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This article is written by Ramanuj Mukherjee, CEO, LawSikho.

Getting started

Despite being home to the headquarters of the Animal Welfare Board of India (AWBI) in Ballabgarh, Haryana, it is facing a serious animal welfare funding crisis. Things may look good on paper, but the ground reality is different. 

Among the 22 districts of the state, most of the Societies for the Prevention of Cruelty to Animals (SPCAs) are either not functional or do not even exist. This is a violation of the Supreme Court’s judgment, which was issued back in 2008 and later in 2015.             

We are forced to think now that if animal welfare is not a priority in Haryana, a state with fiscal strength and national significance, then what message is it sending about our collective responsibility of protecting animals? 

For over two decades, the mandated laws have not been put into effect 

India has one of the most detailed frameworks for animal welfare. The state government is required to fund and maintain the SPCAs as the Prevention of Cruelty to Animals Act 1960 and the Rules of 2001 mandate. Every state is required to set up district SPCAs within six months of the notification, as given under Rule 3, which Haryana has failed to follow for the last 23 years. The states must provide adequate land, infrastructure, a veterinary doctor and operational funding for each SPCA, as stated under Rule 4. 

But a recent PIL filed by the Sehjeevi trust showed that the state is still lagging in providing humane living conditions to animals. The Punjab and Haryana Court issued interim directives to the UT administration to provide clean water, adequate diet, medical facilities and ventilated space in an SPCA facility in Ripur Kalan, Chandigarh. This condition persisted even after the Animal Welfare Board of India (AWBI) inspection in 2020.        

There have been several instances in which the Supreme Court has stepped in to reinforce these obligations. There was a landmark case of Geeta Seshmani vs. Union of India (2008) in which it was directed by the Court to constitute a State Animal Welfare Board within three months. Next was the case of Gauri Maulekhi vs. Union of India (2015), in which it was ordered to establish the district SPCAs within four weeks. 

This responsibility is echoed by the Constitution itself, through provisions on environmental and wildlife protection (Article 48A ), and compassion for animals (Article 51A(g)).   

What about the right to life? Do animals have this right?

Yes, they do. The Right to Life of Article 21 was extended to animals by the Apex Court in the case of Animal Welfare Board of India vs. A. Nagarjuna (2014), calling it the “Magna Carta of animal rights jurisprudence”.

Yet Haryana continues to lag. 

Haryana’s budget and animal welfare: where’s the money for SPCAs?

While the state proudly shows its expenditure on agriculture and allied activities, there is no specific funding for SPCAs. 

On paper, records show that there was an increase of 24% in the funding of agriculture and allied activities. It was ₹6052 crore in the previous year and ₹7525 crore in 2024-25. Sounds great, right? Under this budget, there was no separate budget for animal welfare. Because of no clear details, it is difficult to check how much of the fund, if any, is going for SPCAs, or if it is getting absorbed into broader veterinary and livestock services. 

At the national level, meanwhile, the AWBI offers six grant categories to SPCAs:

• Covering day-to-day operational expenses 
• Rescue cattle grants
• Grants for the shelter house
• Program funding for animal birth control
• Grants for ambulance
• Grants for natural calamity    

But what is the snag here? The SPACs need to be recognised by the AWBI to access these funds. This new recognition rule, which came in 2021, made the process so bureaucratic that not all SPCAs across the country have successfully managed to qualify. This keeps many SPCAs deprived of the financial support.

In its annual plan, the Department of Animal Husbandry and Dairying (DAHD) list a scheme called “Grant-in-aid to societies for prevention of cruelty to animals”. Unfortunately, the disbursement figures remain a mystery. In the same way, the Zila Parishad’s district-level funding records are not available on how much has been used effectively.

What is the result? Just a system with different funding frameworks, but not transparency.   

Ground reality exposes critical infrastructure collapse

Acting on a petition filed by the MowgliAid Animal Welfare Society, the P&H High Court identified 15 districts where SPCAs were not established or were non-functional. This looks like a collapsed ground reality.     

Chandigarh’s SPCA handles overflow cases from surrounding regions. Between January to September 2021, a total of 6383 animal deaths were recorded as per RTI data. This is a stark reminder of what happens when the system fails.

For a fully functional SPCA, the estimated requirements are:

• For land acquisition, ₹1-5 crore.
• For infrastructure development, ₹2-3 crore.
• For operations, ₹50-75 lakhs annually 
• For vehicles and equipment, ₹15-25 lakhs   

The numbers get staggering when scaled up to 22 districts, for the initial setup, ₹100-176 crores and ₹11-16.5 crores annually to keep things running.    

The total estimated requirement for establishing functional SPCAs across all 22 districts stands at Rs 110-176 crore for initial setup plus Rs 11-16.5 crore annually for operations.

Multiple funding sources exist, but remain unutilized

No shortage of funding channels is there in Haryana for SPCAs. Yet no fund is directed by the Animal Husbandry Department, even after an increased budget. However, at the central level, the AWBI does provide grants under different categories, that too online. But the mandatory re-registration process of 2021 has made it difficult for the SPCAs to access it. 

Then there is Corporate Social Responsibility (CSR) funding. Animal welfare is explicitly recognised as eligible for CSR funding under Schedule VII of the Companies Act 2013. This also remains unexplored for the infrastructure of SPCAs, however.  

Hosting the headquarters of ABWI has also delivered no real benefit for district-level SPCAs.  

District administrations theoretically can allocate funds through local bodies, but coordination failures between the Animal Husbandry Department, Municipal Corporations, Police, and Urban Local Bodies prevent effective resource mobilisation.

Tamil Nadu emerges as the model while other states struggle

Tamil Nadu is leading the way when it comes to animal welfare funding. Through its ‘Vallalar Palluyir Kappagangal‘ scheme, Tamil Nadu is the first state in India that have a dedicated animal welfare budget, which is of ₹20 crore. 

Some five NGOs have received an amount of ₹88,05,000 under this scheme. This covers food, medical expenses, ambulances, infrastructure and Animal Birth Control surgeries. What stands out is that Tamil Nadu shows a political commitment with a clear, dedicated budget, transparent process and top leadership.    

Now, comparing this with other states with larger economies like Kerala, Karnataka and Maharashtra, there is no dedicated budget for animal welfare. In fact, when Gauri Maulekhi filed an RTI, it was revealed that not even a single state in India had a fully functioning animal welfare board in 2019. Also, it was only in November 2019 that Karnataka established its animal welfare board.

This systemic failure across states creates an opportunity for Haryana to lead by example, especially given its fiscal capacity and AWBI headquarters advantage.

Court interventions highlight systemic administrative failure

The judiciary has repeatedly intervened to address Haryana’s animal welfare failures. The Supreme Court’s 2008 order in Geeta Seshmani vs. Union of India gave states three months to establish State Animal Welfare Boards and district SPCAs – a deadline Haryana violated by 16 years. The 2015 order in Gauri Maulekhi vs. Union of India provided just four weeks for compliance, yet violations continue nine years later. In a fresh contempt contention in 2020, highlighted continued non-compliance across states.

In the landmark Karnail Singh vs. State of Haryana (2024) case, the High Court observed that “animal rights transcend a private settlement between human parties,” establishing judicial recognition of rights that administrative systems systematically violate.

Department structure exists, but lacks implementation capacity

Haryana’s Department of Animal Husbandry & Dairying, headquartered at Pashudhan Bhawan in Panchkula, oversees animal welfare through the State Animal Welfare Board established in April 2018. Grant application procedures exist through the Saral Haryana portal (saralharyana.gov.in), but SPCA funding applications face bottlenecks. 

