Introduction:
In a huge surprise move the Supreme Court of India has set aside its May 2, 2025 judgment which had ordered the liquidation of Bhushan Power and Steel Ltd. (BPSL) and also voided the resolution plan put forth by JSW Steel Ltd. for the revival of the said company. The said decision to relook into the issue was a response to issues of legal correctness, procedural fairness, and the human impact which affected over 25,000 workers of the company.
Background:
Bhushan Power and Steel was at one point featured in the RBI’s list of “dirty dozen” high debt companies. A resolution plan put forth by JSW Steel Ltd. was given the go ahead by 97.75% of creditors, the NCLT, and NCLAT.
In a judgement delivered on May 2, 2025 a two judge panel which included Justice Bela M. Trivedi (at that time still active) and Justice Satish Chandra Sharma voided out that resolution plan which had been put forward for BPSL and instead ordered the liquidation of the company which they deemed to be the result of procedural breakdown and abuse of the Insolvency and Bankruptcy Code (IBC). The decision was out to interfere with the commercial judgment of the Committee of Creditors (CoC) and was appealed.
Key Points:
The Supreme Court under CJI B.R. Gavai set aside the former judgment which did not properly apply the available legal precedents.
JSW Steel had come out with the resolution plan which saw us invest in the company to the tune of 30,000 crores and in that we brought BPSL’s business back to health.
25,000 workers fell under the previous liquidation order.
Solicitor General Tushar Mehta put forth that liquidation goes against the main goal of the IBC which is to revive companies and not close them.
The Court reported on human and economic impacts with CJI noting:.
We must take a step back and look at the bigger picture. 25,000 people cannot be left out.
Recent Development:
In May the judgment was set aside and we will hear the case again. The Court reported that some issues which did not come up in the trial were decided upon in the previous judgment. JSW Steel’s resolution is still in play for now. The following Thursday we will have the next hearing.
Conclusion:
The Supreme Court has in very few but very large cases set aside its own judgement which it does on what is presented by Article 142 of the Constitution. This is a which the Court’s to balance legal with real world issues, which we see in a case of jobs, investments and industrial revival. Going back to the drawing board the issue will go for re-consideration which in turn gives relief to thousands of workers and also which is the Court’s aim with the IBC to revive rather than liquidate viable companies.
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WRITTEN BY AYUSHI TRIVEDI
