Supreme Court Refuses To Interfere In Essar Power-UP Jal Vidyut Nigam Insolvency Dispute

The Supreme Court of India on Tuesday dismissed a civil appeal filed by UP Jal Vidyut Nigam Limited (UPJVNL), challenging the treatment of its claims in the insolvency resolution of Essar Power MP Limited (now Mahan Energen Limited), holding that no interference was warranted particularly after implementation of the resolution plan.

A division Bench of Justice Manoj Mishra and Justice Manmohan noted that operational creditors had not received any payment under the approved resolution plan and that even if the UPJVNL’s claim were fully admitted, the outcome would remain unchanged.

The dispute dates back to 2009, when EPMPL entered into an agreement with UPJVNL in relation to the supply of water from the Rihand Reservoir. EPMPL, a key coal-based thermal power company in Madhya Pradesh, contributes significantly to the state’s electricity supply and forms an important part of India’s energy infrastructure.

In 2015, EPMPL approached the Madhya Pradesh High Court challenging water charges inter alia on the ground that such charges have been paid to State of Madhya Pradesh, but the writ petition was dismissed on a ground of territorial jurisdiction with liberty to approach Allahabad High Court. Subsequently, in June 2020, EPMPL filed a fresh petition before the Allahabad High Court.

Meanwhile, EPMPL entered into Corporate Insolvency Resolution Process (CIRP) in September 2020, with a Resolution Professional (RP) appointed to manage the proceedings. UPJVNL submitted claims of over Rs. 12 crores for pre-CIRP dues, which were classified by the RP as “contingent claims” and admitted at a nominal value of Re. 1, because the claims were already sub-judice before the Allahabad High Court.

UPJVNL argued that its claims were valid and fully crystalised. Such argument was opposed both by Adani Power Limited, which emerged as the successful resolution applicant, and the Resolution Professional. The NCLT Delhi, in 2021, had approved Adani’s resolution plan and dismissed UPJVNL’s application challenging the RP’s classification.

Later, the NCLAT, in its judgment, upheld the NCLT’s findings, noting that the RP’s role is administrative, not quasi-judicial, and that contingent claims may be admitted at a nominal value where disputes are pending before courts. The NCLAT also observed that the operational creditor’s claims would not have resulted in any payment under the plan, given the priority of secured financial creditors.

During the hearing of the appeal filed by UPJVNL, the Supreme Court observed that the CIRP-period dues raised by UPJVNL had been fully paid under protest by EPMPL. A fresh agreement was also executed between UPJVNL and EPMPL (now Mahan Energen Limited) regularizing the ongoing commercial relationship. The Bench also took note of the dismissal order passed by the apex court in the Civil Appeal filed by the Central Transmission Utility of India Limited. The Bench reiterated that once a resolution plan is implemented, Section 31 of the IBC binds all stakeholders, and reopening settled claims would disrupt the insolvency process and prejudice creditors.

By dismissing the appeal, the Supreme Court has reaffirmed key IBC principles that the Committee of Creditors’ commercial wisdom is paramount, contingent claims can be admitted notionally under Regulation 14, and operational creditors may receive NIL payment where the plan prioritizes secured financial creditors. The judgment highlights the importance of certainty and finality in the resolution process, ensuring that viable companies can continue to operate post-insolvency without lingering legal uncertainty.

Senior Advocate Gopal Jain appeared for UPJVNL. Mr. Ritin Rai Senior Advocate appeared for the Resolution Professional. Adani Power Limited was represented by Mr. Sandeep Singhi Adv with team of advocates comprising of Ms. Ruby Singh Ahuja, Mr. Vishal Gehrana, Ms. Aakriti Vohra, Ms. Shruti Pandey, Ms. Varsha Himatsingka and Mr. Tribhuvan Narain Singh from Karanjawala & Co.

Case Title: U.P. RAJYA VIDYUT UTPADAN NIGAM LIMITED vs. ASHISH CHHAWCHHARIA & ANR.

Bench: Justices Misra and Manmohan

Order Date: March 17, 2026