The two-stage disbursement mechanism creates cash flow challenges, while extensive documentation requirements burden small organisations. Missing meeting records, insufficient staff allocation, and absent operational budgets characterise the State Animal Welfare Board’s dysfunction.

Why implementation keeps failing: seven big roadblocks

With existing funds on paper, there are seven biggest stumbling blocks that happen to make SPCAs run in the maze of challenges:

Bureaucratic delays 

This stems from AWBI’s 2021 re-registration mandate requiring dual certification. With this, there are processing delays of 4-6 months. 

Budget underutilization 

When allocated fund is not spent because of a procedural bottleneck, that is budget underutilization. 

Mismanagement and corruption 

The systematic corruption has repeatedly been flagged by the activists of Delhi-NCR. From illegal breeding rackets running at the Delhi-Haryana border to mysteriously recorded “zero deaths” sterilisation surgeries. 

Capacity gaps 

There is a lack of properly trained AWBI-recognised personnel. There is a lack of proper facilities as well.    

Lack of infrastructure 

The basic allocation of land is missing. Animal ambulance, sterilisation equipment and even autoclaves are insufficient. 

Failures of coordination 

Multiple agencies, like animal husbandry, municipal corporation, police and local bodies, have their own roles. But because of poor communication and overlapping jurisdiction, nothing moves smoothly.

Political apathy 

From directing the set-ups for feeding spots to nudging RWAs to form for welfare board, it often requires the High Court to step in and get the work done. 

Civil society fills gaps while highlighting needs

Looking at the successful models of animal welfare, what do we get? SPCAs of Haryana would not have to struggle the way they are struggling. Taking People for Animals (PFA) as an example, across the countries, with twenty-six hospitals, 165 units, and sixty mobile units, PFA has built a functional infrastructure. Their goal of establishing centres in about 600 Indian districts shows the requirement scale in Haryana.    

Funding is not the issue; it is the system. International systems like Open Philanthropy provided two years of support funding, which amounted to $120,000. It also provided cage-free farm initiatives, which amounted to $200,000. The AWBI was pushed by PETA India’s advocacy to issue an advisory ensuring sufficient funds were provided for community animal feeding. This shows that the work gets done when pressure is applied.

There is a big gap in data around how much funding SPCAs actually need. 

Financial assistance schemes exist, but lack transparency

The AWBI has a whole set of grant schemes that can be applied for through online mode.   

• Operational expenses(maintenance, medicines, rescue operations, and establishment charges) are covered by regular grants
• The Rehabilitation operation is supported by the rescue cattle grants. 
• Infrastructure development is provided by the shelter grants. 
• Disaster relief is provided by the natural calamity grants. 
• The Animal birth control programme funds sterilisation and vaccination initiatives. 
• Ambulance Grants provides emergency response services. 

It is not that easy to access these is not that easy. Funds always get released in two instalments, but that too after a proper, satisfactory inspection. There is a requirement to go through a complex recognition process, and the ABWI board must scrutinise the application.

Haryana’s Saral Portal theoretically streamlines applications through Digital India-compliant faceless, paperless, cashless systems. Yet practical implementation faces hurdles.

Recommendations demand immediate systematic reform

Evidence-based analysis points to clear, actionable recommendations for Haryana. Immediate requirements (0-6 months) include allocating Rs 10-15 crore dedicated animal welfare budget following Tamil Nadu’s model, establishing a functional State Animal Welfare Board with proper staffing and annual allocation, completing Punjab & Haryana High Court compliance for 15 identified districts, and filing comprehensive RTI applications for current spending audits. The state should leverage its AWBI headquarters advantage to establish model district SPCAs and create transparent online funding tracking systems.

Medium-term initiatives (6-18 months) should focus on completing land allocation for all 22 districts, recruiting required veterinary staff to fill vacancies, establishing district-wise helplines and ambulance services, and developing public-private partnerships with CSR funding targeting budget needs. Infrastructure development requires Rs 110-176 crore one-time investment plus Rs 11-16.5 crore annual operations, with priority allocation to Animal Birth Control programs, rescue and rehabilitation, infrastructure, staff and operations, and emergency response.

Talking about the long-term change, say like 2-5 years, then Haryana needs to think big. With big, it is meant that funding for animal welfare must become a legislative mandate, linking it with the plans of disaster response, setting up regional specialised treatment centres, and establishing a strong monitoring system with quarterly reviews and audits by the CAG.    

The aim for per capita spending can be at least higher than Tamil Nadu. Because honestly, Haryana has better capacity.

Money alone won’t do everything. A clear political will is required, and a proper separation of the animal welfare budget from the livestock budget. Pairing up with local NGOs would also work, and most importantly, transparency. This is what accountability is.

Looking forward

The Funding crisis in Haryana SPCAs is a clear case of government failure. There are several shortcomings despite having a strong framework. Even hosting the AWBI headquarters does not work. There are still sixty-eight per cent of the districts that have non-functioning SPCAs. There continues to be a massive shortage of veterinary staff and a lack of allocated funds.     

Haryana does not need to reinvent the wheel. There are already existing examples of proven models that are functioning fully for animal welfare. What does Haryana need to do now?

It needs to draw from these examples and proper funding for its SPCAs. Only with the right commitment, Haryana can fill the existing gaps and create an actual working animal welfare system.

Frequently asked questions (FAQs)

1. Are SPCAs’ services restricted to stay animals?

Not really, SPCAs are for every type of animal cruelty, whether it be the domestic pet or farm animals, or working animals like donkeys and horses. This list also includes those animals that are used for trade or entertainment. 

2. How does the lack of SPCAs affect public health?

It is very direct. When animals go untreated for various injuries, or there is no animal population control, and a lack of vaccination drive, this increases the risk of rabies and other diseases, and this affects the human population directly. 

3. What legal power do SPCAs have?

SPCAs get their legal powers from the Prevention of Cruelty to Animals Act. They can inspect the facilities, rescue the animals and also initiate a legal proceeding against the wrongdoers.

References

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This article is written by Adv. Sohan Varghese Francis, Corporate & Civil lawyer and Founder of Juris Summit, a global legal consultancy helping startups, founders and businesses navigate complex laws with confidence. He holds 4+ years of experience in domestic practice and international collaborations. He specialises in structuring businesses, drafting airtight contracts, and ensuring cross-border compliance.   

To begin with

When we talk about corporate insolvency, the importance is generally given to large financial institutions as well as to the banks, whereas the small creditors are often neglected. The small creditors generally include vendors, suppliers or any service providers who at one time have significantly contributed to the operations and the growth of the business.

The Insolvency and Bankruptcy Code, 2016 (IBC), introduced creditor-driven insolvency resolution, aiming for faster resolutions and value maximisation. Yet in practice, it has created a clear disparity. Financial creditors enjoy priority, and operational creditors, especially the small ones, are left with little to nothing in resolution plans.

This gap is not only seen in the bare act and in documents, but it is also visible in the courtrooms, as well as in the resolution plans. In the most recent case of Kalyani Transco vs. Bhushan Power and Steel Ltd. (2025), this issue is in the spotlight. Although the judgment which was given has followed a proper procedure of the law but then it also gave rise to an important question, i.e., has the insolvency system of India created a group of small creditors who are recognised by law, but in practice are left behind and overlooked?

While we delve into the facts of the Kalyani Transco case, let us revisit the IBC’s structure and compare India’s approach with global standards. And to introspect whether it is time to rethink the treatment of the smallest players in the resolution process?

Operational creditors and their ordeal -the legal landscape

Under the IBC, not all creditors are treated equally. The Code institutionalised a hierarchy that rewards size and financial clout. 

