Vedanta Demerger in Trouble as NCLT Strikes Down Talwandi Sabo Power’s Scheme over Financial Non-Disclosure [Read Order]
NCLT rejected TSPL's demerger scheme, citing financial non-disclosure after finding that Vedanta Limited failed to disclose a Rs. 1,251 crore liability owed to SEPCO
![Vedanta Demerger in Trouble as NCLT Strikes Down Talwandi Sabo Power’s Scheme over Financial Non-Disclosure [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/03/NCLT-Vedanta-Demerger-Talwandi-Sabo-Powers-Scheme-taxscan.jpg "Vedanta Demerger in Trouble as NCLT Strikes Down Talwandi Sabo Power’s Scheme over Financial Non-Disclosure [Read Order]")
The Mumbai Bench of the National Company Law Tribunal ( NCLT ) rejected the Scheme of Arrangement involving Talwandi Sabo Power Limited ( TSPL ), a wholly owned subsidiary of Vedanta Limited, citing financial non-disclosure. Vedanta Limited, a diversified natural resources company, proposed a corporate restructuring plan to demerge its businesses into independent entities. The scheme...
The Mumbai Bench of the National Company Law Tribunal ( NCLT ) rejected the Scheme of Arrangement involving Talwandi Sabo Power Limited ( TSPL ), a wholly owned subsidiary of Vedanta Limited, citing financial non-disclosure.
Vedanta Limited, a diversified natural resources company, proposed a corporate restructuring plan to demerge its businesses into independent entities. The scheme was approved by Vedanta’s board on September 29, 2023, and subsequent approvals were obtained from the boards of the resulting companies by October 13, 2023. The appointed date for the scheme was the same as its effective date.
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SEPCO, a key creditor of TSPL, objected to the demerger scheme, arguing that Vedanta had concealed its debt liability in financial disclosures, misrepresenting the company’s financial position. SEPCO claimed that the Rs. 1,251 crore debt was previously acknowledged in Vedanta’s financial statements and certified by the company’s chartered accountants but was conveniently excluded from the demerger process.
The two-member bench comprising Reeta Kohli ( Judicial Member ) and Madhu Sinha (Technical Member) found merit in SEPCO’s objections, observing that TSPL had recognized SEPCO as a creditor in past financial statements but omitted it from the demerger scheme. The exclusion of this liability impacted the valuation process and creditor voting rights.
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The failure to disclose material liabilities violated Section 230(2)(a) of the Companies Act, 2013, which mandates full disclosure of financial obligations in such schemes.
The tribunal found that TSPL failed to disclose material financial liabilities, including an outstanding debt of Rs. 1,251 crore owed to SEPCO, which hugely impacted the fairness and transparency of the scheme.
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The tribunal ruled that Vedanta’s non-disclosure was a serious procedural lapse, rendering the scheme non-compliant with legal requirements. The tribunal did not rule on the merits of the demerger itself but concluded that the misrepresentation of financial obligations justified the rejection of the scheme.
So, the tribunal dismissed TSPL’s demerger scheme, holding that the concealment of material financial information prejudiced creditors and public interest.
To Read the full text of the Order CLICK HERE
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