Insolvency & Bankruptcy Code: Important Judgments By Supreme Court In 2025

In this article, LiveLaw brings to you a summary of important judgments rendered by the Supreme Court in 2025 in connection with the Insolvency and Bankruptcy Code, 2016. The same are as follows:

1. 'IBC A Complete Code' : Supreme Court Disapproves Of High Court Exercising Writ Jurisdiction To Interdict CIRP

Case: Mohammed Enterprises (Tanzania) Ltd. v. Farooq Ali Khan & Ors. [Citation: 2025 LiveLaw (SC) 19]

In this case, a bench of Justices PS Narasimha and Manoj Misra disapproved of a High Court order interdicting a Corporate Insolvency Resolution Process (CIRP) under the IBC. It observed that the IBC is a complete code in itself, having sufficient checks and balances, and thus, the exercise of supervisory and judicial review powers by High Courts demands rigorous scrutiny and judicious application.

In arriving at the decision, the Court was guided by the earlier decision in Committee of Creditors of KSK Mahanadi Power Company Ltd. v. M/s Uttar Pradesh Power Corporation Ltd, where a bench led by former CJI DY Chandrachud underlined the importance of concluding CIRP and took exception to Telangana High Court deferring a CIRP in the exercise of powers under Article 226 of the Constitution. In the said case, it was held that the High Court was not justified in deferring the CIRP when the main relief sought in the writ petition to consolidate the CIRP of two companies was refused.

2. IBC | For Resolution Plan Involving Combination, Prior Approval Of Competition Commission Mandatory Before CoC Examination : Supreme Court

Case: Independent Sugar Corporation Ltd. v. Girish Sriram Juneja & Ors. [Citation: 2025 LiveLaw (SC) 126]

In this case, a bench of Justices Hrishikesh Roy, Sudhanshu Dhulia and SVN Bhatti, by 2:1 majority, observed that a resolution plan under the IBC, containing a proposed combination(a merger or amalgamation of entities), should only be placed before the Committee of Creditors, after it has been approved by the Competition Commission of India. The Court referred to Section 31(4) proviso of IBC and pointed out that the use of 'prior' makes it clear that the legislature's intent was to create an exception. However, Justice Bhatti disagreed, saying that the condition for prior approval from the CCI was not mandatory.

3. Supreme Court Disapproves Of High Court Interdicting Insolvency Process Against Personal Guarantor At Threshold Stage In Writ Jurisdiction

Case: Bank of Baroda v. Farooq Ali Khan & Ors. [Citation: 2025 LiveLaw (SC) 234]

In this case, a bench of PS Narasimha and Manoj Mishra, while deciding an appeal pertaining to insolvency proceedings initiated against a personal guarantor, observed that the High Court should not have prohibited such proceedings by holding that the guarantor's liability has been waived. “It is well-settled that when statutory tribunals are constituted to adjudicate and determine certain questions of law and fact, the High Courts do not substitute themselves as the decision-making authority while exercising judicial review”, it said.

4. IBC Moratorium Does Not Bar Execution Of Penalties Imposed Under Consumer Protection Act : Supreme Court

Case: Saranga Anilkumar Aggarwal v. Bhavesh Dhirajlal Sheth & Ors. [Citation: 2025 LiveLaw (SC) 284]

In this case, a bench of Justices Vikram Nath and PB Varale ruled that an interim moratorium under Section 96 of the IBC does not apply to penalty proceedings under Section 27 of the Consumer Protection Act, 1986. The Court explained that Section 79(15) of the IBC excludes certain liabilities, such as fines and penalties, from the moratorium's effect. As a result, penalties imposed by Consumer Redressal Forums under the regulatory statutes like the CP Act do not fall within the scope of the moratorium.

5. Supreme Court Wonders Why NCLAT Wrote Long Order On Delay Condonation Application Despite High Pendency

Case: Power Infrastructure India v. Power Finance Corporation Ltd. & Anr. [Citation: 2025 LiveLaw (SC) 285]

In this case, a bench of Justice Abhay S Oka and Justice Ujjal Bhuyan expressed surprise that NCLAT, despite having a high pendency of cases, devoted extensive time and effort to writing a 17-page order on a delay condonation application. It remarked that lengthy submissions and pleadings by members of the Bar often contribute to unnecessarily verbose orders.