Operational creditors have certain rights available under IBC to representation and rights to appeal of this Corporate Insolvency Resolution Process. They can also initiate insolvency resolution u/s 8(1). But these provisions are not used and often fail to translate into real influence in resolution. 

The Creditor Hierarchy under the IBC

When we talk about creditor hierarchy under IBC, then at the top there are the financial creditors who are usually considered as NBFCs, banks and bondholders. Under Section 30(4) of the IBC, CoC have the power they approve or reject the resolution plans, and such practices are often referred to as “commercial wisdom.”  

Service providers, employees and suppliers are generally considered operational creditors. Operational creditors can file under Section 9 but generally lack CoC representation. Under Section 24(3)(c) of IBC, operational creditors are allowed to attend the meetings if their claims together make up more than 10% of the company’s total debt.

In the Swiss Ribbons Pvt. Ltd. v. Union of India (2019), the Supreme Court observed that, discriminating between financial and operational creditors under the IBC is constitutionally valid. The Court felt that financial creditors are in a better position to assess viability and restructuring proposals. 

The Supreme Court in Jaypee Infratech Ltd. v. Axis Bank Ltd. (2020) further reaffirmed this design by recognising that operational creditors are differently placed, and therefore their exclusion from decision-making cannot be faulted as unconstitutional, provided minimum protections under Section 30(2)(b) are met.

The legal disadvantage of small creditors

Despite being stakeholders in the operations of the debtor, the small creditors are faced with:

• No voting rights on resolution plans.
• Minimal recoveries, sometimes just pennies on the rupee.
• Communications on proceedings, if any, received late.
• No representation in the CoC, unless there are exceptional circumstances.

Section 24(4) IBC clarifies that while directors, partners, and representatives of operational creditors can attend meetings of the Committee of Creditors (CoC), they do not have the right to vote. Their presence is permitted, and they can participate in discussions, but the final decisions are made by the financial creditors who hold voting rights based on their financial debts

In Essar Steel, 2019, operational creditors with the claims of ₹4,976 crore were paid just ₹214 crore, about 4.3%  as against a 92% recovery paid to secured financial creditors. The Supreme Court went on to uphold the “commercial wisdom” of the CoC, which implies that once the legal thresholds are met, the courts have no business interfering.

The Court in Essar Steel also clarified that “fair and equitable treatment” under Section 30(2)(b) does not mean equality of outcome but only that operational creditors must receive at least the liquidation value due to them under Section 53. This principle has since been repeatedly applied, including in Kalyani Transco v. Bhushan Power & Steel Ltd. (2025), where the Supreme Court reiterated that operational creditors cannot demand parity with financial creditors so long as statutory minima are met.

This raises another question: Is “commercial wisdom” fast becoming a cloak to conceal inequity? Yet, it is often small suppliers that understand how the business runs on the ground, an experience that should be leveraged.

What happened in Kalyani Transco vs. BPSL (2025)?

There was dissatisfaction among the small players in the insolvency ecosystem in 2025. Kalyani Transco Private Ltd., a minor operational creditor, filed a petition against the resolution plan that was approved for Bhushan Power and Steel Ltd.

It was a direct appeal that the Apex Court was dealing with. It was from the NCLAT’s dismissal of Kalyani Transco’s objections. It wasn’t just paperwork or procedure anymore. The judges were willing to re-examine the meaning of “fair treatment” under the IBC, especially for the operational creditors.  

A brief overview of the case

Kalyani Transco had supplied engineering components to BPSL and claimed a small operational debt. The resolution plan was approved by the CoC, which offered negligible recovery, reportedly less than 1% of the claimed amount to Kalyani Transco, while sizable payouts were made to the secured financial creditors.

Kalyani Transco went to the NCLAT, arguing that the resolution plan was not fair and equitable within the purview of Section 30(2)(e) of IBC, which demands that the plan must be in compliance with legal provisions. Kalyani argued that even though the amount claimed might have been meagre, the claim needed to be respected in the process.

The Supreme Court, however, emphasised that while the IBC does not guarantee equal recovery, it does require non-discriminatory treatment. The Court highlighted that operational creditors cannot be reduced to “illusory” recoveries, even if their claims are comparatively small.

Key issues raised in the case

Was the resolution plan discriminatory?

The operational creditor alleged that the plan provided vastly disproportionate treatment between financial and operational creditors, violating the principles of equitable distribution and natural justice.

Does the “commercial wisdom” doctrine override fairness?

The CoC’s decision was shielded by the now-familiar judicial doctrine of non-interference, that courts should not question the financial wisdom of the creditors. But should this doctrine apply even when the result seems legally sound yet ethically questionable? Since the CoC’s decision was protected by the doctrine of commercial wisdom (as reaffirmed in K. Sashidhar v. Indian Overseas Bank, (2019), the question arose: Should courts step in where outcomes appear legally sound but substantively inequitable?

What is “fair and equitable” under the IBC?

The court was invited to reconsider whether procedural compliance (like giving a creditor “something”) is enough, or whether substance and fairness should guide the outcome.

What were the key findings?

The Kalyani Transco vs. BPSL (2025) decision was not a legal blockbuster, but its subtle affirmations of the status quo have deep implications. While the judgment was consistent with past rulings, it also underlined a growing discontent: that predictability in law is not always the same as fairness in justice.

Courts reaffirmed the supremacy of commercial wisdom

The tribunal reiterated that it shall not interfere in the CoC decisions, unless the plan contravenes explicit provisions of the IBC or is patently arbitrary. Thus, the Supreme Court, in essence, treated the Essar Steel judgment as the touchstone precedent. 

The Court specifically observed that the mandate of Sections 30(4) and 31 of the IBC leaves no room for judicial substitution of CoC’s decision with what the court “thinks” is a better distribution. In doing so, it directly rejected Kalyani Transco’s plea that commercial wisdom must be subjected to a fairness review beyond legality.

Procedural compliance was deemed sufficient

The NCLAT maintained that merely differential treatment of creditors cannot be legally infringing, so long as operational creditors are provided with a payment that is not less than the liquidation value and the plan adheres to Section 53.

The court refused to impose substantive fairness standards on a process that is meant to be fast, predictable, and creditor-driven. It clarified that “procedural fairness” does not extend to questioning the rationale of CoC’s distribution model so long as the minimum legal floor is met. 

It refused to recognise a substantive right of operational creditors to demand parity with financial creditors.

“Fairness” under IBC remains procedural, not moral

The Court nodded silently to one great truth in the matter: the IBC has been primarily concerned with legality rather than equity. The resolution plan might have been a technically acceptable one for BPSL, but to Kalyani Transco, it was still a legal eviction from justice.

In fact, the bench underscored that fairness must be seen in the “systemic context” of speedy resolution and revival of the corporate debtor, not in the “individualised sense” of every creditor’s satisfaction. 

The “value maximisation” logic trumps equitable distribution

The court noted that the goal of the resolution process is value maximisation, not redistribution. 

It reaffirmed that “maximisation of value of assets” under Section 30(2)(b) is the guiding star of IBC, and redistribution of value to create substantive equality was never envisaged.

In rejecting Kalyani Transco’s claims, the Court maintained that operational creditors’ remedy lies in contract law or arbitration, not in stretching insolvency principles beyond their legislative design.

Critical reflections on the Kalyani Transco ruling

Legal judgments often walk a tightrope between doctrine and justice. In Kalyani Transco vs. BPSL, the rope was steady, the doctrine held. But from where small creditors stood, it wasn’t hard to feel like they had fallen off the edge. This section unpacks the deeper implications of the ruling, not just in black-letter law, but in how the insolvency ecosystem is evolving and for whom it’s evolving, as most operational creditors are unsecured.

Legally sound, morally lopsided?

