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If a commercial decision cannot be challenged, the next move is to call it a procedural one — and the Court has now said so explicitly.
Torrent Power
The panel discussed the Court's reasoning in Torrent Power Limited v. Ashish Arjunkumar Rathi & Others, decided by the Supreme Court in February 2026 in connection with the resolution of SKS Power Generation, in which unsuccessful resolution applicants challenged the approval of a competing plan on the ground of alleged procedural irregularity.
The Court held that a resolution professional acting strictly on the instructions of the Committee of Creditors cannot, by that fact alone, be said to have committed a material irregularity, and reiterated that the commercial wisdom of the Committee of Creditors cannot be interfered with by the NCLT, the NCLAT or the Supreme Court itself, cautioning against a growing pattern of unsuccessful bidders attempting to reopen commercial decisions by recharacterizing them as procedural defects.
The doctrine of commercial wisdom makes the merits of a plan approval unreviewable. That leaves one route open to a disappointed bidder: allege that the process was defective.
The convenient target is the resolution professional. An RP who followed the committee's instructions can always be said to have done something the losing bidder disagrees with — and if that is characterised as a material irregularity, the approval can be reopened without ever attacking the commercial decision directly.
The holding removes it. An RP acting strictly on the instructions of the Committee of Creditors cannot, by that fact alone, be said to have committed a material irregularity — because if it could, every committee decision would be challengeable through its executor.
Note the limit implicit in "by that fact alone". An RP who fails in an independent duty is not protected; what is protected is acting on instructions as such.
Set this against the earlier valuation cases and a consistent picture emerges. Courts will intervene where the process genuinely failed — non-disclosure, an unreasoned nil valuation, undocumented assumptions — and will not where a losing party is dressing up a commercial disagreement.
Jet Airways: the limit of restraint
The panel read this alongside the Supreme Court's earlier and more consequential intervention in the Jet Airways matter, in which the Court, in late 2024, invoked its plenary powers to order the liquidation of the airline after the successful resolution applicant failed, over several years, to implement the approved plan.
The Court used that judgment as an occasion to record broader concerns about delay in the functioning of the NCLT and NCLAT and to recommend structural reforms, while nonetheless reaffirming that it is the Committee of Creditors and not the courts that must exercise commercial judgment on the merits of a resolution plan.
The two cases together define the doctrine's shape. The Court will not second-guess the committee's choice of plan — but it will act where an approved plan has simply not been implemented and the process has stalled.
The 66 per cent threshold
The panel observed that the figure represents a legislative judgment about where to draw the line between requiring broad creditor consensus and permitting an unreasonably small minority to block value-maximizing resolution altogether.
On concentration: a single large lender holding the bulk of that 66% majority does not, without more, vitiate the process, since that lender is, in the panel's words, more exposed to the outcome than any other stakeholder in the room.
The panel also recalled that the threshold itself has evolved over time, contrasting the higher approval threshold in force at the time of the Innoventive Industries litigation, one of the earliest cases to test the Code's constitutional validity, with the lower 66% threshold now in force, and noting that a number of early, high-profile resolution attempts might have proceeded differently under the current threshold.
Swiss Ribbons and the composition of the committee
The panel also referred to the Supreme Court's earlier judgment in Swiss Ribbons Private Limited v. Union of India, which upheld the constitutional validity of the Code and, in doing so, considered and rejected the argument that operational creditors should sit on the Committee of Creditors alongside financial creditors, on the reasoning that financial creditors, by virtue of their typically longer-term exposure to the corporate debtor and their institutional capacity to assess viability, occupy a materially different position from operational creditors, whose exposure is generally shorter-term in nature.
Commercial wisdom applied in practice
The panel cited the Adani and Vedanta resolution processes as recent instances in which a plan was approved on a net-present-value basis notwithstanding that an alternative bid may have offered a nominally higher headline value, illustrating that the Committee of Creditors' commercial wisdom, once properly exercised, will be upheld by the courts even where the outcome might appear, on a purely arithmetic view, open to question.
That is the doctrine working as intended. A higher headline figure payable later can be worth less than a lower one payable now — and assessing that is precisely the commercial judgement the committee exists to make.
Common mistakes
- Challenging a plan approval by recasting a commercial objection as procedural.
- Treating a concentrated majority as evidence of a vitiated process.
- Comparing competing bids on headline value rather than net present value.
- Assuming judicial restraint extends to an approved plan left unimplemented.