If Vedanta’s challenge to lenders’ approval of Adani Enterprises’ ₹15,000-crore resolution plan for Jaiprakash Associates Ltd (JAL) succeeds, it could redefine lenders’ wide powers under the “commercial wisdom” doctrine in the country’s bankruptcy regulation, lawyers said.
Lawyers say the Anil Agarwal-led Vedanta's challenge is serious and, if successful, could force lenders to better explain their decisions, especially when choosing a lower-value plan based on factors like upfront cash and faster payments.
“If Vedanta succeeds, the case would represent a reconsideration of the commercial wisdom doctrine,” said V. Aneesh, partner at CMS IndusLaw.
Vedanta is challenging the committee of creditors' (CoC) approval for Adani’s plan before the National Company Law Appellate Tribunal (NCLAT), saying its higher bid was unfairly rejected.
"Commercial wisdom” is a court-developed legal principle, not expressly defined in the Insolvency and Bankruptcy Code (IBC). It means lenders have the primary authority to choose the best resolution plan based on viability, feasibility, recovery and timelines, with limited court interference. It has evolved through rulings of insolvency tribunals and the Supreme Court.
However, under the IBC, Section 30(4) gives powers to the CoC to assess resolution plans—often through an evaluation matrix—and approve one with at least 66% vote share.
"A Vedanta win would be one of the most significant developments in the IBC law since Essar Steel,” said Mayur Shetty, partner at Kochhar & Co.
If Vedanta can show with documents that the evaluation matrix was changed after bids were submitted, or that key parameters were not disclosed equally to all bidders, the issue would go beyond commercial judgment. “In such a case, it points to a breach of legal process,” Shetty said, adding that courts are more likely to examine such arguments.
In the NCLAT, Vedanta has alleged that the JAL resolution process was “tailor-made” for billionaire Gautam Adani-led Adani Enterprises. Vedanta's counsel, Abhijeet Sinha, said the company’s bid was ignored despite it being the highest after five rounds. “There should be transparency in scoring, but there was none. Nobody gave a better offer than Vedanta,” he told the appellate tribunal during a hearing on 10 April.
The core issue is whether lenders can reject Vedanta’s ₹17,000-crore offer in favour of Adani’s ₹14,543-crore plan because it offered quicker payments.
Vedanta said its bid worked out to about ₹12,505 crore on a net present value (NPV) basis and offered better overall value. But lenders preferred Adani’s plan, which promised around ₹6,000 crore upfront and remainder payments within about two years, compared with Vedanta’s longer timeline.
Vedanta also raised concerns about transparency, saying bidders were only told the highest NPV after each round, without details of upfront versus deferred payments. This, it argued, made it difficult to improve its offer.
Essar Steel was a major insolvency case where lenders approved ArcelorMittal’s bid to take over the bankrupt steel company with over ₹42,000-crore plan. In 2019, the Supreme Court upheld the plan and clearly established the contours of the “commercial wisdom” doctrine under the IBC. It held that the CoC has the final authority to approve a resolution plan based on factors such as viability, feasibility and value maximisation. The apex court restricted the role of NCLT and NCLAT to checking legal compliance and procedural fairness, not business decisions.
Adani’s plan totals about ₹15,343 crore, including ₹800 crore towards capital expenditure and working capital. Against claims of about ₹60,637 crore, lenders are expected to recover around 24% with Adani's plan.
Lawyers say if Vedanta wins, courts may start looking more closely at how lenders take decisions, not just the final outcome. This could mean asking lenders to clearly show how they evaluated bids and why they chose one over another.
“The courts will likely examine whether value maximisation has been meaningfully considered, whether the CoC applied its mind to comparative value, whether the process was transparent, and whether there is clear reasoning in the decision-making,” said Aneesh of CMS IndusLaw.
Arka Majumdar, partner at Argus Partners, said any change in the processes and rules would be gradual. Lenders may need to be more transparent about how they assess bids and record reasons when rejecting higher offers.
At present, the law gives lenders wide powers to choose a plan based on recovery, timelines and feasibility under the doctrine of commercial wisdom. Courts have usually stayed away from interfering, except in cases of clear legal or procedural issues.
Lenders maintain that their decision was based on practical considerations. “Normally, we look at how long it takes to receive the money. Faster payments improve recovery as funds can be deployed sooner,” said a senior executive involved in the CoC that approved the Adani bid, requesting anonymity.
Meanwhile, JAL’s resolution professional also told the appellate tribunal that Vedanta has no basis to claim it was the highest bidder, as details of the top bid were never disclosed during the insolvency process.
Some lawyers also warn against too much court involvement. “If every decision is questioned, it could open the floodgates to litigation,” said Apurv Sardeshmukh, managing partner at Stride Legal.
Adani’s plan was approved by 93.8% of lenders, led by National Asset Reconstruction Co. Ltd with about 82% voting share. Other lenders include IDBI Bank, Axis Bank, Bank of New York Mellon and State Bank of India.
JAL, which entered insolvency in 2024 with over ₹50,000 crore in debt, owns significant assets including large land parcels across Noida, Greater Noida and the Yamuna Expressway, along with hotels, commercial assets, cement capacity and an F1 track near the upcoming Noida International Airport.
The plan was approved by the NCLT in March, after which Vedanta moved the NCLAT and the Supreme Court. The Supreme Court refused to stay the process but allowed the NCLAT to continue hearing the case.