The judgment followed procedure and precedent but left small creditors like Kalyani Transco with negligible recoveries despite delivering goods or services as per the rules. 

In light of the Supreme Court’s observation in this case that the differential treatment between financial and operational creditors was not unconstitutional per se, as the legislative intent of the IBC itself was to prioritise resolution over liquidation. Yet, the absence of safeguards for small creditors raises questions about whether the constitutional principle of equality before the law is being indirectly diluted.

The commercial wisdom doctrine: efficient or evasive?

The situation was stuck in its familiar position. The Court cannot interfere with the actual decision of the CoC, but can review if the process was followed. Still, no legal requirement exists that can force the CoC to record and address the concerns of operational creditors. At best, these things are merely acknowledged on paper, and nothing more. 

And this is the actual problem. At this point, the doctrine of commercial wisdom starts looking less like wisdom and more like exclusion. 

A two-tier justice system under the IBC?

The IBC operates with a built-in hierarchy of justice:

• Tier 1: Secured financial creditors — recoveries and influence.
• Tier 2: Operational creditors — minimal returns, no say.

The Kalyani Transco ruling arguably cements this two-tier structure by reiterating that operational creditors cannot claim parity with financial creditors in distributions under a resolution plan. While this provides certainty for lenders and investors, it entrenches a systemic imbalance that leaves suppliers, employees, and MSMEs perennially vulnerable. Unless legislative amendments create a more balanced recovery framework, the IBC risks alienating precisely those stakeholders it sought to protect from the earlier regime of endless litigation and non-recovery.

Rethinking equity in resolution

After analysing the Kalyani Transco ruling and its implications, the elephant in the courtroom is clear: the IBC may be efficient, but is it equitable? 

Should the IBC introduce a minimum payout threshold?

Small creditors could be guaranteed a modest minimum recovery, similar to priority sector norms in banking.

Such a floor could be modest, say 5% or even 1% of admitted claims, but it would signal a systemic commitment to fairness and reduce litigation by aggrieved claimants.

Should small creditors be given partial voting rights?

Until now, no operational creditor has had a say in the committee unless they form 10% or more of the total debt is a rare situation. Hence, there is an inherent representation deficit.

Assigning partial or fractional voting rights according to the size of claims (let’s say a combined 10% voting weight to operational creditors) will perhaps go a long way in balancing fast and efficient resolutions with a basic sense of inclusion.

What can India learn from other countries?

To balance the scale, the legal system in many parts of the world sometimes tries subtly and sometimes directly. Starting from the UK, for instance, trade creditors are actually permitted representation through different committees. Taking another example, in the US, unsecured creditors can participate in the creditors committee, and can participate and negotiate restructuring terms. In fact, Singapore also permits representation of small creditors.

Comparing this with India, small creditors are recognised on paper. But in practice, their role is little more than symbolic. Their claims are recognised by the law, but when it comes to decision-making, they are sidelined. 

Final takeaway

In the case of Kalyani Trancso vs BPSL, the insolvency law was not changed, but they have spotlighted some important points, or we can say on some truths that everyone should know, such as that the law and the procedure are being followed, but then also the fairness is still missing. This case also shows how the gap is increasing between the strict legal procedure and the actual justice that is given under IBC.   

Now the question is whether the judgment that was given was correct and legally sound? So the answer to this question is yes, but not only that; this judgment also indirectly urges the urgent need to add corrective measures in the IBC, which is far more than the mechanical application. 

The system, which is present, gives more power to the financial creditors to make decisions, and on the other hand, the operational creditors are mostly neglected. The main question which have to be answered and focused on is whether the law only needs to focus on the efficiency part or is this high time to make things fairer for all those who do not have a voice in the process?

Frequently asked questions (FAQs)

1. Do small creditors have the right to challenge a resolution plan under the IBC?

Yes, but with limited success. Courts usually defer to the “commercial wisdom” of the CoC unless there’s a clear legal violation or fraud. 

2. Can Operational Creditors be included in the Committee of Creditors (CoC)?

No, Operational creditors cannot be included in the Committee of Creditors (CoC) under the IBC. But, if the combined dues of the operational creditors are 10% or more than that of the total debt, then they are allowed to attend the CoC meetings, but do not have any voting rights. 

3. What are the remedies available to the small creditors when they receive a negligible or zero payout? 

The small creditors should be paid at least the liquidation value, and this is also given under Section 30(2)(b) of IBC. On the other hand, if the due process is followed and all the statutory requirements are met, then the courts uphold such a resolution or plans even after the negligible payouts. 

4. Is it possible for the suppliers to refuse to deal with all those companies that are under the proceedings regarding insolvency?

Yes, the suppliers can decline or can refuse for any new transaction. However, according to  Section 14, which is related to the moratorium provision under the IBC, suppliers need to continue with the existing contracts.   

Reference

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This article is written by Ambreen Imam, Legal Marketing Associate at LawSikho. She brings over four years of expertise in legal writing, content strategy, and marketing, with a parallel focus on technology and intellectual property. With a strong background in crafting thought leadership across IP, fashion, and tech law, she combines legal precision with creative industry insight.

Forget everything your college placement cell told you. 2025 isn’t about who topped the batch, but who read the room. If you’re not AI-literate, business-fluent, and online-visible, you’re already 5 steps behind. 

Introduction 

2025 isn’t just another year in the legal calendar, it’s a full-blown system reset. The Indian legal landscape is shapeshifting, and your next employer might care less about your GPA and more about your digital presence, niche exposure, or even your AI literacy. From foreign law firms finally eyeing India to law firms hunting for AI-literate lawyers who can bill and build brands, the rules of the game are changing. BigLaw is slowly morphing into BigTech. And no, it’s not just Delhi and Mumbai anymore, tier-2 cities are birthing powerhouses with global ambitions. 

If you’re a lawyer or a freshly minted graduate, you’re entering a battlefield in the middle of a rule rewrite. The jobs still exist, but the qualifications have changed. This isn’t your average LinkedIn “how to get into Tier-1 law firms” listicle. This is a fact-backed guide to the 10 actual trends that are going to shape Indian legal hiring in 2025. 

Trend #1: AI won’t replace lawyers, but lawyers who use AI will replace those who don’t 

According to the 2025 Report on the State of the Legal Market by Thomson Reuters, a transformative shift is already under way in the legal profession globally. U.S. firms are moving away from traditional models and leaning into tech investment, new business structures, and client-centric practices to stay relevant. Perhaps the most striking takeaway from the report: law firms must now function like businesses with scalable systems, not like insular institutions with prestige alone as their currency. Strategic investment in legal tech is now essential for long-term growth. The report emphasizes that generative AI’s impact will only deepen in 2025 and beyond. 

Clifford Chance, for instance, has rolled out its proprietary AI tool across departments. Meanwhile, Cyril Amarchand Mangaldas has declared its intent to become an “AI-first” firm, having chosen Legora as its generative AI platform after a multi-phase pilot program involving three AI tools and 380 lawyers across offices. Similarly, Shardul Amarchand Mangaldas & Co recently partnered with Harvey. IndusLaw and Veritas Legal are working with Jurisphere, ELP has adopted AI assistant Oliver by Vecflow,  Anagram Partners launched ‘Blueprint’ in collaboration with Olin.ai., S&R and Trilegal have adopted Lucio. The list goes on. In short, AI won’t take your job, but someone who can work better with it absolutely will. 

Therefore, being AI-literate is no longer optional. Learn prompt engineering, take courses on legaltech via Coursera or LawSikho. Understand where tech meets law and build a hybrid skillset. In 2025, knowing how to use AI may matter more than your GPA (or your NLU status). 

