India's shift towards sustainable and digitally managed energy infrastructure, as part of the Smart Cities Mission and Net-Zero commitments, necessitates strong cybersecurity measures. In October 2020, Mumbai faced a significant power outage that affected essential urban infrastructure. Following this incident, threat intelligence reports revealed the existence of sophisticated malware aimed at Indian power sector organizations, highlighting concerns regarding vulnerabilities in digitally interconnected grid systems. This research provides a detailed case analysis of the Mumbai power outage to assess the connection between cybersecurity resilience and sustainability performance in IoT-enabled smart energy ecosystems. Employing a qualitative case study approach, complemented by sectoral data analysis, sustainability metrics, and resilience modeling, the study investigates how cyber vulnerabilities influence energy efficiency, urban sustainability, and climate commitments. The results indicate that failures in cybersecurity can hinder renewable energy integration, increase reliance on fossil fuels, raise emissions due to backup generation, and diminish urban resilience. Reforms implemented after the incident—including network segmentation, mandatory encryption for smart metering, expedited incident reporting protocols, and enhanced protection for critical infrastructure—have bolstered grid resilience and sustainability alignment. The study concludes that cybersecurity is not just a technical safeguard but a crucial enabler of India's sustainable development and energy transition strategy