Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code, 2016 Emerging Trends in the Judiciary

01Debt-admission threshold: shift from discretion to mandate

In Vidarbha Industries Power Ltd. v. Axis Bank Ltd. (2022), the Supreme Court held that the use of “may” in Section 7(5)(a) conveyed discretion with the NCLT to defer or reject admission despite default. Consequently, CIRP became an equitable gate-keeping exercise wherein debtors could resist insolvency by citing temporary hardships or receivables. The Bill, 2025 attempted a volte-face by making CIRP mandatory once default and debt are established.

The law was clarified in Elegna Co-operative Housing and Commercial Society v. Edelweiss Asset Reconstruction Company (2026), where the Court confirmed the legislature’s intention that the inquiry under Section 7(5)(a) is confined to the existence of financial debt and default, while project viability, project stage and prejudice to homebuyers are irrelevant at the admission stage. A housing society has no locus in a Section 7 proceeding pre-admission, as the process is between a debtor and a creditor (in personam), but the Court ordered enhanced disclosure for CoC deliberations.

02Commercial wisdom opposed by judicial intervention

The power of commercial wisdom given to the CoC has remained paramount since inception. In Kalyani Transco Limited v. Union of India (2025), the Court observed that courts should exercise their jurisdiction sparingly, taking care not to substitute their opinion for the commercial wisdom of the CoC, unless statutory requirements are unmet or the process is fraudulent. It clarified that the CoC does not become functus officio after the NCLT approves the plan, and continues until the plan takes effect, including where more time is taken for implementation.

However, while favouring commercial wisdom, the Court intervened where it deemed the duration of the process conducive to abuse, as in Balajee Ingot India Pvt. Ltd. (2025). There, liabilities crossed Rs. 20.32 crores, including Rs. 16.89 crores of statutory dues, against a liquidation value of around Rs. 10 lakh, and the CoC approved a Rs. 20 lakh plan that the NCLT rejected, resulting in the invocation of Section 65. The case exemplifies how courts may check the erosion of the scheme.

03Finality of resolution plans: the Bhushan Power episode

The assurance of finality of an approved plan was challenged by the Supreme Court’s order in the insolvency of Bhushan Power in May 2025, which imposed liquidation despite implementation of JSW Steel’s resolution plan. This created uncertainty in the minds of lenders and resolution applicants.

The stay in the review judgment in Kalyani Transco Limited v. Union of India (September 2025) reaffirmed the original plan of JSW Steel and upheld finality, CoC primacy and minimal judicial interference, likely emboldening investors and signalling that implemented schemes need not be reopened.

04Group insolvency and substantive consolidation

The Court has increasingly recognized the doctrine of group insolvency. In Satinder Singh Bhasin v. Col. Gautam Mullick (2026), the Court observed that a joint insolvency petition could be filed against multiple interrelated corporations having core directors and performing interdependent functions, and that a joint scheme may address all allottees’ claims. The law now provides the necessary framework for group and cross-border insolvency in the 2026 Amendment.

05Reverse CIRP: a home-buyers’ innovation

In real estate, the process has given rise to “Reverse CIRP”, which involves completion of the project by the existing promoter rather than a third-party admission. In Satish Chander Verma v. Grand Reality Pvt. Ltd. (2025), the NCLAT sanctioned, in principle, the reversal of CIRP by completing the project to the satisfaction of investors and stakeholders.

Subsequent cases such as Supertech Realtors (2025) clarified that Reverse CIRP is not an enforceable right and that the court needs the confidence of the lenders and stakeholders to proceed. In Mansi Brar Fernandes v. Shubha Sharma (2025), the Court distinguished genuine home-buyers from time-sharers, confirmed the collective threshold of Section 7(e) and reiterated the right to shelter.

06CCI approval and the competition law interface

In Independent Sugar Corporation Ltd. v. Girish Sriram Juneja (2025), the Court held that the proviso to Section 31(4) of the IBC, mandating CCI approval of the combination, is mandatory; conditional approvals are not available, nor can post-CoC modifications be entertained. CCI approval of schemes must precede CoC approval.

07Section 29A: eligibility and ineligibility

In JC World Promoters (2025), the Court held that exemption from the application of Section 29A(c) can be derived from the exemption granted in Section 240A to “small” companies. In the later Balajee Ingot proceedings (2026), the Court confirmed the plan approved by the 100% voting CoC in favour of the promoters of the corporate debtor.

However, the Court has held at the other extreme that ineligibility under Section 29A(c) can be grounds for rejection of a resolution plan. The Court found no impediment in the applicants being family relations of the promoters, and the conclusion of their married life in execution of the plan.