Trend #2: Global FTAs Will Reshape Hiring Across Cross-border M&A, PE & International Trade 

India’s bilateral trade with the UK is set to double from USD 56 billion, that means twice the deal flow, twice the documentation, and twice the legal oversight. This deal is going to blow open the hiring floodgates for Indian law firms, especially in cross-border M&A, private equity, and trade compliance. And if the India-US deal follows suit? We’re looking at a decade-defining shift in the Indian legal job market.  

Source:

FTAs aren’t just about trade; they’re legal infrastructure in motion. Every deal, every joint venture, every tariff removed creates a legal ripple. You need regulatory experts, cross-border negotiators, IP strategists, dispute resolution experts; and you needed them yesterday. 

Indian law firms will ramp up specialized hiring across M&A, international trade, and compliance teams. And this won’t just be at the senior partner level. A sharp rise is expected in mid-tier lateral roles, especially for lawyers who come with cross-border deal experience or regulatory expertise. There will also be rising demand for lawyers fluent in UK law, WTO frameworks, and ESG mandates, especially with India’s pitch as a “values-led” trade partner. 

And hiring will be decentralized. Tier-2 and Tier-3 cities will benefit too. SMEs entering global trade lanes will need local legal counsel with global acumen. 

Trend #3: Indo-US Tariffs & The Next Legal Hiring Boom  

If you’re building a legal team for 2025, forget the status quo. It’s time to think in war rooms.
The latest shockwaves from Washington-25% tariffs slapped on India, paired with a headline-grabbing oil deal between the U.S. and Pakistan, are more than just bluster. They signal a shifting fault line in global diplomacy, one that Indian law firms can’t afford to ignore.  

Source:

Public International Law and Cross-Border Arbitration are about to go mainstream.
Up until now, these fields were niche and reserved for high-stakes sovereign disputes or rare treaty violations. Trade lawyers, international arbitrators, and WTO-savvy counsel are going to be in demand like never before. Not just in Delhi or Mumbai, but across rising Tier-2 hubs where exporters, logistics firms, and manufacturing SMEs are quietly plugging into global value chains.  

With the India-U.S. relationship under strain and Pakistan suddenly back in Washington’s economic lap, the next legal landmine won’t just be fought in courts, it will be arbitrated behind closed doors in Singapore, London, or The Hague. 

This changes how firms hire. 

WTO exposure, UK law training, BIT arbitration experience which were once seen as academic or CV padding are now market differentiators. If you’ve worked on even one sovereign dispute or understand treaty interpretation beyond theory, you’re in demand. Lawyers who bring this hybrid fluency are being fast-tracked not because firms suddenly care about geopolitics, but because their clients do. 

And for young lawyers or mid-level associates who are wondering where to place their next bet, here’s your answer: stop chasing only domestic litigation or gen-corp teams. Start tracking deals that involve trade corridors, ESG-linked financing, or export controls. That’s where you’ll find the new work.

Trend #4: Foreign Firms Are Here, But They’re Not Hiring How You Think 

The Bar Council of India’s March 2023 notification has marked a significant shift in the Indian law landscape. For the first time, foreign law firms are officially permitted to practice in India, but only on foreign and international law matters, and strictly under a reciprocity-based registration regime.  

Compared to jurisdictions like Singapore which actively integrates foreign firms through Joint Law Ventures or Japan (where foreign lawyers can form multi-national practices), India’s regime remains cautious and confusing and is still grappling with regulatory clarity, as seen in the introduction and hasty withdrawal of the Draft Advocates (Amendment) Bill, 2025. Yet the shift is undeniable. Foreign firms are no longer just observing, they are actively assessing talent pipelines. They’re not focused on hiring interns or fresh law graduates based purely on class ranks. What they’re looking for are lawyers who understand cross-border regulatory architecture, BIT frameworks, FDI structures under FEMA, and who can advise clients across jurisdictions.  

If your legal training only stops at Indian law, you’re already behind. What you can do now? Start by understanding the nuances of India’s foreign direct investment (FDI) policy, the bilateral investment treaty (BIT) regime, and comparative foreign legal frameworks. Track how jurisdictions like China, Singapore, and Japan have smoothly integrated liberalized legal markets while preserving their sovereignty. 

Trend #5: Tier-2 Cities Emerge as the New Frontiers of Indian Law 

The legal industry in India is witnessing a measured, yet unmistakable decentralisation. While metro cities like Delhi and Mumbai have long served as the centres for corporate and transactional law, the emergence of Tier-2 cities such as Ahmedabad, Kochi, Bhubaneswar, and Chandigarh has begun to recalibrate where the future of legal talent and business lies. These cities are no longer auxiliary to the metros; they’re becoming strategic destinations in their own right. 

The shift is partly infrastructural and partly economic. Improvement in digital court access, enhanced connectivity, and regional regulatory developments have turned cities like Indore and Lucknow into litigation hubs. Fintech regulation, IP-intensive industries, and even Arbitration practices are seeing the rise of high-calibre boutique firms, many of which are founded by former Tier-1 partners or seasoned counsels returning to their hometowns to tap into local markets. Notably, law firms like ELP, Khaitan & Co. and Desai & Dewanji have made conscious advances into cities like Pune and Jaipur, anticipating long-term client base expansion, proximity to manufacturing corridors, and the availability of cost-effective legal talent. 

This recalibration isn’t just limited to geography. Clients, especially mid-sized enterprises and family offices, are increasingly seeking highly specialised counsels rather than paying a premium for full-service law firms. The result? A flourishing class of small to mid-sized firms and chambers offering specialised legal services in IP, fintech, and white-collar crime. 

In a market increasingly defined by agility, depth of expertise, and proximity to clients’ evolving needs, the rise of Tier-2 cities signals more than just decentralisation, it signals a quiet but powerful redistribution of legal influence across the country.

Trend #6: Not All Legal Careers Begin at SAM

BigLaw has defined success in India for years. Prestige, power and stable paychecks! That was the dream. At least, that’s what we thought. But in 2025, that narrative is shifting. According to Vahura data shared with Mint, fewer than 2% of fresh law graduates join India’s top law firms, while approximately 15–20% begin their careers at boutique or specialised mid-tier firms. This shift is no accident. Many Big Law firms now prefer to hire laterally from boutique setups after lawyers have gained focused niche expertise and not freshers who have just graduated unless it’s a PPO. Boutique firms specializing in areas like fashion law, sports IP, crypto regulation, fintech or ESG are redefining the early-career lawyer’s path. These firms, though smaller in size, offer distinctly impactful work with simpler hierarchies and a breathable work environment.

According to a 2024 Vault article referencing a NALP survey, 60% of junior associates reported valuing “meaningful work” and “reasonable hours” more than the firm’s reputation. This aligns with the recent observed hiring changes, i.e, many top firms now prefer hiring lateral talent with domain-specific expertise rather than freshers. Mid-sized and boutique firms have used this to their advantage. They are growing their brand value through specialization and are attracting better-suited candidates at lower overheads. 

Boutique and mid-sized firms led by former Tier‑1 lawyers are now filling partner-track roles more aggressively. With lower billing costs, these firms offer competitive compensation without sacrificing depth. Rather than navigating long associate pipelines at a large firm, you could be owning a legal vertical say luxury fashion IP or blockchain compliance within two-three years.  

Trend #7: Your Firm’s Not a Family and Now Lawyers Know It 

For decades, the unspoken deal was to grind it out for 12–15 years at a top law firm, and maybe just maybe, you’ll make partner. But that equation is being torched by a generation of lawyers who no longer romanticize such long-term & uncertain relationships. 

They’re not giving their youth, sanity, or identity to a single firm anymore and certainly not in blind hope of some future reward. They’re playing smart, moving laterally, joining startups, building personal brands, and yes, fearlessly walking out when they’re not valued. 

