New Delhi, Jul 31 (PTI) In a significant development, the Supreme Court on Thursday recalled its controversial May 2 verdict that had ordered liquidation of Bhushan Power & Steel Limited (BPSL) while setting aside a resolution plan of JSW Steel Limited for the ailing firm.

A bench comprising Chief Justice B R Gavai and Justice Satish Chandra Sharma observed that the May 2 judgment, authored by Justice Bela M Trivedi, since retired, did not "correctly consider the legal position as has been laid down in the catena of judgments".

Earlier, a bench of Justice Trivedi and Justice Satish Chandra Sharma had set aside a resolution plan of applicant JSW Steel Limited for BPSL, holding it illegal and in violation of the Insolvency and Bankruptcy Code (IBC).

The verdict had criticised the conduct of all key stakeholders in the resolution process, the resolution professional, the Committee of Creditors (CoC) and the National Company Law Tribunal (NCLT) for enabling what it termed a "flagrant violation" of the IBC.

On Thursday, a CJI-led bench said it was inclined to review the earlier judgment, which had quashed JSW Steel's resolution plan for the debt-ridden company.

"We are of the view that the impugned judgment does not correctly consider the legal position as has been laid down in the catena of judgments. Apart from that, it is submitted that various factual aspects have been taken into consideration, arguments which were not advanced were also considered though this position is disputed.

"This is a fit case wherein judgment under review needs to be recalled and the matter is to be considered afresh," the bench ordered and fixed the pleas for hearing on next Thursday.

The court added that certain factual aspects were considered and arguments not advanced were also factored into the verdict, raising grounds for reconsideration.

In an open court hearing, the CJI expressed shock after he was intimated that there were as many as 25,000 workers presently working in the BPSL which has been revived by JSW Steel by infusing Rs 30,000 crore.

Emphasising the human impact of the impugned judgment, the bench said, "We should also look at the larger picture. 25,000 people cannot be thrown on the road." Solicitor General Tushar Mehta argued that the May 2 judgment interfered with the commercial wisdom of the CoC, something courts are generally barred from doing under the IBC.

"Liquidation is not part of the preamble of the IBC... the main aim of the IBC is to ensure that the company gets revived," the law officer said.

"No question of law arises in this case. Findings were rendered merely on the basis of doubt," he said.

The law officer also pointed out that JSW has been running the company since 2021 and has taken loans to revitalise operations.

"This company was once part of the RBI-identified 'dirty dozen'. It is now a healthy, operational entity employing 25,000 people," he added.

Senior advocate Neeraj Kishan Kaul, appearing for JSW, said that 97.75% of creditors had approved the resolution plan and that it had been upheld by both the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT).

"The plan has been fully implemented. Fresh capital expenditure has been infused, and all creditors have been paid. The turnover has increased," Kaul said.

The senior lawyer assailed the impugned judgment for setting a "dangerous precedent" and noted that the Enforcement Directorate's provisional attachment came only after the plan was approved, leading to prolonged litigation.

He also contended that promoters, who had delayed the process, were now attempting to derail the plan and push for liquidation.

"The very object of IBC is being frustrated," he said.

The lawyers questioned the apex court's invocation of Article 142 of the Constitution.

Article 142 grants the top court the power to pass any order necessary to ensure "complete justice" in any matter pending before it.

"Power under Article 142 has been used to do complete justice. Not to do injustice to 25,000 people," the CJI said.

Authoring a 105-page judgment for the bench, Justice Trivedi had criticised multiple stakeholders, including successful resolution applicant (SRA) JSW Steel Limited, for procedural lapses and failure to uphold the objectives of the IBC.

The bench had held that the CoC failed to exercise its commercial wisdom while approving JSW's resolution plan, which was in absolute contravention of the mandatory provisions of the IBC and CIRP regulations.

The impugned verdict declared the NCLT orders of September 5, 2019 and the NCLAT judgment of February 17, 2022 as "perverse" and lacking jurisdiction, and consequently, set those aside.

The bench had rejected the resolution plan of JSW, as approved by the CoC, for being non-compliant with the IBC.

The NCLT was subsequently directed to initiate liquidation proceedings against BPSL under section 33(1) of the IBC, exercising the court's powers under Article 142 of the Constitution.

The top court had said the CoC should not have accepted the resolution plan.

In exercise of the powers under section 33(1) of the IBC and Article 142 of the Constitution, the bench had directed the NCLT to initiate liquidation proceedings against the corporate debtor. PTI SJK SJK KSS KSS