6. No S.138 NI Act Case Against Ex-Director Of Company When Cause Of Action Arose After IBC Moratorium Was Declared: Supreme Court

Case: Vishnoo Mittal v. M/s Shakti Trading Company [Citation: 2025 LiveLaw (SC) 314]

In this case, a bench of Justice Sudhanshu Dhulia and Justice Ahsanuddin Amanullah held that if the cause of action for the offence of cheque dishonor under Section 138 of the Negotiable Instruments Act, 1881 has arisen after the declaration of moratorium with respect to the company as per the IBC, then the proceedings under S.138 NI Act cannot be continued against the ex-director of the company.

The Court reasoned that upon imposition of the moratorium, the board of directors' powers are suspended, and management of the corporate debtor is taken over by the Insolvency Resolution Professional. As a result, directors cannot be held liable for actions they are no longer authorized to take.

7. IBC | Once Resolution Plan Approved, Dues Not Part Of It Get Extinguished : Supreme Court Rejects Post-Resolution Income Tax Demand

Case: Vaibhav Goel & Anr. versus Deputy Commissioner of Income Tax & Anr. [Citation: 2025 LiveLaw (SC) 330]

In this case, a bench of Justices Abhay S Oka and Ujjal Bhuyan declined a claim raised by the IT Department to include a tax demand in a Resolution Plan after it was approved by the Adjudicating Authority under the IBC. It cited the case of Ghanashyam Mishra and Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Company Ltd. (2021) 9 SCC 657, which held that all claims not included in the resolution plan are extinguished upon its approval.

The Court reasoned that a successful resolution applicant must be able to take over the corporate debtor on a clean slate, free from undecided or belated claims and if claims are allowed after the approval of the Resolution Plan, it would create uncertainty and hinder the implementation of the plan.

8. IBC | Supreme Court Accepts Apology Of Tax Authorities For Asking Successful Resolution Applicant To Pay Dues Not Covered By Approved Plan

Case: M/s JSW Steel Limited v. Pratishtha Thakur Haritwal & Ors. [Citation: 2025 LiveLaw (SC) 361]

In this case, a bench of Justices BR Gavai and AG Masih, giving the benefit of doubt and accepting their unconditional apology, disposed of a contempt petition filed against Chhattisgarh tax authorities for raising demand notices against a successful resolution applicant over claims in respect of a period prior to the approval of the resolution plan. "we have no hesitation in holding that the demands raised by the respondents/authorities for a period prior to the date on which the learned NCLT has approved the Resolution Plan were totally contemptuous in nature. The respondents could not have raised the said demands inasmuch as they are not part of the Resolution Plan...However, we do not propose to proceed against the respondents/contemnors inasmuch as they are entitled to benefit of doubt", it said.

9. Supreme Court Upholds Piramal's Resolution Plan For DHFL, Sets Aside NCLAT Order

Case: Piramal Capital and Housing Finance Limited v. 63 Moons Technologies Limited & Others [Citation: 2025 LiveLaw (SC) 374]

In this case, a bench of Justice Bela Trivedi and Justice SC Sharma approved the Resolution Plan proposed by Piramal Capita and Housing Finance for the erstwhile Dewan Housing Finance Corporation Ltd. It held that funds recovered from the fraudulent transactions at Dewan Housing Finance Corporation Ltd (DHFL) will go to Piramal Capital & Housing Finance Ltd. The Court set aside the NCLAT order, which directed the creditors of DHFL to reconsider the resolution plan proposed by Piramal Capital and Housing Finance. It held that NCLT will freshly reconsider the applications relating to the allocation of proceeds from avoidance transactions worth Rs. 45,000 crores.

