What was changed
Siva Industries and Holdings, the holding company of C. Sivasankaran's Siva Group (once behind Aircel and Barista), was dragged into insolvency by IDBI Bank in 2019. The resolution professional admitted financial creditor claims of ₹4,863 crore. Barred by Section 29A of the IBC from bidding for his own company, the promoter side — through the founder's father RCK Vallal — instead offered a one-time settlement of ₹333.21 crore under Section 12A, with ₹5 crore upfront and the balance within 180 days.
The IDBI-led committee of creditors, with over 90% voting share, accepted the offer — a 93.5% haircut. But the NCLT Chennai and then the NCLAT rejected the withdrawal application, holding that a 29A-ineligible promoter could not use a settlement 'akin to a resolution plan' to regain the company, and ordered liquidation in January 2022.
On 3 June 2022, the Supreme Court set aside the NCLAT order, ruling that the CoC's decision was taken in its commercial wisdom and that neither tribunal was justified in overriding it. The settlement stood, liquidation was averted, and the promoters kept the company — a rare promoter take-back under the IBC.
The ruling became a leading precedent: even where a promoter is ineligible to file a resolution plan, creditors retain the power to settle and withdraw the insolvency if 90% agree, and tribunals must defer to that commercial judgment.
What it achieved
Promoters regained control by paying ₹333.21 crore against ₹4,863 crore of admitted claims — a 93.5% haircut lenders voted to accept.
Why it worked
It is one of the rarest outcomes under India's IBC: a defaulting promoter regaining control of the company.
Lenders accepted a 93.5% haircut — ₹333 crore against ₹4,863 crore — showing how deep distress can reset bargaining power.
The Supreme Court elevated CoC 'commercial wisdom' over tribunals' stricter reading of Section 29A.
It created a durable precedent for Section 12A settlements even at the liquidation stage.
The case shows promoters can legally use Section 12A to achieve what Section 29A forbids in a resolution plan.
What can be applied
When creditors vote overwhelmingly for a settlement, courts should respect their commercial wisdom rather than impose a stricter legal outcome that recovers less.
Aftermath
The June 2022 Supreme Court judgment in Vallal RCK v. Siva Industries let the settlement proceed and stopped liquidation, returning the company to promoter control. Lawyers and rating agencies flagged it as a landmark: tribunals in later cases have cited it to uphold creditor-approved settlements over procedural objections, and it remains the standard reference on the primacy of CoC commercial wisdom under the IBC.
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