from interfering in CIRP proceedings when adequate alternative remedies are available within the IBC framework, including objections before the CoC, NCLT, NCLAT, and ultimately the Supreme Court.
This approach preserves the integrity of the IBC as a self-contained code and prevents collateral litigation under Article 226.
6. Extinguishment of Claims After Plan Approval
The confirmation of the clean slate doctrine remains a cornerstone of insolvency jurisprudence. It ensures that a corporate debtor can recommence operations without legacy encumbrances, thereby encouraging investment, revival, and economic stability.
7. Supreme Court on Personal Claims and Corporate Entity Identity
Rejection of Insolvency Plea Against Electrosteel Castings Ltd. (2026)
In early 2026, the Supreme Court dismissed a plea by UV Asset Reconstruction Company seeking initiation of insolvency proceedings against Electrosteel Castings Ltd. (ECL).
The Court upheld the NCLAT’s view that once a resolution plan for Electrosteel Steels Ltd. (ESL) had been approved, all associated claims stood extinguished, and derivative insolvency actions against guarantors or erstwhile promoters were barred.
This judgment reinforces the finality and binding effect of an approved resolution plan.
Key IBC Sections Under Supreme Court Review
| Section | Subject |
|---|---|
| Section 7 | Admission of application by financial creditor |
| Section 9 | Admission of application by operational creditor |
| Section 14 | Moratorium during CIRP |
| Section 29A | Eligibility of resolution applicants |
| Section 30 | Submission and approval of resolution plan |
| Section 31 | Effect and finality of approved plan |
| Section 33 | Liquidation commencement |
| Sections 43–51 | Avoidance transactions |
| Sections 60–62 | Adjudication and appeal hierarchy |
Emerging Issues Likely to Reach the Supreme Court
Moratorium and Criminal Liability
Recent High Court rulings indicate that directors cannot invoke the IBC moratorium to evade personal criminal liability, including proceedings under Section 138 of the Negotiable Instruments Act.
These decisions rely on Supreme Court precedents such as P. Mohanraj v. Shah Brothers Ispat Pvt. Ltd. and Rakesh Bhanot v. Gurdas Agro Pvt. Ltd. Further clarification by the Supreme Court is anticipated.
Real Estate and Homebuyer Claims
While tribunals have addressed homebuyers’ status as financial creditors and project-wise insolvency in real estate matters, further Supreme Court guidance is expected to harmonize the interplay between RERA and the IBC.
Conclusion
The Supreme Court of India has played a pivotal role in shaping corporate insolvency jurisprudence by striking a balance between statutory fidelity and commercial realities. Its evolving jurisprudence establishes that:
The IBC is a self-contained and exclusive insolvency code
Approved resolution plans attain finality and extinguish unprovided claims
Commercial wisdom of the CoC is respected, subject to statutory compliance
Courts must not bypass the statutory hierarchy of remedies
Transparency and compliance with Sections 29A, 30, and 31 are indispensable
These principles ensure that corporate insolvency resolution in India remains predictable, fair, and firmly rooted in statutory law, while remaining responsive to institutional and procedural challenges.
