Why Bhushan Power Verdict Is a Legal and Economic Setback

The Supreme Court's recent decision to nullify JSW Steel's acquisition of Bhushan Power and Steel Ltd (BPSL) has reignited a critical debate in Indian insolvency law: can there be finality in commercial resolutions, or will we remain mired in judicial second-guessing?

- Neeti Shikha

This was no ordinary commercial transaction. Valued at Rs19,700 crore (around USD 2.35 billion), the acquisition was approved under the Insolvency and Bankruptcy Code (IBC), passed scrutiny by the Committee of Creditors (CoC) and the National Company Law Tribunal (NCLT), and was fully implemented. By 2021, the plant was profitable and contributing meaningfully to JSW's steel output. The Supreme Court, however, set aside the plan in 2025, citing delays in payment, concerns about the financing structure, and alleged bad faith on the part of the resolution applicant, alongside lapses by the CoC and resolution professional.

At stake is not only this transaction but a larger legal and economic principle: closure. It is in the interest of the state that there be an end to litigation (Interest reipublicae ut sit finis litium). When a case, closed and implemented, is judicially reopened years later, it sends a troubling message to businesses and investors.

Judicial review is essential in any system, but it must be balanced and proportionate. The Court had other options. It could have directed compliance through a judicially supervised mechanism, ensured operational creditors were paid, or called for disciplinary action against errant professionals. Instead, it invalidated a resolution that had restored a distressed company to viability.

The principle that winding up should be a remedy of last resort is among the most enduring and clearly articulated doctrines in insolvency jurisprudence. The law was created to preserve economic value and save viable businesses. Yet here, the Court's decision appears to ignore those principles, placing procedural fidelity above economic outcomes.

Parliament's intent, particularly through the 2020 amendments, was clear: to protect resolution applicants from legacy liabilities and encourage timely resolution. This judgment risks undermining that legislative clarity.