JSW-BPSL Case: Supreme Court admits Review pleas, flags ‘Apparent Errors’ in Liquidation Verdict

The Bench of Chief Justice BR Gavai and Justice Satish Chandra Sharma, while allowing oral arguments in the review, a rare step, remarked that the impugned judgment appeared inconsistent with a “catena of prior decisions” on the Insolvency and Bankruptcy Code (IBC).

“We are inclined to allow the review. We won’t look into any documents, just the judgment itself,” CJI Gavai said.

The Committee of Creditors was represented by Solicitor General Tushar Mehta, assisted by Advocate Raunak Dhillon, while Senior Advocate Navin Pahwa, along with Advocate Shardul S. Shroff, appeared for the Resolution Professional.

Solicitor General Tushar Mehta submitted that the company had been successfully revived and was now financially sound. Yet, invoking Article 142, the Court had directed liquidation, undermining the objective of the IBC.

“This company collapsed due to defaults but was not taken over by JSW until revived. Still, liquidation was ordered. That is an apparent error,” Mehta said, presenting a chart detailing the flaws in the ruling.

The Bench expressed concern over the judgment’s conclusion that the Committee of Creditors (CoC) had failed to exercise commercial wisdom, with CJI noting: “This Court and the NCLT/NCLAT cannot sit in appeal over CoC's wisdom. That’s well settled.”

Highlighting concurrent approvals of the resolution plan by both the NCLT and NCLAT, the Bench questioned whether the Apex Court could have interfered without any recorded perversity.

Responding to allegations that JSW was a “related party” and hence disqualified under Section 29A, SG Mehta pointed out that the issue had not been pressed in arguments, yet the judgment repeatedly made findings on that basis. “If a point is not raised, we cannot assist the Court. That's how errors creep in,” Mehta submitted.

CJI Gavai also confirmed that he and Justice Sharma had discussed the case and were convinced it merited reconsideration, especially in light of the interests of 25,000 employees. “We must consider the ground reality,” he said.

Senior Advocate Neeraj Kishan Kaul, appearing for JSW, emphasized that liquidation is a last resort under the IBC and not even mentioned in its preamble. “The aim is to restore functionality,” he said, outlining how JSW infused Rs. 20,000 crore, cleared debts, invested Rs. 8,000 crore in equity, and increased turnover and jobs.

Kaul maintained that all objections relate to implementation, not the plan itself. “This isn’t a Section 61(3) issue. At best, it’s an NCLT matter, and even then, only a creditor can approach,” he added.

The Court observed, “Prima facie, we are of the view that the impugned judgment does not correctly reflect the legal position as settled by a series of prior decisions. We allow the review petitions and keep all questions open for both sides at the final hearing.”

The matter will now be heard by a special three-judge Bench led by CJI Gavai on August 7, 2025.

The Bench had issued notice on review petitions filed by Punjab National Bank and other lenders. Notices were issued to former promoters of BPSL and operational creditors including Kalyani Transco.

The original verdict dated May 2, 2025 was passed by the Bench of Justices Bela M Trivedi (since retired) and Satish Chandra Sharma. It had set aside the NCLT and NCLAT orders approving JSW Steel’s resolution plan. The Bench had directed initiation of liquidation proceedings against BPSL under Chapter III of the IBC, invoking powers under Article 142 of the Constitution.

On May 26, 2025, the Apex Court had ordered a status quo on the liquidation process pending before the NCLT, after JSW Steel moved the court pointing out that the timeline for filing a review petition against the May 2 judgment had not expired.

The review petitions argue that JSW Steel had already implemented the resolution plan by making payment of Rs. 19,350 crore. However, the May 2 ruling had observed that despite no legal impediment, JSW did not implement the resolution plan for two years post-approval by the NCLAT. The court said this defeated the objective of the Code and amounted to misuse of the process of law.