The arc reveals an old contest between financial expedience and the rule of law. Justice Bela M. Trivedi's judgment of 2 May 2025 brought timely clarity; she did not pick at threads but pulled open a tapestry of systemic non-compliance of the provisions of the IBC and the CIRP Regulations. The Supreme Court recalled that judgment by a slim order that stated that it suffered from several errors on the face of the record without enlightening litigants as to what those errors were. Operational creditors, small suppliers and legal certainty were left on the platform when the captain-financiers were handed the wheel.

The Clarity of Justice Trivedi's Judgment

To grasp the scale of the retreat, one must revisit the precision of what was set aside. Justice Trivedi, sitting with Justice Satish Chandra Sharma, set aside the resolution plan of JSW Steel as being in “flagrant violation and contravention” of the law and directed liquidation of the corporate debtor. The Bench cited the following reasons: The Resolution Professional utterly failed in his statutory duties under the IBC and the CIRP Regulations; JSW secured the bid by making misrepresentations at the evaluation stage and thereafter, under the cover of amended Regulations, slipped in a Consolidated Resolution Plan with Addendum; the CoC approved the plan in absolute contravention of mandatory provisions, despite having itself flagged the very non-compliances at its 18th and 19th meetings before voting in favour.

Crucially, Justice Trivedi did not jettison the doctrine of commercial wisdom; she gave it back its meaning. Commercial wisdom, she held, is “not a matter of rhetoric” but a well-considered decision by the CoC as the protagonist of the resolution process, taken with due regard to the mandatory requirements of the Code and the Regulations. Where a plan is non-compliant and the CoC nonetheless approves it, “it could not be said that the CoC had exercised its commercial wisdom while approving such Resolution Plan”. That formulation honoured both halves of the statutory scheme: the autonomy of the CoC on genuinely commercial questions, and the floor of legality below which that autonomy cannot descend.

A Recall in Two Lines

If 2 May 2025 was a high-water mark for statutory fidelity, what came next was a jurisprudential (disguised as procedural) low. After Justice Trivedi demitted office, review petitions. On 31 July 2025, a Bench presided over by the Chief Justice Gavai recalled the judgment in review.

Review jurisdiction in Indian law has settled contours. An error apparent on the face of the record is one that is self-evident, not one requiring a long process of reasoning to detect. The slim order lists ten earlier authorities and observed as not correctly considered, including K. Sashidhar, Essar Steel, Vallal RCK, Kalpraj Dharamshi and Swiss Ribbons. On that footing, in two lines, the order concludes that errors apparent on the face of the record exist. What the specific errors are, the order does not disclose.

The Reversal: Bowing to the Wise Captains

The post-recall judgment of 26 September 2025, delivered by a three-Judge Bench of the Chief Justice, Justice Sharma and Justice K. Vinod Chandran, embraced what Justice Trivedi had viewed with healthy scepticism: the non-justiciable primacy of the CoC's commercial wisdom. Every major challenge fell to the same answer. The structural mutations blessed under that rationale are as follows:

The elastic implementation date. The plan was approved in September 2019 and remained un-implemented for over 540 days while lenders and JSW were locked in collateral disputes over attachments by the Enforcement Directorate. The promoters argued that Clause 3.1 made the timeline open-ended and indeterminable. The Court was unmoved. The CoC's multiple extensions, carried by a 97.25% vote, were said to be a protected exercise of commercial wisdom designed to save the company.

The illusion of upfront equity. JSW had secured pole position by promising an upfront equity infusion of ₹8,550 crores. But only ₹100 crores was infused as pure equity, while ₹8,450 crores (99% of the sum) was routed through Compulsorily Convertible Debentures issued to a group company. The subversion of the bid was patent. The Court deferred to the CoC's acceptance of the instruments, treated CCDs as equity-in-waiting on Narendra Kumar Maheshwari, and closed the door. Curiously, none of the findings of Justice Trivedi were found to be incorrect.

The Tug-of-War over EBITDA

A basic structural reality is overlooked when the courts treat the CoC as an infallible and impartial pilot. Banks are not neutral stakeholders. Their balance-sheet imperatives are frequently in conflict with the wider corporate ecosystem. The statistics are unforgiving: the median recovery for operational creditors under the IBC hovers around six per cent, while the vendors, transporters and contractors who keep the wheels turning are left to absorb haircuts that, in any other legal regime (branch), would attract the discipline of Article 14 and Article 300-A of the Constitution.

The BPSL case made the imbalance starkly visible. Through the resolution delay the company generated EBITDA of approximately ₹1,813 crores, earned on pre-existing assets and the labour of operational creditors among others. The NCLT had originally ordered fair distribution among the body of creditors. After the recall, the CoC executed a volte face and resolved that the entire sum belonged to the financial creditors alone. JSW argued that the cash was the company's internal flow. The operational creditors, who had waited nearly 900 days for ex gratia payments of a token kind, were left outside the door. The Court chose not to intervene, leaving allocation to the discretion of the monitoring committee and the lenders, blessing a clear case of misappropriation, poorly masked by lofty legal jargon.

The Captain and the Compass

The transformation of BPSL from a stern demand for statutory compliance into deference to the CoC is the trend line from Sashidhar (2019), Essar (2022) to Vallal RCK (2022), not an aberration. While upholding constitutionality of the provisions of the IBC in Swiss Ribbons (2019), Justice Nariman repelled the argument that the Operational Creditors have no voice in the approval process observed as follows: “The NCLT has, while looking into viability and feasibility of resolution plans that are approved by the committee of creditors, always gone into whether operational creditors are given roughly the same treatment as financial creditors, and if they are not, such plans are either rejected or modified so that the operational creditors' rights are safeguarded.” Yet when the issue of fair and equitable treatment of operational creditors was raised and the NCLAT intervened to safeguard the rights of operational creditors in Essar on November 15, 2019 (hardly 10 months later) the Court speaking again through Justice Nariman astonishingly declared that such intervention as illegal and the CoC's wisdom is unquestionable as long as they receive not less than the notional liquidation value. One wonders if any greater travesty of commercial justice can be cited.

With respect, it is unfortunate that, that the superior courts are quietly surrendering judicial review to commercial expert bodies. Justice Krishna Iyer's caution from Kulshreshtha bears repetition: “Experts are entitled to great consideration but not to exclusive wisdom; their expertise lies in their craft and not in law.”

Deference to a specialised body is reasonable on technical metrics. It cannot extend to public law, transparency, fairness and constitutional issues. The result in BPSL is defended by reference to the going-concern outcome – productive capacity has been preserved and jobs have been saved. What about the route taken?

If the commercial wisdom of the CoC can absorb misrepresentation by the resolution applicant, contradictory stands by the CoC itself, a two-year breach of the upfront-payment commitment and statutory non-compliances acknowledged in the CoC's own minutes, then the phrase has travelled some distance from anything that could be called wisdom. It has become, in operation a label for immunity from judicial scrutiny, though Sec.31(2) IBC and the relevant constitutional provisions make judicial review mandatory. One of the key grounds under which the NCLT ought to set aside a Resolution Plan is that it “does not contravene the provisions of the law for the time being in force”. The wise captain of the IBC has remained free to navigate without a legal or moral compass; and those whose property and livelihood are charted on the same vessel are left to take comfort, such as it is, from the going-concern statistics.