Kalyani Transco v. Bhushan Power & Steel: the JSW resolution plan, recalled and restored

The facts in brief

Bhushan Power & Steel Ltd. (BPSL) was among the original "dirty dozen" — the twelve large stressed accounts the Reserve Bank of India directed for resolution under the Insolvency and Bankruptcy Code in 2017. After a contested corporate insolvency resolution process, the Committee of Creditors approved a resolution plan submitted by JSW Steel, the National Company Law Tribunal granted approval, and the National Company Law Appellate Tribunal affirmed it. JSW took over BPSL and, from 2019, implemented the plan — paying financial creditors roughly ₹19,350 crore upfront (the resolution plan was valued at about ₹19,700 crore in all) and investing in the modernisation and expansion of the plant.

Dissatisfied operational creditors and former promoters challenged the plan's compliance with the Code. The litigation reached the Supreme Court, where a two-judge bench of Justices Bela M. Trivedi and Satish Chandra Sharma heard the matter. On 2 May 2025, in a judgment reported as 2025 INSC 621, the bench held JSW Steel's plan illegal and contrary to the IBC.

The 2 May judgment faulted the plan for non-compliance with Sections 30(2) and 31(2), criticised the Committee of Creditors for accepting it, set aside the NCLT and NCLAT approvals, and directed liquidation of BPSL under Section 33 — even though the plan had by then been substantially implemented for some six years. The ruling was extraordinary: it ordered the liquidation of a fully revived, operating steel plant on the strength of compliance defects in the plan that had brought it back to life.

JSW Steel and the lenders sought review. On 26 September 2025, a three-judge bench — Chief Justice B.R. Gavai and Justices Satish Chandra Sharma and K. Vinod Chandran — recalled the 2 May judgment and upheld the resolution plan.

The two-stage litigation

The May order and the September recall must be read together; the May order is not the final state of the law. The point matters because a reader who stops at the 2 May judgment would take away precisely the opposite of the rule that now governs.

The 2 May 2025 judgment treated the compliance defects as fatal notwithstanding implementation. It declined to let the fact of a substantially executed plan insulate it from scrutiny, and it reached for the most drastic remedy the Code offers — liquidation under Section 33 — on the footing that an illegal plan cannot stand and that the consequence of an unapproved plan is liquidation.

The 26 September 2025 review reversed that approach. The three-judge bench held that the 2 May judgment suffered from errors apparent on the face of the record — the standard that engages the Court's review jurisdiction under Article 137 — and recalled it. Recall, rather than mere modification, was the appropriate course because the errors went to the foundation of the result.

What the review bench held

The review bench upheld JSW Steel's resolution plan and set aside the direction for liquidation. Its central reasoning rested on the transformation of the corporate debtor and the protection of a bona-fide successful resolution applicant.

The Court reasoned that BPSL — a loss-making, stressed account at the start of the process — had, through JSW's modernisation and expansion investment, become a going concern earning substantial profits, with thousands of employees dependent on it. The object of the Code is the revival of the corporate debtor as a going concern, with liquidation as a last resort. To order the liquidation of an entity that the resolution process had successfully revived, and to penalise the resolution applicant who had achieved that revival, would invert the Code's purpose. A successful resolution applicant cannot be made to suffer for having rescued a failing enterprise.

The recall therefore turned on two propositions working together. First, the May judgment was vitiated by errors apparent on the face of the record and could be recalled in review. Second, on the merits, the finality of a CoC-approved, NCLT/NCLAT-affirmed and fully implemented plan ought to be respected where the corporate debtor has been revived into a profit-making going concern.

The commercial wisdom of the Committee of Creditors is the pivot on which much of the IBC turns, and it is the consideration the review bench restored to its proper place. Under the Code's scheme, the decision to accept a resolution plan belongs to the financial creditors who bear the loss, exercising their commercial judgment; the adjudicating authority's role in approving the plan is confined and does not extend to substituting its own commercial assessment. A court that quashes a plan for compliance defects must be careful not to displace that commercial wisdom under the guise of legality review — particularly when the plan has been approved, affirmed and implemented. The May judgment, in ordering liquidation of a revived enterprise over compliance objections, had on the review bench's analysis crossed that line; the recall pulled the inquiry back to the limited grounds on which an approved plan may properly be disturbed.

The IBC review and recall jurisdiction

The case is one of the rare instances in which the Supreme Court has used its review and recall power to undo a final judgment in an insolvency matter. Review under Article 137 is confined to errors apparent on the face of the record and is not a re-hearing of the appeal. The September bench was satisfied that the threshold was met — that the May judgment had erred in a manner that justified recall rather than tolerating the consequence of liquidating a revived enterprise.

The episode illustrates the tension at the heart of the IBC's design. On one side stands strict compliance: a resolution plan must conform to Sections 30(2) and 31(2), and the courts must police that conformity, lest the process be gamed. On the other stands the commercial reality and the statutory preference for revival over liquidation: once a plan has been approved by the commercial wisdom of the Committee of Creditors, affirmed by the tribunals, and implemented over years, unwinding it imposes costs that ripple far beyond the parties — to employees, to operational creditors who have already been paid, and to the credibility of the resolution market.

The September recall comes down decisively on the side of finality and revival in the case of an executed plan. It signals that judicial interference with a CoC-approved, affirmed and implemented plan will be exceptional, and that the protection of a bona-fide resolution applicant who has revived the corporate debtor is a powerful consideration in the balance.

Why the saga matters

This was one of the defining IBC episodes of 2025. It is the first occasion on which the Supreme Court ordered the liquidation of an already-revived, fully-implemented "dirty dozen" account and then reversed itself on review. The whiplash — liquidation in May, restoration in September — is itself instructive about how unsettled the law on executed-plan finality remained, and how high the stakes are when a flagship resolution is in play.

For resolution applicants, the September recall is reassuring: a successful applicant who has implemented a plan and revived a stressed asset has a strong claim to the protection of finality, even against compliance challenges, where the alternative is to destroy the value the resolution created. For dissenting creditors and challengers, the saga is a caution that the moment for compliance objections is during the resolution process and the ordinary appellate cycle — not years after implementation, when the equities of an operating, profit-making going concern weigh heavily against unwinding.

A note on citation. The 2 May 2025 main judgment is reported as 2025 INSC 621. The 26 September 2025 review and recall judgment is cited here as 2025 SCC OnLine SC 2093; the INSC neutral-citation number of the review order should be confirmed against the official copy before formal use.

Related on Valkya

• Committee of Creditors of Essar Steel v. Satish Kumar Gupta
• Swiss Ribbons v. Union of India
• IBC — May–June 2026 roundup

Sources

1. LiveLaw — Supreme Court orders liquidation of Bhushan Power & Steel (2 May 2025, 2025 INSC 621): https://www.livelaw.in/top-stories/supreme-court-bhushan-power-steel-jsw-resolution-plan-liquidation-291234
2. Bar & Bench — Supreme Court recalls Bhushan Power judgment, upholds JSW resolution plan (26 September 2025): https://www.barandbench.com/news/litigation/supreme-court-recalls-bhushan-power-steel-judgment-jsw-resolution-plan
3. SCC OnLine / SCC Times — review judgment analysis, 2025 SCC OnLine SC 2093: https://www.scconline.com/blog/post/2025/09/27/supreme-court-recall-bhushan-power-steel-jsw-resolution-plan-review/
4. Verdictum — Kalyani Transco v. Bhushan Power & Steel (JSW resolution plan): https://www.verdictum.in/court-updates/supreme-court/kalyani-transco-v-bhushan-power-steel-jsw-resolution-plan-review