Supreme Court's Recall of Bhushan Power Judgment Hailed as a Positive Step
In a move that has been widely welcomed by India's legal and business communities, the Supreme Court has recalled its own troubling judgment from May 2025 in the Bhushan Power and Steel Limited (BPSL) case. The original verdict had ordered the liquidation of the revived steel giant, sending shockwaves through the insolvency framework. The court's decision to now rehear the matter is being seen as a crucial step toward restoring commercial certainty and investor confidence in India's Insolvency and Bankruptcy Code (IBC).
The Original Verdict's Flaw
The now-recalled judgment had overturned a successful resolution plan for BPSL that had been in place for over five years. JSW Steel had taken over the failing company and turned it into a profitable, thriving enterprise. However, citing procedural irregularities, the Supreme Court had ordered the company to be liquidated, effectively sounding a death knell for a revived business.
Legal experts have argued that this decision contradicted the core purpose of the IBC. The law was designed as an economic tool to save viable businesses, with liquidation intended only as a last resort. The May judgment, they argue, prioritized legal technicalities over the primary goal of corporate revival and economic growth.
Why the Recall Matters
The decision to liquidate a fully functional company had shaken the foundations of the IBC, which is considered a landmark reform. It created a dangerous precedent, suggesting that even successful, long-standing resolutions could be vulnerable to reversal. This had the potential to deter future investors from participating in the insolvency process, as it undermined the finality and predictability of approved plans.
The Supreme Court's decision to recall its verdict and rehear the case is a significant admission that the original judgment may not have correctly interpreted the law. It provides hope that the court will now re-balance its approach, giving due weight to the economic objectives of the IBC and the commercial wisdom of the lenders who approved the original revival plan. The fresh hearing presents an opportunity to reaffirm that the goal of India's insolvency law is to give struggling but viable businesses a second chance, not to push them into liquidation over procedural issues.
