SC withdraws Bhushan Power liquidation order, review hearing on Aug 7

Business Standard

a day ago

In a significant reversal, the Supreme Court on Thursday recalled its May 2 judgment that had declared JSW Steel's resolution plan for Bhushan Power & Steel Limited (BPSL) 'illegal' and had ordered the company's liquidation. The decision comes four years after BPSL was acquired under the Insolvency and Bankruptcy Code (IBC).
A bench comprising Chief Justice of India (CJI) BR Gavai and Justice Satish Chandra Sharma allowed review petitions and announced that it would hear the matter afresh on August 7. The court observed that the earlier judgment may not have correctly applied existing legal precedents.
'Prima facie, we are of the view that the impugned judgment does not correctly consider the legal position as has been laid down by a catena of judgements,' the bench said.
CJI cites ground realities, worker impact
The CJI noted the need to consider ground realities, including the Rs 20,000 crore investment made by JSW and the livelihood of 25,000 workers. 'Article 142 has to be utilised to do complete justice, not to do injustice to 25,000 workers,' the CJI remarked.
He added that as per settled law, the commercial wisdom of the Committee of Creditors (CoC) cannot be lightly interfered with—especially when endorsed by both the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT).
Justice Satish Chandra Sharma, who was part of the May 2 bench, also agreed to the review. 'Yesterday I had a discussion with my learned brother, who was gracious enough to admit that it requires reconsideration,' CJI Gavai said in court.
Solicitor General, JSW and CoC back review
Solicitor General Tushar Mehta, representing the CoC, supported the review, noting that the IBC's intent is to revive debt-laden companies, not liquidate them when they are performing.
JSW counsel Neeraj Kishan Kaul warned the earlier verdict sent 'dangerous signals' by invalidating a resolution plan approved by the CoC, NCLT, and NCLAT after five years of implementation. He questioned the locus standi of BPSL's promoter in filing the challenge, arguing that only creditors, not defaulting promoters, should be permitted to contest resolution plans.
Senior advocate Dhruv Mehta, appearing for the BPSL promoter, opposed the review.
JSW to retain control of BPSL during review
Legal experts said that JSW will continue operating BPSL until further orders. 'The recall effectively means that there is no contrary order at the moment, and the position as on the date on which the SLP was filed, will prevail,' said Parth Contractor of Chambers of Parth Contractor.
Alay Razvi, Managing Partner of Accord Juris, added, 'BPSL is presently managed by JSW Steel, not the Resolution Professional, and will continue this way until the Supreme Court issues its final decision after the review hearing.'
On May 2, the Supreme Court had rejected JSW Steel's ₹19,700 crore resolution plan for BPSL, ruling it violated provisions of the IBC. However, on May 26, a separate bench stayed liquidation proceedings after JSW expressed intent to file a review.
Following review petitions by JSW, Punjab National Bank, and other creditors, the Supreme Court on July 29 agreed to hear the matter in open court. Notices were issued on all review petitions, culminating in Thursday's decision to recall the earlier judgment.
The August 7 hearing will revisit all questions related to the legality of JSW's acquisition of BPSL, with the earlier judgment now set aside.