10. S.61 IBC | When Judgment Is Pronounced In Open Court, Limitation Period Runs From That Day : Supreme Court

Case: A Rajendra v Gonuganta Madhusudhan Rao and others [Citation: 2025 LiveLaw (SC) 392]

In this case, a bench of Justice AS Oka, Justice Ahsanuddin Amanullah and Justice AG Masih held that the incident which triggers the running of the limitation period under the IBC is the date of pronouncement of the order and in case of non-pronouncement of the order when the hearing concludes, the date on which the order is pronounced or uploaded on the website.

The Court also clarified that where the judgment was pronounced in open Court, the period of limitation starts running from that very day. However, the party is entitled to exclude the period, as per Section 12(1) of the Limitation Act 1963, during which the certified copy of the order was under preparation on an application filed by that party.

11. Arbitral Award For Claims Not Included In IBC Resolution Plan Can't Be Enforced: Supreme Court

Case: Electrosteel Steel Limited (Now M/S ESL Steel Limited) v. Ispat Carrier Private Limited [Citation: 2025 LiveLaw (SC) 491]

In this case, a bench of Justice Abhay S Oka and Justice Ujjal Bhuyan allowed an appeal challenging the enforcement of an arbitral award passed by the Micro and Small Enterprises Facilitation Council (MSEFC) against Electrosteel Steels Ltd., holding that the award was non-executable in view of the resolution plan approved under Section 31 of the IBC. On the issue of maintainability of challenge to the award under Section 47 CPC, the Court observed that Section 47 CPC allows an execution court to reject a decree or award only if it is a nullity or suffers jurisdictional defect, independent of any petition under Section 34 of the Arbitration Act. Section 36 of the Act deems an award a decree once the limitation period for filing Section 34 petition expires, it noted.

12. S. 8 IBC | Service Of Demand Notice On Corporate Debtor's Key Managerial Personnel Is Valid To Trigger Insolvency Process : Supreme Court

Case: Visa Coke Limited v. M/s Mesco Kalinga Steel Limited [Citation: 2025 LiveLaw (SC) 505]

In this case, a bench of Justices JB Pardiwala and R Mahadevan upheld the delivery of a demand notice under Section 8 of the IBC to the corporate debtor's Key Managerial Personnel, stating that the delivery of the notice to the KMP substantially complies with the requirement of Section 8 of IBC. Setting aside the NCLAT ruling, the bench allowed the Operational Creditor's appeal, stating that delivery of the demand notice to the corporate debtor's KMP constitutes deemed service of the notice.

The judgment observed that since the respondent-corporate debtor failed to demonstrate any prejudice resulting from the notice being served on its KMP, a substantive right should not be defeated on a mere technicality. Accordingly, it treated the delivery of the notice as valid and constituted deemed service of the demand notice.

13. Supreme Court Rejects JSW's Resolution Plan For Bhushan Steel As Illegal, Orders Liquidation; Says CoC Acted Without Commercial Wisdom

Case: Kalyani Transco v. M/s Bhushan Steel and Power Ltd [Citation: 2025 LiveLaw (SC) 524]

In this case, a bench of Justice Bela M Trivedi and Justice Satish Chandra Sharma rejected the Resolution Plan submitted by JSW Steel for Bhushan Steel and Power Ltd. Holding that the Resolution Plan of JSW was illegal and contrary to the provisions of the IBC, the Court stated that the Committee of Creditors should not have accepted it. The bench also faulted the NCLT for approving the Resolution Plan. Since JSW's resolution plan was rejected, the Court ordered the liquidation of Bhushan Steel and Power Ltd.

The Court also emphatically stated that the NCLT or the NCLAT cannot review the actions taken by statutory authorities under other laws. It disapproved of the NCLAT staying with the provisional attachment order passed against the assets of Bhushan Steel and Power Ltd under the Prevention of Money Laundering Act.

14. S. 61(2) IBC | Appeal Filed Beyond 45 Days Not Condonable By NCLAT : Supreme Court

Case: Tata Steel Ltd v. Raj Kumar Banerjee & Ors. [Citation: 2025 LiveLaw (SC) 542]

In this case, a bench of Justices JB Pardiwala and R Mahadevan ruled that the NCLAT, acting as the Adjudicating Authority under the IBC, has no power to condone delays in filing appeals beyond the prescribed limit of 45 (30+15) days under Section 61(2) of the Code.

