Introduction
In Kalyani Transco v. Bhushan Power & Steel Ltd.¹, the Hon’ble Supreme Court delivered a dramatic ruling, overturning an approved resolution plan under the Insolvency and Bankruptcy Code, 2016 (IBC), more than five years after its implementation.

Bhushan Power & Steel Ltd. (BPSL), one of the RBI’s “dirty dozen” defaulters, had entered insolvency in 2017 with debts exceeding INR 45,000 crore. In 2018, the Committee of Creditors (CoC) approved JSW Steel’s INR 19,700 crore resolution plan, which the NCLT and NCLAT later upheld. However, Kalyani Transco challenged the plan before the Supreme Court, alleging serious flaws in the process.

The Grounds of Challenge
The challenge was primarily based on three issues. First, JSW Steel’s eligibility under Section 29A had not been independently verified and the Resolution Professional relied solely on self-declarations. Second, the Corporate Insolvency Resolution Process (CIRP) exceeded the statutory 330-day limit under Section 12 and was therefore time-barred. Third, the plan discriminated against operational creditors in violation of Section 30(2) and Regulation 38, which require equitable treatment of all creditors.

On May 02, 2025, the Supreme Court accepted these objections, struck down the plan, and ordered liquidation of BPSL. The Court held that the resolution process suffered from procedural irregularities, statutory violations, and inequitable treatment of creditors. This was a rare and significant outcome, as liquidation was ordered despite a CoC-approved and partly implemented resolution plan.

The Shift in Judicial Approach
The difference between the two rulings is striking. The May 2025 judgment emphasised strict adherence to procedure, holding that breaches of timelines and verification lapses could not be ignored, even if liquidation resulted. By contrast, the July 2025 review in Punjab National Bank v. Kalyani Transco realigned the approach with established IBC jurisprudence, recognising that insolvency law is intended to rescue viable businesses, not dismantle them.

By keeping the liquidation order in abeyance, the Court reinforced that while compliance with statutory provisions is essential, excessive formalism must not undermine the IBC’s larger objective. The emphasis shifted back to creditor autonomy, finality of resolution, and stability of the insolvency framework.

Analysis
The reopened proceedings raise a fundamental question such as, should strict procedural purity outweigh the stability of resolution plans once approved, or should revival remain the primary goal even if procedural lapses occur? The Supreme Court’s eventual decision will shape not only the future of BPSL and JSW Steel but also the confidence of investors, lenders, and resolution applicants in the IBC process.

What emerges clearly is that liquidation must remain the last resort. By revisiting its earlier ruling in Punjab National Bank v. Kalyani Transco, the Supreme Court has sought to balance statutory compliance with economic revival. The case reaffirms that the IBC is not a law of punishment but of preservation, ensuring that viable businesses are saved rather than broken apart.

By - Akarsh Pandey and Diksha Belwal