The NALP Foundation’s 2024 Stay Study (US-based but globally relevant) confirms the shift. While salary still matters, the top reasons for leaving firms include lack of career clarity, poor work-life balance, and toxic work cultures. Meanwhile, Indian attrition rates are estimated at 25–33%, a silent exodus that law firms don’t openly talk about, but feel every quarter when associates resign quietly or ghost exit interviews.  

The traditional law firm ladder is cracking. In its place is a zig-zag path where agility, upskilling, and freedom trump tenure. Established firms might grumble but what choice do they have? 

Hiring is no longer just about attracting talent. It’s about retaining it. In 2025, law firms won’t just need talent acquisition teams. They’ll need talent retention teams. Because if they can’t answer why someone should stay beyond 2 years, the best lawyers will already be looking elsewhere. 

Trend #8: The Data Law Hiring Surge: Privacy Is No Longer a Niche 

With the Digital Personal Data Protection Act officially in force, India has entered a new era of tech regulation. The Act applies to nearly every business processing personal data and introduces high penalties, strict consent requirements, and executive accountability. For legal teams, this marks a shift from occasional policy updates to full-time risk mitigation. The market has already started reacting. Top firms are fast-tracking internal training, while data-heavy sectors like fintech, edtech, and health tech are quietly poaching lawyers who understand privacy and data structures. Law firms are now building dedicated data law verticals, and even IP and disputes teams are being pulled in to draft privacy notices, respond to access requests, and advise on cross-border data transfers. 

What does that mean for hiring in 2025? Lawyers trained in data protection law, consent management systems, and cross-border data transfer regimes aren’t just expensive hires, they’re strategic power centers. Firms not actively building or hiring for privacy talent are seeing clients shift to digital-first boutiques that are into GDPR, DPDP, and vendor audits. Recruitment is shifting from “find someone who can learn privacy” to “hire someone who knows it.” 

If you’re a law firm with global clients or high-volume digital mandates, stop postponing your data law strategy. Build or poach a bench of privacy experts now. For law grads and lawyers, specializing in privacy compliance, risk governance, or cross-border data law is no longer optional, it’s your best hedge. Get in early or get left behind. 

Trend #9: The Rise of Allied Professionals in Indian Law Firms 

For decades, the phrase “non-lawyer” has been the polite slur for an entire class of professionals working in the background of India’s legal industry. In 2025, that narrative is finally being challenged. Law firms are no longer just hiring lawyers. They’re hiring strategists, legal technologists, AI operations leads, business development professionals, content creators, marketing heads, community builders, innovation managers, contract automation consultants, and more. And this isn’t a fringe trend, it’s a structural realignment of how legal businesses are run. 

The shift is being driven by three realities: 

• Client expectations have changed. Law firms are under pressure to operate like high-functioning corporations: data-driven, digitally enabled, brand aware. 
• Technology is non-negotiable. AI adoption, compliance automation, and digital workflows demand specialized skills no JD can teach. 
• Retention is in crisis. Younger lawyers are rejecting rigid hierarchies and opaque culture. They want impact-driven, hybrid roles. Firms that won’t evolve are watching top talent leave. 

And let’s be clear: this isn’t about token hires. It’s about rethinking the essence of legal teams. Across BigLaw, litigation chambers, IP firms, and legal startups, allied professionals are being brought in not just to support but to lead.

A 2024 exposé titled “Unseen, Unheard: The Invisible Struggle of Non-Lawyer Professionals in Indian Law Firms” laid the truth about the extent of this inequality. What was once said in work WhatsApp groups is now out of the closet: the legal industry has a class problem and let’s be real, we all know it. 

But this will be changing in 2025. Legal businesses that cling to old hierarchies are losing ground. Firms with multi-disciplinary teams, hybrid hiring models, and flat structures are attracting better clients, stronger partnerships, and the next generation of legal minds. 

For fresh law grads and lawyers, the message is clear: you don’t have to practice law to build a meaningful career in it. India is witnessing a boom in non-traditional legal careers, where your skills in storytelling, product thinking, UX, design, operations, analytics, networking and social media are not just welcomed, they’re being valued. 

Indian law firms must abandon the outdated “non-lawyer” label and embed structural inclusivity into every layer of hiring and leadership. That means performance bonuses, career tracks, and decision-making power for allied professionals in business, tech, marketing, and innovation roles.  

Firms must end the archaic, elitist gatekeeping that defines India’s legal hiring especially the Tier 1 obsession with NLU degrees and litigation pedigrees. This narrow recruitment culture is not just outdated; it’s actively sabotaging the new generation’s capability, room for innovation and client outcomes. In a global, tech-driven legal market, firms that continue to ignore talented professionals from non-NLU backgrounds, and experts from adjacent industries will lose out on clients and credibility. The future legal workforce that we are looking at is interdisciplinary, remote-ready, and custom made for the real legal world and not just rank holders. Firms that refuse to evolve will not be elite for long, they’ll actually be irrelevant. 

Trend #10: Visibility Is Currency: How Your Digital Footprint Is Your New CV 

If you’re still sending cold emails, waiting on HR replies, or refreshing “Careers” pages? That’s actually very 2015 of you. Hiring in 2025 is brutal: unemployment’s rising, inboxes are overflowing, and yes, you’re competing with 300+ other applicants for a single opening. 

Visibility is currency. Legal aspirants today must go beyond well-structured resumes and predictable LinkedIn updates. The new-age hiring funnel begins on social platforms and ends in cold DMs, viral comment sections, and newsletters.  

Here’s what they won’t tell you:  

• Your CV might never be seen by human eyes. Over 60% of mid and top-tier Indian law firms now use ATS (Applicant Tracking Systems), filtering out resumes that lack keyword optimization, structure, or even basic formatting. If your CV looks pretty but isn’t machine-readable? Sorry but it’s getting ghosted. 
• Video CVs aren’t cringe. They’re your new elevator pitch. With async hiring on the rise, firms want to hear your tone, clarity, and thought process. A tight 60-second “Why Me” video can do what 4 pages of bullet points can’t. 
• And the wildest shift? People are being hired from DMs. LinkedIn comments & Insta replies, those who show up in the right places, with the right voice, are landing interviews before their CV ever hits an inbox and not the ones hiding behind, yet another generic ChatGPT cover letter. It’s not just about being qualified. It’s about being visible when it counts.  

Hiring in 2025 isn’t about formality. It’s about frequency, finesse, and being findable. The question is no longer “Are you applying?” it’s “Are you being noticed?” 

Conclusion 

2025 would see the much-needed change in the legal industry. The firms that win will be those that evolve, decentralize, digitize, and humanize. The lawyers who rise will be fluent in AI, geopolitics, tech law, and personal branding. And the students waiting for campus placements? They’ll be outpaced by the ones who build visible, versatile, cross-disciplinary careers. 

The old metrics of prestige and pay are no longer enough. Associates are no longer afraid to walk. Gen Z lawyers are choosing autonomy over all-nighters, growth over glass doors, and visibility over vague promises of partnership. They’re moving laterally, building niche practices, going in-house, and even launching their own firms. 

The Indian legal hiring market isn’t broken, it’s rebuilding. But it won’t look like the one your seniors walked into. And that’s your edge, if you’re paying attention. 

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This article is written by Priyanka Mandhani, a qualified Corporate Lawyer and a Company Secretary, and the Founder of Juris Summit. She specialises in corporate law, compliance and contract advisory for startups and businesses across jurisdictions. With experience in Indian and US legal systems, her work focuses on aligning legal strategy with commercial outcomes.