15. IBC | Naming Creditor In Balance Sheet Not Mandatory, Acknowledgment Extends Limitation: Supreme Court Allows IL&FS Plea

Case: IL & FS Financial Services Limited v. Adhunik Meghalaya Steels Private Limited [Citation: 2025 LiveLaw (SC) 753]

In this case, a bench of Justices Manoj Misra and KV Viswanathan, reaffirming that an entry in a company's balance sheet amounts to a valid acknowledgment of debt under Section 18 of the Limitation Act, 1963 irrespective of the name of the creditor, revived the dismissed insolvency plea filed by IL&FS against Adhunik Meghalaya Steels for a default of ₹55.45 crore, citing an acknowledgment of debt in the corporate debtor's balance sheet.

16. IBC Moratorium Doesn't Bar Voluntary Surrender Of Corporate Debtor's Leased Property To Lessor: Supreme Court

Case: Sincere Securities Private Limited & Ors. v. Chandrakant Khemka & Ors. [Citation: 2025 LiveLaw (SC) 774]

In this case, a bench of Justices Sanjay Kumar and SC Sharma held that the moratorium under IBC does not bar the voluntary handover of property leased by the corporate debtor to the lessors if retaining the asset is deemed unviable and the Committee of Creditors endorses the decision.

17. IBC | Homebuyers Can't Be Denied Flat Possession If Their Claims Were Verified & Admitted By Resolution Professional : Supreme Court

Case: Amit Nehra & Anr. v. Pawan Kumar Garg & Ors. [Citation: 2025 LiveLaw (SC) 882]

In this case, a bench of Justices Sanjay Kumar and Satish Chandra Sharma observed that once a claim is verified and admitted by the Resolution Professional (RP), it cannot be treated as “belated” to deny substantive relief under a resolution plan. It ruled in favor of the homebuyers, holding that their verified and admitted claims could not be downgraded to 'unverified' merely because of delayed filing, especially when such treatment had wrongly denied them flat possession and confined them to a partial refund despite having paid substantial consideration.

18. 'Right To Housing A Fundamental Right Under Article 21': Supreme Court Urges Centre To Create Revival Fund For Stressed Real Estate Projects

Case: Mansi Brar Fernandes v. Shubha Sharma and Anr. [Citation: 2025 LiveLaw (SC) 903]

In this case, a bench of Justice JB Pardiwala and Justice R Mahadevan delivered a significant judgment aimed at safeguarding homebuyers. It declared that the right to housing is a fundamental right under Article 21 of the Constitution and urged the Union Government to come up with a revival fund to provide financing for stressed real estate projects undergoing insolvency proceedings. The bench said that the objective must be to prevent liquidation of otherwise viable real estate projects and to protect the interests of genuine homebuyers.

Further, it ordered that every residential real estate transaction for new housing projects shall be registered with local revenue authorities upon payment of at least 20% of the property cost by buyer/allottee. The Court also directed the Union Government to fill up vacancies at the NCLT and the NCLAT on a "war-footing".

With a view to curb the growing misuse of IBC, the Court further reiterated that the Code cannot be used as a tool by speculative investors seeking quick financial returns rather than the genuine revival of distressed companies or protection of real homebuyers.

19. Supreme Court Upholds JSW Steel's Resolution Plan For Bhushan Power & Steel, Says JSW Can't Be Penalised For Reviving Loss-Making Entity

Case: Kalyani Transco v. M/s Bhushan Power and Steel Ltd. [Citation: 2025 LiveLaw (SC) 954]

In this case, a bench of former CJI BR Gavai, Justices SC Sharma and K Vinod Chandran upheld the resolution plan of JSW Steel Ltd for Bhushan Power and Steel Ltd (BPSL) and rejected the objections raised by the ex-promoters and certain creditors of BPSL. Allowing the appeals after JSW has revived the loss-making entity by infusing huge amounts of funds will lead to "disastrous results", the Court said.

