The Supreme Court of India, in a judgment delivered on 26 February 2026, reaffirmed that the doctrine of commercial wisdom is central to the insolvency resolution framework under the Insolvency and Bankruptcy Code, 2016. A Bench comprising Justice B.V. Nagarathna and Justice R. Mahadevan, in Torrent Power Ltd. v. Ashish Arjunkumar Rathi, held that judicial review of resolution plans approved by the Committee of Creditors is strictly confined to the parameters set out in Sections 30(2) and 61(3) of the IBC.
Background
The matter arose from a challenge to the approval of a resolution plan by the Committee of Creditors in the Corporate Insolvency Resolution Process of a corporate debtor. The appellant, Torrent Power Ltd., contested the plan on grounds including the adequacy of the resolution amount and the commercial viability of the proposed arrangement.
The doctrine of commercial wisdom, as developed in IBC jurisprudence, holds that the Committee of Creditors, comprising the financial creditors of the corporate debtor, is the appropriate body to take commercial decisions regarding the resolution of the company's insolvency. Courts and tribunals have consistently held that the CoC's decision-making authority on commercial aspects of a resolution plan should not be second-guessed by the judiciary.
The scope of judicial review in insolvency proceedings has been progressively refined through a series of Supreme Court decisions. The present case required the Court to restate the boundaries of permissible judicial intervention when a resolution plan has been approved by the requisite majority of the CoC.
Key Holdings
The Court held as follows:
Commercial wisdom is the core of IBC: The Bench held that the doctrine of commercial wisdom lies at the core of the insolvency resolution framework. The Committee of Creditors, being composed of financial creditors with direct economic interest in the outcome, is best positioned to evaluate the commercial merits of a resolution plan.
Judicial review strictly limited: The Court held that judicial review of a CoC-approved resolution plan must be confined to the parameters specified in Sections 30(2) and 61(3) of the IBC. These provisions enumerate specific grounds on which a plan may be challenged, and courts cannot expand the scope of review beyond these statutory grounds.
CoC authority is decisive: The Bench emphasised that where a resolution plan meets the requirements of Section 30(2) and has been approved by the requisite majority of the CoC, the adjudicating authority and appellate tribunals must defer to the CoC's commercial judgment on matters such as the quantum of recovery and the distribution among creditors.
Challenge dismissed: The Court dismissed the challenge to the resolution plan, holding that the grounds raised by the appellant fell outside the permissible scope of judicial review under the IBC.
Implications for Practitioners
This judgment reinforces the settled position on the limits of judicial review in IBC proceedings, but its restatement by a Supreme Court Bench serves as an important corrective against the tendency of some NCLT and NCLAT benches to conduct de novo evaluation of the commercial terms of resolution plans.
For resolution applicants and their legal advisers, the ruling provides assurance that a plan approved by the CoC will not be upended on grounds of commercial adequacy. The focus of plan defence should be on demonstrating compliance with Section 30(2) requirements.
Dissenting creditors and unsuccessful resolution applicants should note that the scope for challenging approved plans on commercial grounds remains extremely narrow. Challenges must be framed within the specific statutory grounds enumerated in Section 61(3), and arguments rooted in the commercial wisdom of alternative proposals are unlikely to succeed.