Getting started 

Nowadays, Indian companies are not only functioning in India but also beyond borders. But this international expansion sometimes creates difficulties in tough times. It gets quite tough when companies get into any financial trouble, and the assets are scattered across multiple countries, and every country has its own legal system.  

What happens in this case? The creditors, employees, and investors sitting in a dozen different countries are going to be affected by this. This is a reality of cross-border insolvency and is challenging. The company that manages to overcome this situation wins the investors’ trust. But who fails? This is like losing a race in the global market.   

In this global race, is India capable enough to handle these types of mess? Are the Indian law (Indian Bankruptcy Code 2016) and courts ready to handle the disputes that involve cross-border assets and creditors? Or to meet the international standards, is there a need for a strategy change?    

Let’s find out. 

Understanding the cross-border gap in the IBC 2016

Aspirations without any Implementation

What came with IBC when it was introduced in 2016?

An order and certainty to handle domestic insolvency cases. But there was a legislative gap in the cross-border insolvency part.  

Yes, it does mention international cooperation under Sections 234 and 235. But these are more like wishful promises than actual working mechanisms. One authorises the central government to make an agreement with foreign countries to enforce the IBC there (S. 234). And the other one allows the resolution professionals to receive letters of request from foreign courts. This assists in dealing with the overseas assets of the corporate debtors (S. 235).

Looks fine on the paper. But in reality, no bilateral agreement exists.

So the fact is that these provisions just exist, but are of no practical use. When any company with foreign investors and assets abroad is in trouble, then the resolution professionals and courts find it difficult to work without any practical tools. 

The absence of COMI and its repercussions 

One of the trickiest parts is that we lack a clear and formal concept of the Centre of Main Interest (COMI). This works like an anchor that decides which country has the primary jurisdiction in such cases. So COMI is a big deal in cross-border bankruptcy systems.   

But there is no statutory definition of COMI in India. No clear rules and no settled interpretation. So our courts are left navigating uncharted water when any case comes up. This often results in competing claims of jurisdiction and legal confusion. 

What is the fallout? 

When there are multiple countries running their own insolvency process at the same time, it results in higher litigation costs, delays and unpredictable results. 

Jet Airways: a groundbreaking protocol

This issue didn’t just stay within our borders, and quickly turned into a full-blown cross-border legal battle in 2019. The proceedings were running in India and the Netherlands simultaneously.  

But what actually happened?

To start the bankruptcy proceedings of Jet’s overseas operations, the creditors approached the Dutch court. While in India, the domestic Corporate Insolvency Resolution Process (CIRP) was being managed by the National Company Law Tribunal (NCLT).

The powers of the Dutch bankruptcy trustee were not recognised by the NCLT. It actually refused to recognise their powers. It pointed out that IBC has no clear legal provisions that formally allow it to recognise foreign proceedings or representatives. 

NCLAT’s Landmark judgement

But then came a historical twist.

NCLT’s landmark judgement was a game-changer. It was the very first time a cross-border insolvency process was approved that allowed the Indian resolution professional and the Dutch trustee to work together. 

The Sections we discussed above, S. 234 and S. 235, are more aspirational than functional. Also, India hasn’t adopted the UNCITRAL Model Law on cross-border insolvency. This gap was filled by the sheer level of creativity of NCLT.   

Here is what it did.

India was recognised as the COMI by the Tribunal while granting partial recognition to Dutch proceedings as a “non-main” proceeding. In simple words, it means that Indian proceedings were primary, but Dutch proceedings had legal standing.

It was the very first time in the legal history of India that a foreign insolvency administrator’s jurisdiction was recognised within an Indian insolvency case. 

Hon’ble Supreme Court’s order

The aftermath was not that smooth. While the case showed that judicial diplomacy can be used by the Indian courts to make cross-border insolvency work, even without a proper legal framework. But it was risky to rely completely on judicial patchwork instead of solid legislation.

The so-called ‘Jet Protocol’ became a symbol of what social pragmatism could achieve in a globalised financial world. But the revival plan fell apart soon. The Jalan-Kalrock Consortium failed to meet the key conditions. This was picked to rescue the jet.

Despite repeated extensions, the most-awaited first tranche payment of ₹ 350 crore never came. The consortium also attempted to alter its performance guarantee, rasing serious concerns about intent.    

Pointing out the repeated defaults, bad faith and abuse of procedural flexibility, the Court ordered liquidation on November 7th, 2024. The Court reiterated that IBC’s purpose is deliver speedy resolution and maximise value. 

Using its special power under Article 142, the Court also recommended organisational changes, CoCs need to put decision reasons on record, an oversight committee shall enforce binding guidelines of CoC behaviour, NCLT orders should have implementation milestones spelt out, and tribunal infrastructure needs to be immediately strengthened with additional members and technological advancements to avoid future delays.

Group insolvency & international assets: Videocon & others

The approach of India regarding cross-border bankruptcy should also pay special attention when the discussion is regarding group insolvency, as there are many businesses which are operating across different countries. There is a famous example of a case, State Bank of India v. Videocon Industries Ltd (2018), in this case the first substantive consolidation allowance was provided by the court under the Insolvency and Bankruptcy Code (IBC). This judgment helped in creating a judicial pathway for group insolvency long before India had introduced a legal framework for that. 

The NCLT decision

It was requested by a group of lenders for the merger of 13 Videocon Group companies, where each company was undergoing its insolvency process. These companies were all linked through shared liabilities, common promoters and strong independence. It was observed by the NCLT that these are not separate businesses that are running different and separate CIRPs, and such a thing would create confusion, make the process inefficient and lower the value. 

Keeping this issue in mind, the tribunal ordered a combined CIRP. The tribunal directed that there should be the appointment of one common Committee of Creditors (CoC), one Resolution Professional (RP), and the merging of liabilities and assets of all the companies. Most important to be kept in mind is that the NCLT also included gas assets as well as Videocon’s foreign oil, which was held in overseas subsidiaries, which is a part of the consolidated debtor’s estate.

Challenges 

This move, while aimed at value maximisation, raised profound cross-border legal challenges. Can Indian insolvency orders be enforced abroad, particularly in jurisdictions with their own insolvency frameworks and property regimes? Without bilateral treaties (under S. 234 and S. 235) or a codified cross-border mechanism, such orders have limited extraterritorial enforceability.

Globally, courts have addressed similar issues. In the US, Courts allow consolidation when entities operate as a unified whole, as in re Bonham, Genesis Health Ventures, and Owens Corning. The core principle: economic reality must prevail over corporate form when separateness is abused or inefficient.

Foreign creditors under India’s insolvency regime: Progress or tokenism?

Statutory inclusion of creditors under the IBC

Inclusion of foreign creditors under the IBC regime is a development, but far from universal. The IBC defines a “person” under Section 3(23) to explicitly include those “resident outside India,” and this definition carries through into the classification of both financial and operational creditors under Sections 5(7) and 5(20). In principle, this implies that foreign creditors ought to have access to the same recourse as their Indian counterparts. But principle and practice are not always so easy to bridge.

The Macquerie Bank ruling: Allowing foreign creditors into the market

The Apex court in the Macquarie Bank v. Shilpi Cable Technologies (2018) ruling cleared up a major hurdle for foreign creditors. The major issue was whether a certificate of an Indian-recognised “financial institution” is to be provided by a creditor under S. 9 (3) of IBC. 

It was a yes by the NCLT and NCLAT. Macquarie, a Singaporean bank, was disqualified for lacking the certificate after issuing the demand letter and starting CIRP.  But the Apex Court had a more practical view. The requirement was not mandatory but directory, as the Court ruled. It made sure that the international creditors are not blocked because of the technicalities. 

