Summary
In a landmark judgment, the Supreme Court has reversed its earlier decision directing the liquidation of Bhushan Power & Steel Ltd. (BPSL) and restored the resolution plan submitted by JSW Steel. The review decision in Kalyani Transco v. Bhushan Power and Steel Ltd. & Ors. (2025-TIOLCORP-20-SC-IBC-LB) underscores a judicial course correction that reaffirms the Insolvency and Bankruptcy Code’s (IBC) fundamental principle—revival over liquidation.
By emphasizing that procedural irregularities cannot outweigh economic logic, the Court has sent a strong signal favouring continuity, enterprise value preservation, and judicial restraint in commercial matters. This ruling not only restores investor confidence but also strengthens the finality of Committee of Creditors (CoC) decisions—one of the cornerstones of modern IBC jurisprudence.
Key Highlights
- Judicial Reversal: The Supreme Court’s review overturned its own liquidation order, allowing JSW Steel’s resolution plan for BPSL to proceed.
- Revival Over Liquidation: The Court held that liquidation must be the last resort; reviving viable enterprises better serves economic objectives.
- Commercial Wisdom Doctrine: The decision reaffirms that CoC’s commercial decisions, once procedurally sound, cannot be replaced by judicial opinions.
- Functional Continuity of CoC: The Court clarified that CoC’s responsibilities continue even after plan approval, ensuring oversight till completion.
- Limited Judicial Review: Appeals to the Supreme Court will lie only on substantial questions of law, ensuring finality of factual determinations.
- Clarification on Promoter Locus: Former promoters may have standing if their legal rights are impacted, but cannot use it to regain control.
- Procedural Relaxation: The Court viewed implementation delays as justified where caused by genuine litigation or enforcement obstacles.
Key Takeaways
- Economic Pragmatism Prevails: The judgment strengthens the Code’s objective of value maximization and business continuity over rigid procedural compliance.
- Investor Confidence Reinstated: Reinforces faith in India’s insolvency framework and the sanctity of CoC-approved plans.
- Judicial Restraint Ensured: Limits judicial interference to fraud, illegality, or manifest legal error—preserving commercial finality.
- Strengthened Oversight: Extending CoC’s role through implementation ensures accountability in execution.
- Revival-Centric Jurisprudence: Marks a pivotal shift towards interpreting the IBC as a dynamic economic legislation, not a mere procedural statute.
Conclusion
The Supreme Court’s review verdict in the Bhushan Power case marks a decisive shift towards judicial pragmatism and economic realism within India’s insolvency framework. By reinstating JSW Steel’s resolution plan, the Court has reaffirmed the IBC’s core philosophy—revival, not liquidation.
This judgment not only restores confidence among investors and creditors but also strengthens the sanctity of the CoC’s commercial wisdom and the finality of resolution plans. It serves as a vital reminder that insolvency law must evolve with business realities, prioritizing enterprise continuity, value preservation, and stability in the credit ecosystem.
In essence, the decision represents a pragmatic recalibration of IBC jurisprudence—one that balances legality with economic purpose, ensuring that the Code remains a living instrument of India’s economic justice.
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(The author is a practicing advocate, Co-Founder and Legal Head of RB LawCorp.
He specializes in GST law. Suggestions or queries can be directed to
ashsharma@rblawcorp.in. The views expressed in this article are strictly
personal.)