NCLAT Approves the Takeover of Vidarbha Industries by Adani Power.
The National Company Law Appellate Tribunal (NCLAT) is a body that has officially approved the resolution plan filed by Adani Power to buy Vidarbha Industries Power Limited (VIPL). The appellate tribunal ruled in January 16, 2026, that several challenges had been thrown out to reverse the approval that had earlier been given by the National Company Law Tribunal (NCLT). This decision paves the last regulatory way to the transfer of ownership of the stressed thermal power asset to the giant of Indian private thermal power producer.
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This ruling was given by a two-member bench headed by the chairperson Justice Ashok Bhushan and the technical member Barun Mitra who did not see any merit in the appeals made by the opposing parties. The legal issues were mainly raised by the Western Coalfields Limited as an active creditor and the employee representative of the company. The two appellants had made the same argument that the resolution process was faulty and that money was distributed in a discriminatory manner against the operational creditors.
This ruling has strengthened the purity of the commercial wisdom of the Committee of Creditors (CoC) when it is involved in the insolvency procedure. According to the tribunal, the approved plan was in line with the requisite provisions of the Insolvency and Bankruptcy Code (IBC) in its entirety. This decision is a success in allowing Adani Power to acquire Nagpur based power generation company by paying Rs 4,000 crore.
Financial structure and Creditor Recoveries.
A special distribution plan approved by the plan of offer is a detailed plan of distributing the offer of Rs 4,000 crore, which is very biased towards the secured financial creditors. Applying the terms under which the tribunal has sanctioned, secured financial creditors will get about 3,706 crore of the presented claims. This sum is equivalent to a recovery rate of almost 60 percent of the banks and financial institutions which had lent money to the power project.
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These financial creditors also will not be paid cash but they will stay as equity holders in the revived entity with 26 percent post-acquisitions. The structure will enable the lenders to have a possibility to reap higher form of value in the future once the power plant becomes profitable under its new management. The transaction amounts to a huge haircut but is deemed to be better than the liquidation value of the business property.
operational creditors are the other ones that see a very different fate on the resolution plan, which was pivotal to the court battle. The plan is only providing a sum of 1 crore to be distributed amongst all the creditors, including governmental bodies and workers, who are active. This recovery is recorded in opposition to aggregate submitted operational demands to over Rs 553 crore which translates to lower than one percent recovery of this type of creditors.
The tribunal observed that the estimated value of liquidation of Vidarbha Industries was about 1, 263 crore that was much lower than the amount of debt owed. The situation would have resulted in the operational creditors getting nothing in case of liquidation as the liquidation value was not enough to pay the financial creditors too. This economic fact was the foundation of the legal ratification of the low amount paid to operational creditors.
Controversies Over the Period of insolvency.
A huge part of appeal lodged by Western Coalfields dealt with the procedure timetables required by Insolvency and Bankruptcy Code. The appellant claimed that the Committee of Creditors made the resolution plan after the 180 days deadline of the statutory deadline. It contended that such delay made the whole approval process unlawful and invalid which is to be re-initiated or liquidated.
Western Coalfields specifically referred to changes that were made to the resolution plan on April 1, 2025, and argued that it was outside the allowable window. They argued that Adani Power as the successful resolution applicant had changed the form of acquisition of residual operational debt after the deadline elapsed. This procedural objection was aimed at disqualifying the plan technically on the issue of duration of Corporate Insolvency Resolution Process (CIRP).
These accusations were strongly denied by the NCLAT bench based on the official dates of the insolvency procedure. The tribunal explained that CIRP formally began on the 30th of September 2024, that is, the first 180-day term expired on March 28, 2025. The books of account revealed that the plan was already passed by the Committee of Creditors on meetings which had been held on February 19 and February 21, 2025.
The judges determined that the plan had been voted and presented to the adjudicating authority in ample time as per the law. The tribunal believed that the changes in April were minor modifications to the acquiring structure that did not change the payouts to the stakeholders. Thus, the following amendments were not a new plan and did not breach the statutory schedules established by the Code.
Court Cases on Equality to Creditors.
The court of appeal used the existing Supreme Court precedents extensively in determining the question of unfair practices presented by the employees and trade creditors. The case widely referred to the landmark case in Committee of Creditors of Essar Steel India Ltd vs. Satish Kumar Gupta. This case law provided that the principle of equality in the insolvency procedure should not require all classes of creditors to recover in an identical manner.
Justice Bhushan made it clear that the law acknowledges a very clear distinction in rank between financial creditors and operational creditors. It was reiterated by the judgment that the term equitable treatment does not mean that creditors in the same category must be treated equally, but some different categories may be treated differently. The tribunal confirmed that unequal should not be treated as equal and the different payouts in the Adani Power plan were validated.
The bench also clarified that in Section.30(2) (b) of the IBC, it is simply ensured that operational creditors at least benefit as much as they would have done had the company been liquidated. The statutory claim of operational creditors was at noes since the liquidation value of Vidarbha Industries was insufficient to dispose the financial creditors in full. Thus, the distribution of the 1 crore was technically a bonus and not a breach of their right.
