Vedanta Wins Interim Stay on NCLT Order, Resumes Demerger Process

By siliconindia | Thursday, 29 May 2025, 12:03 Hrs

Vedanta Limited received an interim stay from the NCLAT on the NCLT’s order rejecting its demerger scheme.
The stay allows Vedanta to resume the demerger process while addressing the concerns raised by a Chinese creditor, SEPCO.
The NCLT had previously dismissed the scheme due to the exclusion of SEPCO’s Rs 1,251 crore debt from the creditor list.

In an easing of the growing burden for Vedanta Ltd, the National Company Law Appellate Tribunal (NCLAT) has made an interim stay on an order of the National Company Law Tribunal (NCLT). Dismissing demerger of Vedanta’s only power business and its merger with resultant entity Talwandi Sabo Power Ltd (TSPL).

“We wish to inform you that the Hon’ble National Company Law Appellate Tribunal (NCLAT), has passed an order dated May 27, 2025 (uploaded on NCLAT Website on May 28, 2025), granting an interim stay on the order passed by the Hon’ble NCLT, Mumbai dated March 04, 2025, to the extent it relates to “the rejection of the Scheme”, subject to fulfilling the conditions mentioned in the Order (Order)”, Vedanta reported.

A two-member NCLAT bench stated, “the issues raised before us need to be considered at length and presently in view of the submissions made the scheme is severable and thus in case the stay is not granted to the impugned order, it may affect the second motion application filed in respect of other three transferor companies pending in different tribunals.”

Earlier, the NCLT had dismissed TSPL's scheme of arrangement as a result of an objection raised by SEPCO Electric Power Construction Corporation, a creditor based in China. SEPCO had objected to the scheme by claiming that the power unit had deliberately excluded the creditor’s outstanding debt of Rs 1,251 crore from the scheme’s creditor list.

TSPL had contractually engaged with SEPCO to set up a power plant, with certain matters pending, such as ESP modifications. However, the contract was terminated in February 2024. The tribunal held that the exclusion of such a substantial liability could prejudice the rights of creditors and shareholders and that the valuation of TSPL, which had not assessed SEPCO’s claim, suffered from a serious flaw that could affect public interest. The demerger of Vedanta Ltd's businesses is expected to complete by the end of September 2023 under the leadership of Anil Agarwal.