Introduction
The Insolvency and Bankruptcy Code (IBC), 2016 is nearing its tenth anniversary, marking a crucial period during which the Supreme Court of India has played a pivotal role in interpreting and shaping the insolvency framework. Beyond merely interpreting the statute, the Court’s decisions have significantly influenced the evolution of insolvency law in India.
Initial Phase: Establishing the Code’s Constitutionality
In its early rulings, the Supreme Court addressed the constitutional validity of the IBC. Notable cases such as Swiss Ribbons Pvt. Ltd. v. Union of India, 2019 INSC 95, and K. Sashidhar v. Indian Overseas Bank, 2019 INSC 148, laid down the foundational roles and responsibilities of creditors, tribunals, and courts under the Code.
Second Phase: Affirming Commercial Wisdom
The Court then focused on the commercial aspects of the Code. Through cases like Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta, 2019 INSC 1256, and Ebix Singapore Pvt. Ltd. v. Committee of Creditors of Educomp Solutions Ltd., 2021 INSC 468, it emphasized the supremacy of the committee of creditors’ commercial judgment, limiting the scope of judicial review and treating the approved plans as final.
Third Phase: Ensuring Compliance and Legitimacy
Recently, a new wave of decisions has emerged, expanding the Court’s focus to include procedural compliance, the legitimacy of claims, and the effectiveness of resolutions. The 2025 decision in Independent Sugar Corporation Ltd. v. Girish Sriram Juneja, 2025 INSC 124, underscored the necessity of obtaining regulatory approvals, such as from the Competition Commission of India, before the creditors’ committee’s vote, as mandated by Section 31(4) of the Code.
Legitimacy of Claimants
The Supreme Court further scrutinized the legitimacy of claims in Mansi Brar Fernandes v. Shubha Sharma, 2025 INSC 1110, where it differentiated genuine homebuyers from speculative investors seeking only financial returns, reinforcing that the IBC is not a debt recovery tool but a mechanism to revive and complete viable projects.
Ensuring Effective Resolutions
The effectiveness of resolutions was addressed in Kalyani Transco v. Bhushan Power and Steel Ltd., 2025 INSC 1165, where the Court upheld the finality of an approved plan, emphasizing that reopening claims post-approval would contravene IBC provisions. Similarly, Piramal Capital and Housing Finance Ltd. v. 63 Moons Technologies Ltd., 2025 INSC 421, distinguished between avoidance applications aimed at specific transactions and those targeting fraudulent trading, maintaining the integrity of the resolution process.
Conclusion
As the IBC approaches its second decade, the Supreme Court’s decisions indicate a shift towards ensuring procedural integrity and compliance, rather than focusing solely on commercial aspects. This evolving jurisprudence underscores the importance of preserving the credibility of insolvency processes, which will be crucial for the future of India’s insolvency regime.