Delay in implementation cannot be the sole reason to invalidate the resolution plan, the Court held. It further noted that the delay was attributable to various other factors, including proceedings under the Prevention of Money Laundering Act.

The Court also held that the commercial wisdom exercised by the Committee of Creditors has to be given primacy and should not be lightly interfered with. It further stated that the CoC does not become functus officio merely upon the approval of a resolution plan by the Adjudicating Authority. It was held that the CoC continues to have a role until the resolution plan is fully implemented or an order of liquidation is passed.

20. IBC | Preference Share Holders Are Investors, Not 'Financial Creditors'; Can't File Insolvency Petition : Supreme Court

Case: EPC Constructions India Limited v. M/s Matix Fertilizers And Chemicals Limited [Citation: 2025 LiveLaw (SC) 1036]

In this case, a bench of Justices JB Pardiwala and KV Viswanathan held that holders of Cumulative Redeemable Preference Share are investors, and not financial creditors, and therefore cannot initiate insolvency proceedings under Section 7 of the IBC, since non-redemption of such shares does not constitute a “default” under the IBC.

21. IBC | Section 7 Application Can't Be Rejected For Curable Defects In Affidavit : Supreme Court

Case: Livein Aqua Solutions Private Limited v. HDFC Bank Limited [Citation: 2025 LiveLaw (SC) 1135]

In this case, a bench of Justices Sanjay Kumar and Alok Aradhe observed that procedural defects in a Section 7 insolvency application under IBC, such as a defective affidavit, are curable and cannot be used as a basis for summary dismissal. “Mere filing of a 'defective' affidavit in support of an application would, however, not render the very application non est and liable to be rejected on that ground as it is neither an incurable nor a fundamental defect", it said.

22. IBC | Terminated Contract Not Corporate Debtor's Asset; Moratorium Won't Revive Extinguished Contractual Rights : Supreme Court

Case: A A Estates Private Limited v. Kher Nagar Sukhsadan Co-operative Housing Society Ltd. & Ors. [Citation: 2025 LiveLaw (SC) 1151]

In this case, a bench of Justices JB Pardiwala and R Mahadevan held that a contract which has been lawfully terminated before the initiation of insolvency proceedings cannot be treated as an “asset” or “property” of the corporate debtor, and therefore does not enjoy the protection of the moratorium under Section 14 of the IBC. The Court further observed that a defaulting developer cannot take refuge under Section 14 of the IBC to stall the redevelopment of a housing project, especially when the agreement was lawfully terminated prior to the initiation of insolvency proceedings.

23. NCLT Can Order Forfeiture Of Entire Deposit If Purchaser Of Liquidation Assets Defaults In Payments : Supreme Court

Case: M/s. Shri Karshni Alloys Private Limited v. Ramakrishnan Sadasivan [Citation: 2025 LiveLaw (SC) 1195]

In this case, a bench of Justices Sanjay Kumar and Alok Aradhe held that if a purchaser defaults on payment for assets acquired in liquidation under a judicially supervised sale, the entire amount already deposited may be forfeited. It further clarified that Section 74 of the Indian Contract Act, 1872 cannot be invoked to seek a refund, as no contract exists between the purchaser and the liquidator, the sale being conducted under the authority and supervision of the Adjudicating Authority.

24. S. 9 IBC | Debtor's Ledger Acknowledging Debt & Post-Notice Payments Negate Defence Of Pre-Existing Dispute: Supreme Court

Case: M/s. Saraswati Wire and Cable Industries v. Mohammad Moinuddin Khan and others [Citation: 2025 LiveLaw (SC) 1200]

In this case, a bench of Justice Sanjay Kumar and Justice Alok Aradhe held that a 'pre-existing dispute' capable of barring the initiation of a Corporate Insolvency Resolution Process under Section 9 must be real, genuine, and supported by substantive evidence, and not a moonshine defense raised merely to obstruct CIRP. In an event when the Corporate Debtor ledger account negated the claim of a pre-existing dispute, the NCLAT erred in dismissing the Section 9 application, the Court said.