One of the recent judgments that has caused a lot of debate in the insolvency circles is the Supreme Court’s decision in Kalyani Transco Limited v. Union of India. The ruling, delivered on September 26, 2025, by a three-judge Bench led by Chief Justice BR Gavai, marks a decisive course correction in India’s insolvency jurisprudence. It reviewed and overturned the earlier judgment of the SC delivered in May 2025 by a Bench led by Justice Bela Trivedi, which had directed liquidation of Bhushan Power and Steel Limited (BPSL), even after the successful implementation of JSW Steel’s resolution plan.
By restoring JSW’s plan, Justice Gavai’s Bench has not only revived commercial pragmatism within the framework of the Insolvency and Bankruptcy Code, 2016 (IBC), but also reaffirmed key structural principles—finality of resolution, primacy of the Committee of Creditors (CoC), and the limited scope of judicial interference. Yet, as with any major correction of precedent, this judgment also leaves a few open questions about the limits of review, the use of post-fact developments, and how delay and implementation risk should be assessed under the Code.
The earlier verdict of May 2025 marked a disruptive turn in the insolvency ecosystem. Justice Trivedi’s Bench had ordered the liquidation of BPSL primarily on grounds of alleged procedural lapses and delays in implementation, despite the plan having been approved by the CoC, the NCLT, NCLAT, and largely executed by JSW Steel. This judgment faulted the CoC and the Resolution Professional for alleged non-compliance with certain procedural mandates and observed that prolonged delays in implementation had eroded the very object of resolution. The decision treated the delay as fatal, reasoning that the sanctity of statutory timelines under the IBC must prevail over post-approval commercial adjustments. In doing so, however, Justice Trivedi’s Bench departed from settled principles laid down in Essar Steel, K. Sashidhar, and Swiss Ribbons—particularly the doctrine that judicial bodies should not substitute their assessment for the commercial wisdom of the CoC unless statutory non-compliance or fraud is demonstrated. This judgment thus introduced a new and unsettling premise: that a court could retrospectively invalidate a resolution plan based on perceived inefficiency or delay, even after implementation had begun.
Overnight, this earlier judgment placed at risk several resolved cases where implementation was ongoing or delayed due to external litigation or regulatory hurdles. The practical fallout was immediate: lenders faced queries from auditors on whether implemented plans could be reversed; resolution applicants considered exit options or indemnity claims; and several NCLT benches began receiving fresh interlocutory applications from erstwhile promoters and operational creditors seeking similar reliefs. The judgment’s logic, if left uncorrected, threatened to derail the IBC’s fundamental promise of timely and commercially driven resolution.
Recognising the chaos that followed, the Supreme Court, in its review jurisdiction, took the unusual but necessary step of revisiting the May 2025 verdict. In its detailed September judgment, Justice Gavai’s Bench categorically upheld the JSW resolution plan for BPSL, setting aside the May 2023 Judgment. The Court’s reasoning restored coherence to IBC jurisprudence and reaffirmed its core tenets in the following terms:
1. The commercial wisdom of the CoC remains paramount - The Court reiterated that judicial bodies cannot substitute their views for those of the CoC, except where there is demonstrable non-compliance with Section 30(2) of the IBC. Justice Trivedi’s bench intervention on grounds of delay was thus a direct encroachment into the CoC’s domain.
2. The CoC is not functus officio post-approval - The judgment clarified that the CoC’s role continues even after plan approval, to monitor implementation, address disputes, and ensure compliance with agreed timelines. This is a significant clarification that closes a long-standing interpretative gap.
3. Finality of resolution plans depends on disposal of statutory appeals - The Court observed that the finality of a resolution plan arises only upon completion of appeals under Sections 61 and 62. Until then, implementation delays—especially those caused by judicial or regulatory stays—cannot invalidate an otherwise compliant plan.
4. Treatment of Compulsorily Convertible Debentures (CCDs) - The Court treated CCDs issued under the resolution plan as equivalent to equity, aligning the treatment of such instruments with commercial realities and accounting norms.
5. Bar on belated and inconsistent claims - The CoC’s subsequent claim to a share of BPSL’s EBITDA was rejected as both belated and contrary to the Request for Proposal (RFP). This underscores that all material claims must be raised within the structured resolution process.
6. Recognition of practical realities - Importantly, the Court acknowledged that delays in implementing JSW’s plan were due to external factors, specifically, the Enforcement Directorate’s provisional attachment of assets and pending appeals and the same could not be attributed to the resolution applicant.
In essence, Justice Gavai’s Bench re-anchored the IBC around commercial realism rather than procedural absolutism, ensuring that technical delays do not undo years of restructuring work or investment commitments.
Despite its corrective value, the review judgment leaves several critical issues unresolved. The Court’s reliance on BPSL’s post-approval profitability under JSW Steel raises a key jurisprudential concern - whether ex-post commercial outcomes should influence the validity of earlier legal decisions. This approach risks setting a precedent where subsequent performance overshadows procedural correctness. Additionally, while the Court differentiated between external and applicant-induced delays, it did not clearly define what constitutes “unjustifiable delay,” leaving ambiguity for future cases involving mixed causes. The judgment also affirmed the CoC’s role post-approval, but offered little clarity on the extent of its powers - whether it can renegotiate terms, enforce timelines, or impose penalties remains uncertain. Finally, while the ruling may reassure investors in the short term, it leaves open how courts will approach delayed or modified resolution plans in the future, potentially resulting in varied interpretations.
The review judgment stands as a critical reaffirmation of the IBC’s foundational ethos - commercial resolution over judicial liquidation. For practitioners, it restores predictability and offers a coherent framework for handling implementation delays and post-approval disputes.
From a policy standpoint, it reinforces India’s insolvency regime as one guided by commercial expertise rather than judicial micromanagement. Yet, it also serves as a reminder that doctrinal certainty must be matched with procedural precision, especially when dealing with overlapping enforcement actions and appellate delays.
About the authors: Anoop Rawat is a Partner and the National Practice Head of Restructuring & Insolvency at Khaitan & Co. Charu Bansal is a Principal Associate at the Firm.
Disclaimer: The opinions expressed in this article are those of the author(s). The opinions presented do not necessarily reflect the views of Bar & Bench.
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