NCLAT stays order against Vedanta's power business demerger

New Delhi, Appellate tribunal
NCLAT
has granted an interim stay on an order of the National Company Law Tribunal (
NCLT
) rejecting demerger of
Vedanta
's power business and its merger with resultant entity Talwandi Sabo Power Ltd (TSPL).
The order came as a relief to
Vedanta Ltd
which is in the process of demerging its businesses into separate entities.
In a filing to BSE, Vedanta said the NCLAT order dated May 27, 2025 granted an interim stay on the order passed by the NCLT's Mumbai bench dated March 4, 2025 "to the extent it relates to the rejection of the scheme", subject to fulfilling the conditions mentioned in the order.
Vedanta said that it remains committed to its strategic reorganisation plan and continues to work towards unlocking long-term value for all stakeholders.
A two-member NCLAT bench said "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".
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The matter has been listed for the next hearing on August 4.
Earlier, the Mumbai bench of NCLT had dismissed the petition of TSPL on the demerger scheme after objections were raised by SEPCO, a creditor of TSPL.
The NCLT had observed "material facts have not been disclosed by the applicant company, violating Section 230 (2)(a) of the Companies Act, 2013, which in our considered opinion is bound to prejudice the public interest at large".
The NCLT's ruling came after China-based SEPCO Electric Power Construction Corporation objected to the demerger, saying the power unit had deliberately excluded their outstanding debt of Rs 1,251 crore from the list of creditors.
SEPCO alleged that TSPL had concealed the information about its liabilities.
"This has been done deliberately to defeat SEPCO's rights," the NCLT had said.
According to a Vedanta spokesperson, the NCLT ruling pertained only to the TSPL application and the power business undertaking and does not impact or alter the progress of the other business undertakings proposed to be demerged.
SEPCO was listed as an unsecured creditor to the extent of Rs 1,251 crore, which would constitute more than 75 per cent of the unsecured debt by value, and as a result of the same, the vote by SEPCO itself would have been against the scheme, potentially impacting the interest of TSPL.
The tribunal had said that the non-disclosure of such a significant liability could prejudice the interests of creditors and shareholders, and the valuation of TSPL conducted without factoring in SEPCO's claim was flawed and could impact public interest.
The scheme, filed under Sections 230 to 232 of the Companies Act, 2013, involved the demerger of Vedanta's business verticals into five separate entities-- Vedanta Aluminium Metal, Talwandi Sabo Power, Malco Energy, Vedanta Base Metals and Vedanta Iron and Steel.
It was aimed to create independent, globally competitive companies, each focusing on its core business and attracting specialised investors and stakeholders.
The boards of the respective companies had approved the scheme between September and October 2023.
Anil Agarwal-led Vedanta Ltd is expecting to complete the demerger of its businesses by September-end this year. PTI

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