Today, On 31st July, CJI Gavai-led bench recalls May 2 verdict that ordered Bhushan Power & Steel’s liquidation, observing, “Article 142 is to do justice, not to send 25,000 workers on road.” Supreme Court hints at reviewing earlier ruling.
New Delhi: The Supreme Court Today said that its earlier judgment dated May 2, which had cancelled JSW Steel’s resolution plan for Bhushan Power and Steel Ltd (BPSL) and ordered its liquidation, might need a relook.
A bench led by CJI BR Gavai and Justice Satish Chandra Sharma heard the review petition filed by JSW Steel and made an important prima facie observation that the previous judgment seemed to go against earlier Supreme Court rulings.
At the start of the hearing, the Chief Justice of India (CJI) requested the lawyers to focus only on previous court judgments.
He said,
“Restrict arguments to the judgments.”
Also Read: Supreme Court Scraps JSW Steel’s Rs 19,700 Cr Deal, Orders Bhushan Power Liquidation
Solicitor General Tushar Mehta, representing the petitioners, explained that this case involved a company that went into a serious financial crisis after it failed to repay its debts. He pointed out that JSW Steel, which is Mr. Kaul’s client, had not taken over the company at that stage.
However, now that Bhushan Power and Steel is financially stable, the Court’s use of its special powers under Article 142 to order its liquidation appears to be unfair.
SG Mehta said,
“This is a case where a company went into deep financial crisis due to money default, but wasn’t taken over by Mr. Kaul’s client. Now that it’s financially healthy the Court is invoking Article 142 to order its liquidation which seems unfair.”
He further highlighted that the earlier verdict criticised the Committee of Creditors (CoC) for not using their commercial judgment properly.
He told the Court,
“The Court observed that the CoC failed to exercise its commercial wisdom.”
In response, the Chief Justice underlined a key principle followed by the judiciary. He stated that courts, including the Supreme Court, the National Company Law Tribunal (NCLT), and the National Company Law Appellate Tribunal (NCLAT), should not interfere with the CoC’s commercial decisions.
The CJI said,
“We have consistently maintained that neither this Court nor the NCLT or NCLAT, can second guess the CoC’s commercial decisions.”
The Solicitor General argued that in this case, the Court had done exactly that intervened in commercial decisions that it should not have.
He said,
“Court has intervened in the CoC’s commercial wisdom, which courts aren’t supposed to do.”
The Chief Justice also pointed out that both the NCLT and NCLAT had given similar findings in this matter, and unless there was a clear mistake in their judgments, the Supreme Court should not have interfered.
He asked,
“Also both NCLT and NCLAT gave concurrent findings unless there was clear perversity in those judgments, should the Court have stepped in at all?”
SG Mehta then referred to a part of the May 2 judgment paragraph 62 and said that it merely listed some facts. He added that the entire judgment was based on the Court’s doubt over one act. He explained that even if those facts were reviewed again, there was no clear conclusion just that the act created suspicion.
He stated,
“Para 62 only states facts but the entire judgment hinges on the courts doubt over a particular act. While facts can’t be re-examined, even assuming they are, there’s no conclusive finding just that it raises doubt.”
He also spoke about Section 29 of the Insolvency and Bankruptcy Code (IBC), which prevents certain people from submitting resolution plans.
He mentioned that there were earlier concerns about JSW Steel’s eligibility, but those concerns were never pursued further.
He said,
“Section 29 bars certain applicants from submitting resolution plans. Though there was initial concern about JSW’s eligibility it wasn’t pursued.”
He continued by referring to the allegation that JSW Steel was linked to the original promoters of BPSL, which could have made it ineligible. But he noted that the Court itself had recognised that this issue wasn’t strongly argued and had decided not to go deeper into it.
He clarified,
“There was an allegation that JSW was ineligible due to being a related party to BPSL promoters. However, the Court noted the issue wasn’t actively pursued and chose not to delve deeper into the related party aspect.”
Finally, the Chief Justice reminded everyone of the actual purpose of the IBC, which is to make sick companies operational again and save jobs, not shut them down.
He made a strong remark saying,
“The company should be made functional that is the purpose of IBC. The power of Article 142 is to do justice not to send 25000 workers on road.”
Matter listed to next Thursday.
The Supreme Court, On May 2, dismissed JSW Steel’s Rs.19,700 crore resolution plan for Bhushan Power and Steel Ltd (BPSL), citing violations of Sections 30(2) and 31(2) of the Insolvency and Bankruptcy Code (IBC).
A bench comprising Justice Bela M Trivedi (now retired) and Justice Satish Chandra Sharma ordered the liquidation of BPSL, overturning previous approvals from the NCLT and NCLAT.
Additionally, the Court found that JSW had made misleading statements to the CoC and misused the process. It concluded that the CoC should not have accepted the plan and criticized the NCLT and NCLAT for their approvals, nullifying their orders from September 5, 2019, and February 17, 2022.
Earlier, On May 26, a bench led by Justice BV Nagarathna and Justice Satish Chandra Sharma maintained the status quo on the liquidation proceedings before the NCLT after JSW Steel expressed its intention to file a review petition, aiming to prevent complications while the limitation period for filing remained active.
Case Number: R.P.(C) No. 1432/2025
Case Title: Punjab National Bank and Anr. v. Kalyani Transco and Ors.
FOLLOW US FOR MORE LEGAL UPDATES ON YOUTUBE
