India’s Insolvency and Bankruptcy Code was built to correct a broken credit culture. It has unquestionably changed lender behaviour, improved recovery discipline and created a rules-based architecture where disorder once prevailed. But legal validity, by itself, is not enough to sustain legitimacy.
Vedanta Group’s appeal before the NCLAT against the approval of Adani Enterprises’ acquisition of Jaiprakash Associates Limited (JAL) raises a broader policy question. The NCLT cleared the deal after creditor approval, despite Vedanta being the highest bidder by over INR 3400 crores. Creditors are understood to have favoured Adani’s bid primarily due to higher upfront payments. Meanwhile, the National Asset Reconstruction Company Limited (NARCL) had recently, taken over the company’s debt from lenders.
This exposes a harder truth – the process wasn’t followed as it should have been. Insolvency systems do not earn credibility merely by being technically compliant. They earn it when outcomes are also seen as balanced, rational and fair to the full universe of stakeholders whose lives they touch.
Concentrated power, limited perspective
The defining feature of the IBC process is a transparent, open auction. In the Jaypee case, the Committee of Creditors (CoC) followed this approach. Five bidders participated, each depositing ₹100 crore, in a process that ran for over 24 hours. As bids escalated, participants were asked to match the highest offer. One by one, they dropped out, leaving Vedanta as the highest bidder.The defining feature of the IBC process is a transparent, open auction. In the Jaypee case, after initial plans were found sub-optimal, the Committee of Creditors (CoC) introduced a challenge process. While multiple bidders had submitted initial expressions of interest, only Vedanta participated in the subsequent rounds. Vedanta as the sole bidder, undertook extensive due diligence and enhanced its own bid by ₹250 crore. The CoC formally declared Vedanta as H1 and confirmed this in writing. By all norms, the outcome was clear.
Yet, in a surprising turn, the asset was awarded to another bidder. The highest bidder did not win. The plan considered sub-optimal by the COC won.
This undermines the foundation of auction-based price discovery and indicates that the challenge process/auction was largely a procedural formality. The correct course would have been to first engage with the winning bidder, and only if that failed, move to others. Deviating from this risks eroding trust and discouraging serious bidders from participating in future IBC auctions.
Jaiprakash Associates is not a vanilla asset. While it sits at the intersection of infrastructure, real estate, cement, land, litigation, community expectations and legacy development commitments, there are real and common people involved whose money is also involved in these projects. This intersection involved homebuyers, contractors, shareholders, and other laypersons who are not exposed to the complexities involved in these processes. An extremely technical approach marginalises essential stakeholders.
Such assets cannot be evaluated through a financial lens alone. They require time, sectoral understanding and stakeholder sensitivity. They require the ability to distinguish between immediate cash comfort and long-term value preservation.
When a recently substituted creditor ends up exercising decisive influence over a complex, multi-dimensional asset, the system must at least ask whether the perspective is sufficiently deep, whether the incentives are sufficiently aligned and whether the evaluation criteria are sufficiently broad.
The missing empathy in insolvency design
The most serious blind spot in India’s insolvency architecture is not legal. It is moral.
Homebuyers may now be recognised stakeholders under the IBC, but formal recognition has not fully translated into lived reassurance. In sprawling, delayed projects linked to companies like JAL, homebuyers are not peripheral claimants. They are families who committed life savings to a promise of shelter, stability and dignity. Reports around Jaypee-linked projects show that thousands of buyers remain entangled in uncertainty even as headline resolution moves forward.
This is where the system reveals a public empathy deficit.
An insolvency resolution that is satisfactory on paper but leaves ordinary citizens partially seen, partially heard and partially protected cannot be described as complete. The law may rank claims. Society does not. For a homebuyer, a delayed flat is not an abstract balance-sheet event. It is a stalled life plan, a continuing EMI, a postponed childhood, an ageing parent without a home.
India’s resolution framework must begin to account for that human ledger.
Beyond balance sheets lies the real economy
Large insolvencies do not affect only lenders and bidders. They disrupt livelihood ecosystems.
A suboptimal resolution in an infrastructure-led company can delay payments to small contractors, squeeze MSME vendors tied to supply chains, shut off transport demand for truck drivers moving cement and raw materials, and prolong uncertainty for daily wage labour dependent on construction activity. These invisible stakeholders never sit at the creditor table. Yet they bear the consequences of what is decided there.
This is why transparency matters so much. Public reporting has suggested that a lower-value plan was accepted over a higher one, primarily because of upfront payment terms. That may be commercially defensible within the current rules. But when material factors shaping such choices remain opaque to the wider public, the trust deficit widens.
Having said that, the matter is now before the honourable court, which will determine its outcome. But whatever the verdict, this case will set an important precedent: that companies with multi-dimensional assets cannot be evaluated through a narrow creditor lens alone. The interests of people, shareholders and the broader public must be weighed alongside financial considerations, rather than privileging short-term transactional gains.
(Views are personal)
