Supreme Court recalls judgment liquidating Bhushan Power; JSW resolution plan to be considered afresh

The Supreme Court on Thursday recalled its May 2 judgment that had rejected JSW Steel's ₹19,700 crore resolution plan for Bhushan Power and Steel Ltd (BPSL) and had ordered its liquidation. .A Bench of Chief Justice of India (CJI) BR Gavai and Justice Satish Chandra Sharma said that the May 2 judgment under review did not correctly consider the legal position."Prima facie we are of the view that the impugned judgment does not correctly consider the legal position as has been laid down in catena of judgments. Apart from that, it is submitted that various factual aspects have been taken into consideration, arguments which were not advanced were also considered though this position is disputed. This is a fit case wherein judgment under review need to be recalled and the matter is to be considered afresh," the Court said.It proceeded to list the review petitions against the judgment for detailed hearing on August 7, Thursday..Solicitor General (SG) Tushar Mehta, appearing for the Committee of Creditors (CoC), and Senior Advocate Neeraj Kishan Kaul, representing JSW Steel, made detailed submissions highlighting the implications of the May 2 ruling.SG Mehta contended that no substantial question of law had been raised in the matter and that the judgment rendered findings merely based on doubt. “Section 29A disqualifies a resolution applicant, but it was never pressed in this case. Yet, the judgment is replete with findings about it,” he argued.On the practical consequences of the judgment, Mehta noted that JSW Steel had been running BPSL since 2021 with 25,000 people currently employed. “JSW has made it a healthy company,” he said.CJI Gavai agreeed with the gravity of the situation.“My learned brother (Justice Satish Chandra Sharma) is also agreeable that it requires reconsideration. We should also look at the larger picture—25,000 people cannot be thrown on the road.”Senior Advocate Kaul argued that JSW had infused ₹30,000 crore into BPSL, cleared all dues, and increased turnover. “After all this, the judgment sends a dangerous signal. No one has found fault with the plan. Every allegation pertains only to its implementation,” he said. Kaul also questioned the use of Article 142 to overturn the approval of the resolution plan and criticised the reliance on arguments not raised during the hearings.He further informed the Court that a provisional attachment was made by the Enforcement Directorate after the plan was approved, leading to prolonged litigation and delay.The Court also heard Senior Advocate Arvind Nigam, representing the Resolution Professional, who confirmed that extensions to the timeline had been duly granted by the NCLT and NCLAT..On May 2, Supreme Court had rejected JSW Steel's ₹19,700 crore resolution plan for BPSL, declaring it illegal. The Court had also directed BPSL's liquidation.In that judgment, a Bench of Justices Bela Trivedi and Satish Chandra Sharma held that the Committee of Creditors (CoC) erred in approving JSW Steel's plan, which the Court opined was in violation of the Insolvency and Bankruptcy Code (IBC).JSW Steel had emerged as the successful resolution applicant for BPSL in 2019, after offering to pay over ₹19,000 crore to financial creditors. The plan was approved by the National Company Law Tribunal (NCLT) in September 2019. It was later upheld by the National Company Law Appellate Tribunal (NCLAT) as well, despite legal challenges, including concerns raised by the Enforcement Directorate (ED) regarding the attachment of BPSL’s assets.The matter reached the Supreme Court amid growing concerns that JSW Steel had not implemented the plan for the years since approval. The Court noted that the resolution applicant failed to fulfill essential post-approval obligations, undermining the very objectives of the IBC, which includes time-bound resolution of insolvency and maximisation of asset value..Notably, in December 2024, the ED decided not to pursue its appeal before the Supreme Court against JSW Steel's takeover of BPSL under the IBC.It also returned attached assets valued at ₹4,025 crore to JSW Steel so that the latter could take control of Bhushan Power pursuant to the insolvency resolution process under IBC.The ED had initially challenged JSW's resolution plan and also attached BPSL's assets under Section 5 of the Prevention of Money Laundering Act, 2002 (PMLA) because the former promoters of BPSL were accused of defrauding banks and diverting funds for personal gains.However, the ED later changed its stance and withdrew its challenge citing Section 32A of IBC. Section 32A was inserted in IBC with effect from December 2019 and provides immunity to the corporate debtor and its assets from prosecution or attachment if a resolution plan of a company under insolvency is approved. This meant that the attachment of properties by ED also ceased on the approval of a resolution plan..SG Mehta was briefed by a team from Cyril Amarchand Mangaldas comprising Raunak Dhillon (Partner), Uday Khare (Partner), Aishwarya Gupta (Principal Associate), Isha Malik (Principal Associate) and Anchit Jasuja (Associate).