The bigger problem hasn’t gone away. Foreign stakeholders are still stuck in the procedural obstacle because the IBC does not automatically recognise foreign insolvency judgements. With no bilateral treaties and no comprehensive cross-border framework, everything ends up depending on ad hoc court discretion.  

Cross-border fallout from the Bhushan Power & Steel case

In Kalyani Transco v. Bhushan Power & Steel (2025), the Supreme Court overturned JSW Steel’s court-approved and completely implemented resolution plan for Bhushan Power due to major procedural irregularities. Despite the fact that the plan had been carried out over three years, including the injection of foreign money and payments to creditors, the Court ordered liquidation and the restoration of disbursed funds. 

Impact on foreign investors and local markets

The transaction had numerous cross-border stakeholders and foreign finance mechanisms, making the decision highly unsettling for international investors.

Do you know the international reaction? Foreign investors have marked India as a “high-risk” jurisdiction for the enforcement of insolvency. Their fundamental anxiety is not about the substantive result but about the unpredictability of judicial intervention, long after a resolution plan is approved and implemented. 

What has the Bhushan Power case uncovered? Even when stakeholders act as per the commercial and regulatory environment, failures due to resolution professionals or the CoC can retroactively deconstruct transactions. 

Concerns surrounding institutional accountability

The absence of institutional accountability, more specifically for the function of adjudicating authorities and professionals engaged, overburdens the resolution applicants and creditors disproportionately. 

Judicial unpredictability, particularly in the implementation of resolution plans that are fully executed, gravely erodes India’s reputation for credibility on cross-border insolvency issues. Reforms in law and regulation have to tackle this fault line so that the IBC comes to be a mechanism that not merely resolves distress efficiently but also generates confidence among global financial stakeholders.

What is stopping India from adopting UNCITRAL for cross-border insolvency?

Redundant approach to Internationalisation legal harmonisation

When it comes to adopting the UNCITRAL law on cross-border insolvency, India has been dragging its feet. A draft framework was recommended based on the Model Law by the Insolvency Law Committee in 2018. But years later, it is still sitting on the shelf. On the other hand, other countries like the USA, the UK and Singapore have already integrated the Model Law in their domestic system.

Why is India hesitant?  

A lot of it comes because of the sovereignty concerns. The fear is that if we let the foreign courts or administrators in, then it might dilute the domestic control. Concerns are also related to the fact that India does not have reciprocal enforcement agreements with other countries yet. 

But where companies are running in countries and capital is flowing easily across borders, these have started to look outdated. India needs to start aligning with international standards if it wants to position itself as a serious global financial hub, as it may not remain an option for long.

Dependence on reciprocal treaties that are non-operative in nature

India’s current mechanism is built based on S. 234 and S. 235. These Sections allow cooperation with foreign jurisdictions through reciprocal treaties, on paper. What is the actual problem? None of these treaties is actually in force today.

So what does this mean in practice?

Lots of uncertainty. There is no clear path for foreign creditors and insolvency professionals who want to participate in Indian proceedings. 

This lack of a functional legal mechanism creates delays, confusion and risks. At a time when global confidence is critical, there is no reliable way for the foreign insolvency proceedings. India risks being seen as a difficult jurisdiction to do business. 

Speculations surrounding India’s competitiveness as an investment location

Failure to have a globally accepted cross-border structure undermines India’s intentions to emerge as a capital competitive location. Conversely, embracing the Model Law would simplify foreign proceeding recognition, facilitate coordinated multinational resolutions, and enhance India’s international market credibility. 

Reform here is not just legal tidying up it is vital to making it easier to do business and building India’s financial stability. While India invites foreign investment, it needs to prove that its laws are able to deal with cross-border distress with transparency and predictability.

Comparison with UK and US models

There is no formal recognition of foreign proceedings, and also no clear set of rules on who gets paid first. Concurrent liquidation in different countries ends up slicing updates into pieces and reducing overall recovery. 

In contrast, the UK and the US have already adopted the UNCITRAL Law. Their systems provide creditors with uniform standards of recognition, automatic stays and strong judicial cooperation.

India, on the other hand, is still stuck with a patchwork approach. This does not provide the same assurances. IBC needs to evolve into a framework closer to the Model Law, that cuts down on multiple proceedings, brings transparency and grows investor confidence in these cases.     

Until that happens, India’s regime will remain weak, eroding asset value and investor trust in an increasingly interconnected economy.

Recommendations and roadmap for reforms

Adopting the UNCITRAL model law via “Part Z” amendments

The regimen of cross-border insolvency in India is bogged down by ad hoc judicial solutions and unpredictability, discouraging international investors. To correct this, India needs to pass “Part Z” of the IBC to unambiguously adopt the UNCITRAL Model Law.

Creating Cross-Border Facilitation Offices

Legislation has to be complemented by bilateral treaties in the central jurisdictions (Singapore, UK, US) to ensure mutual recognition and enforcement of insolvency orders and coordinate concurrent proceedings- preventing asset fragmentation and creditor conflict like Jet Airways. Enacting these reforms needs a Cross-Border Facilitation Office(CFO) which would formulate best-practice procedures, have a registry of foreign proceedings with Indian connections, and act as a point of liaison for foreign fiduciaries.

Imbibing procedural discipline

Procedural discipline is also important. To prevent asset deterioration and stakeholder frustration, courts must enforce binding timeframes for foreign representative involvement, including defined dates for claim filing, relief applications, and document exchange. Judges, tribunal members, and practitioners require specialised training in comparative insolvency law, international negotiation, and asset recovery.  The IBC, in collaboration with universities and organisations like INSOL, should offer certification courses, workshops, and mentorship.

A way forward

At the present time, India is in a very crucial stage, and the talk is regarding the strengthening of the insolvency system. It is seen that the domestic laws have been quickly developed, but the country is now also struggling to handle the cases which are related to cross-border. If India adopts the UNCITRAL Model Law through the proposed amendment, i.e, “Part Z” will help bring India with more than fifty leading jurisdictions, as well as provide relief in foreign proceedings and legal clarity which needed during recognition. Not only this, but when the country enters into a reciprocal agreement with important centres such as the US, UK and Singapore, such an agreement will ensure smooth coordination in the cross-border cases and mutual recognition of insolvency orders. 

When a cross-border facilitation Office is set up within IBBI, then through this, it will help in bringing all expertise together, which makes the procedure even and uniform and also provides a single point of contact for all foreign representatives. When the timelines are clear for the foreign participants then it helps in ensuring smoother processes and also helps in improving skills which needed in handling large multinational restructurings.

Frequently asked questions (FAQS)

1. Can any international creditor file for bankruptcy under IBC if he does not have any local counsel?

Yes, any international creditor can file for bankruptcy under IBC if he does not have any local counsel. In the judgment of Macquarie Bank v. Shilpi Cable Technologies Supreme Court said that foreign financial creditors will now be able to start a Corporate Insolvency Resolution Process (CIRP) in India without needing a local resolution expert. 

2. Can a legal practitioner outside India take part in an Indian CIRP directly?

Foreign practitioners cannot automatically appear at the moment; they have to wait for Section 235 letters of request, which can be given by Indian tribunals at their discretion. Foreign trustees have no recourse to reciprocal treaties or Model Law provisions and must apply for express permission of the courts to participate in a CIRP.

3. What are the available remedies where a foreign creditor’s claim is accepted, but enforcement over assets abroad is needed?

Once a domestic judgment or order of liquidation in India is secured, foreign creditors have to depend upon mutual enforcement agreements or local laws within the jurisdiction of the asset. Without bilateral insolvency arrangements, they typically encounter further litigation for the acknowledgement and enforcement of Indian orders abroad, which adds time and expense.

Reference

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