Vedanta Secures Interim Relief from NCLAT in TSPL Demerger Case

Vedanta Limited announced that the National Company Law Appellate Tribunal (NCLAT) has granted an interim stay on the earlier order passed by the National Company Law Tribunal (NCLT) Mumbai, which had rejected the proposed demerger involving Talwandi Sabo Power Limited (TSPL).

Background on the Scheme of Arrangement

The demerger forms part of a broader Scheme of Arrangement involving Vedanta Limited and its subsidiaries:

• Vedanta Aluminium Metal Limited (VAML)
• Talwandi Sabo Power Limited (TSPL)
• Malco Energy Limited (MEL)
• Vedanta Iron and Steel Limited (VISL)

Under the scheme, Vedanta intended to demerge its businesses into separate legal entities with a view to unlock long-term shareholder value.

NCLT Rejection and Appeal

On March 4, 2025, the NCLT Mumbai had rejected the first motion application for demerger of Vedanta’s power generation business into TSPL, citing material non-disclosures under Section 230(2)(a) of the Companies Act, 2013. Specifically, the NCLT found that the company failed to adequately disclose its contractual obligations towards SEPCO, a Chinese contractor involved in TSPL’s power plant project.

NCLAT Grants Interim Stay

Vedanta appealed the order, contending that:

• The contract with SEPCO was terminated in February 2024 due to non-performance.
• The liability was written back and disclosed in the FY24 financials.
• The NCLT exceeded its jurisdiction by rejecting the Scheme itself at the first motion stage.

NCLAT agreed to hear the matter in detail and granted an interim stay on the NCLT’s rejection of the Scheme, provided Vedanta furnishes a bank guarantee of ₹1,245 crore in favor of SEPCO within two weeks.

The Appellate Tribunal noted that: “The issue raised… needs to be considered at length… the scheme is severable… in the meanwhile the impugned order, so far as it only relates to rejection of the scheme is hereby stayed till the next date of hearing…”

Next Steps

The matter is scheduled for detailed hearing on August 4, 2025. The stay ensures that parallel proceedings concerning the demerger of other units VAML, MEL, and VISLare not adversely affected by the dispute involving TSPL.

Strategic Implications

Vedanta reiterated its commitment to its reorganization plan aimed at enhancing focus and valuation transparency across verticals. The move is seen as a crucial part of Vedanta’s broader strategy to streamline its corporate structure and potentially list individual business units.

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REF: https://nsearchives.nseindia.com/corporate/VEDL_29052025122931_VEDLSEIntimationTSPLNCLATOrdersigned.pdf