NCLAT Approves Sarda Energy’s ₹2,000 Crore Acquisition of SKS Power, Dismissing Challenges

The National Company Law Appellate Tribunal (NCLAT) has upheld the decision of the National Company Law Tribunal (NCLT), approving the acquisition of SKS Power Generation (Chhattisgarh) Ltd by Sarda Energy & Minerals Ltd (SEML), a company listed on the BSE.

Unsuccessful bidders, including Torrent Power Ltd, Jindal Power Ltd, and Vantage Point Asset Management Pte., had challenged the NCLT’s approval of the acquisition. However, the NCLAT ruled that there were no valid grounds to interfere with the NCLT’s decision. The appellate tribunal, led by Justice Ashok Bhushan along with technical members Barun Mitra and Arun Baroka, stated, “We do not find that any sufficient grounds have been made out within the meaning of Section 61(3)(ii) of the IBC to interfere with the decision of the adjudicating authority (NCLT) approving the resolution plan of Sarda, in these appeals filed by unsuccessful resolution applicants.”

Back in August 2023, the Mumbai branch of the NCLT had approved the acquisition of SKS Power Generation by SEML. The power company had liabilities amounting to ₹2,697 crore, and Sarda Energy’s resolution plan offered a payment of around ₹2,000 crore to acquire the company.

SKS Power Generation was admitted to the Corporate Insolvency Resolution Process (CIRP) in April 2022 after the Bank of Baroda, one of its lenders, filed a petition. Before the NCLT’s approval, the Committee of Creditors (CoC), which was led by the State Bank of India and the Bank of Baroda, had voted 100% in favor of Sarda Energy & Minerals’ resolution plan.

In this case, Sarda Energy & Minerals was represented by the legal firm Chandhiok & Mahajan and Agarwal Law Associates. Meanwhile, the company’s Resolution Professional (RP) and the CoC were represented by law firms Trilegal and Cyril Amarchand Mangaldas. After the NCLT’s ruling, the unsuccessful bidders approached the NCLAT to challenge the decision.

The unsuccessful bidders claimed that the Resolution Professional (RP) and the CoC had “selectively permitted” Sarda Energy & Minerals to revise its commercial offer after the conclusion of negotiations on April 19, 2023. However, the appellate tribunal found no evidence to support these claims and upheld the NCLT’s decision.

According to Akshat Khetan, founder of AU Corporate & Legal Advisory Services, “The case underscores the importance of transparency and adherence to the IBC framework, with the judiciary playing a limited role in interfering with the CoC’s decisions unless material irregularities are evident. The outcome reinforces the IBC’s objective to ensure timely resolution and maximize asset value.”

SKS Power Generation (Chhattisgarh) operates a coal-based thermal power plant located in Binjkote and Durramuda in the Raigarh district of Chhattisgarh. The facility is in high demand as it is one of the few operational power plants available for sale, and it comes with a 25-year fuel agreement and a railway line.

The thermal power plant consists of four units with a combined capacity of 1,200 MW (4×300 MW) using Indian coal as the primary fuel. The company is also in the process of executing the second phase of the project, which will add another 600 MW (2×300 MW) to the plant’s capacity, according to its official website.