Supreme Court recalls May 2 verdict ordering liquidation of Bhushan Steel and Power Limited

New Delhi: The Supreme Court on Thursday recalled its May 2, 2025 judgment which has rejected the resolution plan by JSW Steel for M/s Bhushan Power and Steel Limited, and ordered the liquidation of the debt-ridden company.

A bench of Chief Justice of India B R Gavai and Justice Satish Chandra Sharma decided to examine the issues afresh after allowing the review petitions against the judgment rendered by Justice Bela M Trivedi (since retired).

Hearing review petitions filed by JSW Steel and lenders of BPSL, Punjab National Bank, State Bank of India and others, the bench said, "We are prima facie of the view that the impugned judgement does not correctly consider the legal position as has been laid down by a catena of judgements".

The bench found that this is a fit case wherein the judgment under review needs to be recalled and the matter needs to be considered afresh.

"While we are allowing the review, we keep all the questions available to both parties open to be argued at the stage of hearing," the bench said.

The court said a three-judge bench would consider the matter on August 7.

The court also noted that the investment of nearly Rs 20,000 Crores made by JSW Steel as well as the livelihood of about 25,000 workers, need to be taken into account.

"25,000 people cannot be thrown on to the road. Article 142 of the Constitution has to be utilised to do complete justice not to do injustice," the bench said.

Senior advocate Neeraj Kishan Kaul, appearing for JSW Steel, submitted that the judgment would have devastating effect on the IBC. A successful resolution applicant which invested almost Rs 30,000 crores in equity, was now fighting this litigation, he said.

Solicitor General Tushar Mehta for the Committee of Creditors contended violation of the timeline was not so fatal that a successfully implemented plan can be set aside and a direction can be issued under 142 to liquidate a company.

The petitioners sought review of the judgment, which found Rs 19,300 Cr resolution plan of the BPSL, was not in conformity with the provisions of the Insolvency and Bankruptcy Code, 2016.

By the May 2, 2025 judgment, a bench of Justices Trivedi (since retired) and Sharma had set aside the resolution plan of JSW Steel.

On May 26, 2025, a bench led by Justice B V Nagarathna, however, had ordered status quo on the liquidation proceedings pending before the National Company Law Tribunal, as the time for filing the review petition for the aggrieved party had not elapsed then.

In its May 2, 2025 judgment, the court had invoked jurisdiction conferred under Article 142 of the Constitution and directed the adjudicating authority i.e. the National Company Law Tribunal to initiate the liquidation proceedings against the corporate debtor-BPSL under Chapter III of the IBC and in accordance with law.

The bench had held JSW Steel did not implement the resolution plan for about two years since its approval by the NCLAT, though there was no legal impediment in implementing it.

"Such flagrant violation of the terms of the resolution plan, has frustrated the very object and purpose of the Code," the bench said.

The court had also noted the mala fide and dishonest intention on the part of JSW, Steel in firstly securing highest score making before CoC and then not implementing the same under the garb of pendency of proceedings, though the resolution plan was supposed to be an unconditional one.

"In our opinion, nobody should be permitted to misuse the process of law nor should be permitted to take undue advantage of the pendency of any proceedings in any Court or Tribunal," the bench said.

The court pointed out, the resolution plan, after its approval by the adjudicating authority i.e. NCLT under Section 31, is binding not only to the corporate debtor, its employees, members, creditors and the Government authorities but also to all the stakeholders including the successful resolution applicant itself.

The court had then set aside the judgments and orders of September 05, 2019 and February 17, 2020 passed by the NCLT and NCLAT respectively.