The Supreme Court of India, in a judgment dated 30 September 2025, reversed an earlier liquidation order concerning Bhushan Power & Steel Ltd., affirming that the Insolvency and Bankruptcy Code, 2016 (IBC) prioritises the revival of companies over their liquidation. A three-judge Bench comprising Chief Justice B.R. Gavai, Justice Satish Chandra Sharma, and Justice K. Vinod Chandran held that JSW Steel, the successful resolution applicant, should not be penalised for delays caused by Enforcement Directorate (ED) attachments and other factors beyond its control, observing that "IBC is not a mechanical checklist but a living framework."
Background
The insolvency of Bhushan Power & Steel Ltd. was one of the landmark cases under the IBC, with JSW Steel having emerged as the successful resolution applicant through the corporate insolvency resolution process (CIRP). However, the implementation of the resolution plan faced significant obstacles, including attachment orders by the Enforcement Directorate on the corporate debtor's assets in connection with money laundering investigations.
These ED attachments and related proceedings caused substantial delays in the implementation of the resolution plan, eventually leading to an order for liquidation of the company by the National Company Law Tribunal (NCLT). The matter escalated to the Supreme Court, raising fundamental questions about whether the IBC's timelines under Section 12 should be applied mechanically when delays are attributable to factors entirely outside the resolution applicant's control.
Key Holdings
The Supreme Court made the following determinations:
Revival over liquidation: The Court emphatically reaffirmed that the IBC's primary objective is the revival and continuation of the corporate debtor as a going concern. Liquidation is a measure of last resort, to be ordered only when resolution has genuinely failed, not when it has been impeded by external circumstances.
No penalty for extraneous delays: JSW Steel could not be penalised for delays caused by ED attachments, investigations by enforcement agencies, and judicial proceedings that were beyond its control. The timeline under Section 12 of the IBC must be applied with cognisance of the factual matrix, including the impact of third-party actions.
IBC as a living framework: The Bench characterised the IBC as "not a mechanical checklist but a living framework" that must be interpreted purposively to achieve its core objectives of value maximisation and economic revival.
Reversal of liquidation order: The Court set aside the liquidation order and directed the implementation of the resolution plan, thereby restoring the revival process for Bhushan Power & Steel.
Section 62 of the IBC: The Court examined the interplay between the IBC resolution process and enforcement actions under criminal statutes, holding that the objectives of the IBC cannot be subordinated to enforcement proceedings where the corporate debtor itself is not the accused.
Implications for Practitioners
This judgment provides significant comfort to resolution applicants who face delays attributable to enforcement agency actions or regulatory impediments. IBC practitioners advising prospective resolution applicants can now rely on the principle that extraneous delays will not automatically trigger liquidation.
For insolvency professionals, the ruling reinforces the obligation to pursue resolution with vigour while documenting the causes of any delays, particularly those attributable to third-party actions. Maintaining a clear record of such impediments becomes crucial evidence in any subsequent application to extend timelines or resist liquidation.
The characterisation of the IBC as a "living framework" may have broader implications for the interpretation of other provisions where mechanical application of timelines could defeat the statute's objectives. Creditors' committees and resolution professionals should factor this judicial approach into their strategy when navigating delays in complex resolution processes.