A triumph of rule of law, a setback for insolvency resolution

A landmark judgment dated May 2, 2025, the Supreme Court disposed of an appeal filed in 2020 concerning the resolution of Bhushan Power and Steel (BPSL).

- MS SAHOO Former chairman of Insolvency and Bankruptcy Board of India

The judgment is detailed, incisive, and beyond reproach by any legal standard. It lays bare a series of grave illegalities and lapses, some deliberate and collusive, in the approval and implementation of the company's resolution plan.

Considering the illegalities, the court set aside the resolution plan approved by the Committee of Creditors (CoC) and the National Company Law Tribunal (NCLT) in 2019, subsequently affirmed by the National Company Law Appellate Tribunal (NCLAT). Invoking its extraordinary powers under Article 142 of the Constitution, the Court directed the liquidation of BPSL. The message is unambiguous and emphatic: India is governed by the rule of law, and no illegality in the sacrosanct insolvency process will be tolerated.

The resolution plan, under implementation since 2019, had envisaged a payment of about ₹20,000 crore to creditors and had successfully revived operations, with production levels reaching almost twice that of the pre-resolution period.

The liquidation now ordered operates, in effect, as a penalty, not on the wrongdoers (the resolution professional, successful resolution applicant, CoC, NCLT, and NCLAT), but on the company and the broader economy.