The Supreme Court of India, on 31 July 2025, recalled its own judgment dated 2 May 2025 that had rejected JSW Steel Limited's Rs 19,700 crore resolution plan for Bhushan Power and Steel Limited (BPSL) and ordered the company's liquidation. A Bench comprising Chief Justice B.R. Gavai and Justice Satish Chandra Sharma, exercising powers under Article 142 of the Constitution, found that the earlier judgment had not properly considered applicable precedents and the settled legal position under the Insolvency and Bankruptcy Code, 2016 (IBC), necessitating a complete rehearing.
Background
Bhushan Power and Steel Limited, once one of India's largest steel producers, had been admitted into the corporate insolvency resolution process in 2017. After prolonged proceedings, JSW Steel's resolution plan of approximately Rs 19,700 crore was approved by the Committee of Creditors and confirmed by the NCLT. The plan was subsequently challenged by erstwhile promoters and certain dissenting creditors before the NCLAT and then the Supreme Court.
On 2 May 2025, the Supreme Court had set aside the resolution plan on grounds relating to procedural irregularities during the insolvency process and ordered BPSL's liquidation under Section 33 of the IBC. The order sent shockwaves through the insolvency ecosystem, as BPSL had already been operating as a going concern under JSW's management for several years, and liquidation would have resulted in significant value destruction for creditors and approximately 10,000 job losses.
JSW Steel filed a review petition arguing that the May judgment had relied on points that were neither argued by the parties nor supported by the record, and had failed to apply binding precedents of the Supreme Court regarding the sanctity of approved resolution plans under Section 31 of the IBC.
Key Holdings
The Supreme Court, in its recall order, observed the following:
Procedural error acknowledged: The Bench noted that the May 2025 judgment appeared to have considered issues that were not part of the arguments presented by the parties, raising concerns about the opportunity for effective hearing.
Precedent not applied: The Court acknowledged, prima facie, that settled precedents governing the approval and implementation of resolution plans under the IBC — including the binding authority of Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta (2019) — may not have been adequately considered.
Complete rehearing ordered: Rather than reviewing the judgment on limited grounds, the Court recalled the entire judgment and directed that the matter be reheard afresh, with all parties permitted to make full submissions.
Interim protection: The status quo with respect to BPSL's operations under JSW's management was maintained during the pendency of the rehearing.
Implications for Practitioners
The recall of a Supreme Court judgment in an IBC matter of this magnitude is an extraordinary event that underscores both the self-correcting nature of the judicial process and the high stakes involved in insolvency resolution of large corporate debtors. The order provides reassurance to resolution applicants and the broader investment community that approved and implemented resolution plans will not be undone without proper consideration of binding precedents.
For insolvency practitioners, the sequence of events highlights the importance of exhaustive briefing and citation of all relevant precedents at the hearing stage itself, given the potential for judgments to proceed on points not fully argued. The Court's willingness to recall its own order also reinforces that Article 142 remains a potent remedy when fundamental procedural fairness is compromised.
Creditors and resolution applicants in pending IBC matters should note that the Essar Steel precedent on the finality of CoC-approved resolution plans continues to be treated as the governing authority. The recall order implicitly affirms that departure from this precedent requires rigorous justification and proper argument.