SC recalls order liquidating Bhushan Power; allows review petition

In a major development, the Supreme Court on Thursday recalled its May 2 judgment that had ordered the liquidation of Bhushan Power & Steel Ltd (BPSL) and invalidated JSW Steel’s ₹19,800 crore resolution plan for the debt-ridden company.

A special bench led by Chief Justice BR Gavai and Justice Satish Chandra Sharma found that the earlier verdict, authored by now-retired Justice Bela M. Trivedi, had not correctly applied the legal position laid down in several precedents. The court said certain factual issues were wrongly considered, including arguments that were never made during the original hearing.

“This is a fit case wherein the judgment under review needs to be recalled,” the bench said, scheduling the matter for rehearing next Thursday.

The May 2 ruling—delivered by a bench of Justices Trivedi and Sharma—had set aside the resolution plan approved by 97.75% of BPSL’s financial creditors, and upheld by both the NCLT and NCLAT. It had sharply criticised the conduct of the resolution professional, the Committee of Creditors (CoC), and the adjudicating authorities, describing the entire resolution process as a “flagrant violation” of the Insolvency and Bankruptcy Code (IBC). It had also invoked Article 142 of the Constitution to order BPSL’s liquidation under Section 33(1) of the IBC.

However, on Thursday, the CJI-led bench flagged the serious human and economic impact of the May 2 verdict. “We should also look at the larger picture. 25,000 people cannot be thrown on the road,” the Chief Justice said, reacting to submissions that JSW Steel had revived the company by infusing ₹30,000 crore and retaining thousands of workers.

Solicitor General Tushar Mehta argued that the May ruling had overstepped the judiciary’s boundaries under the IBC by interfering with the CoC’s commercial wisdom. “Liquidation is not part of the preamble of the IBC. Its main objective is revival,” he said. “No question of law arises in this case. Findings were rendered merely on the basis of doubt.”

Appearing for JSW Steel, senior advocate Neeraj Kishan Kaul and counsel Tahira Karanjawala argued that the resolution plan was fully implemented — with creditors repaid, operations revitalised, and fresh capital infused. Kaul said the impugned verdict had created a “dangerous precedent” by reversing a fully executed plan and questioned the court’s reliance on Article 142 to justify liquidation.

He also pointed out that the Enforcement Directorate attaching Bhushan Power asset came after the plan’s approval and that former promoters, who had delayed proceedings, were now trying to derail the process in favour of liquidation.

“The very object of the IBC is being frustrated,” Kaul told the court.

Justice Trivedi’s 105-page judgment, now withdrawn, had slammed multiple stakeholders—including JSW Steel, the CoC, and the NCLT—for procedural lapses and failing to adhere to the IBC’s core objectives. It had termed the approvals given by NCLT and NCLAT as “perverse” and lacking jurisdiction.

With Thursday’s order, the Supreme Court has reopened the door for JSW Steel and the CoC to defend the resolution plan afresh, and potentially restore the revival of Bhushan Power and Steel under the IBC framework.

Also See: SC halts BPSL liquidation as JSW Steel plans to seek review