Jurisdiction of NCLT/NCLAT to review decisions of Statutory Authorities under PMLA?

In a significant judgment delivered by the Hon'ble Supreme Court of India in Kalyani Transco v. M/s Bhushan Power and Steel Ltd. & Ors. on May 2, 2025, the SC had dealt with the below-mentioned issues: 

  1. Maintainability of appeals filed by different stakeholders. 
  2. Jurisdiction of NCLT/NCLAT to review decisions of statutory authorities under PMLA. 
  3. Extent of compliance with mandatory provisions of the IBC (Insolvency and Bankruptcy Code, 2016) and its Regulations. 
  4. Significant delays encountered in the implementation of the Resolution Plan
  5. Roles and responsibilities of the Resolution Professional (RP) and Committee of Creditors (CoC)

Background Facts of the Case: 

Bhushan Power and Steel Limited ("BPSL") was one of the "dirty dozen" - 12 large accounts identified by the Reserve Bank of India in June 2017 for immediate reference under the IBC . The corporate insolvency resolution process (CIRP) was initiated against BPSL on July 26, 2017, with a debt exposure exceeding ₹47,000 crore. JSW Steel emerged as the successful resolution applicant (RA), with its resolution plan being approved by 97.25% of the Committee of Creditors (CoC) in October 2018 . The National Company Law Tribunal (NCLT) approved the plan on September 5, 2019, subject to certain conditions, which was subsequently upheld by the National Company Law Appellate Tribunal (NCLAT) on February 17, 2020 .

However, the case faced complications when the Enforcement Directorate (ED) under the Prevention of Money Laundering Act (PMLA) issued a provisional attachment order on October 10, 2019, attaching BPSL's assets. Several stakeholders, including operational creditors and the former promoters of BPSL, challenged the NCLAT's judgment before the Supreme Court. 

In a landmark judgment delivered on May 2, 2025, the Supreme Court set aside the resolution plan for BPSL that had been approved and partially implemented over nearly six years, directing liquidation proceedings against the company. The Court found the resolution process to be tainted with procedural irregularities, non-compliance with mandatory provisions of the IBC, and a blatant abuse of the process of law at every stage of the CIRP. 

The Court highlighted several critical lapses   :

  1. Strict adherence to timelines: The Court emphasized that the time-bound nature of CIRP is a foundational pillar of the Code. The statutory limit of 330 days for completion of CIRP under Section 12 is non-negotiable, and any resolution plan received beyond this limit without valid extension is legally unsustainable .
  2. Verification of eligibility under Section 29A: The Court ruled that verifying resolution applicants' eligibility under Section 29A is a mandatory duty of the Resolution Professional and cannot be delegated or performed superficially .
  3. Unconditional resolution plans: The Court found that JSW had not implemented the resolution plan for about two years since its approval by the NCLAT, despite there being no legal impediment, demonstrating mala fide and dishonest intention .
  4. Judiciary's limited role: The Court clarified that NCLT and NCLAT have limited jurisdiction in matters falling outside the scope of the IBC, and cannot modify the terms of a Resolution Plan. 
  5. Jurisdiction of NCLT/NCLAT to review decisions of statutory authorities under (Prevention of Money Laundering Act) PMLA: NCLAT in the given case had in effect accepted a challenge to an Order passed by the Enforcement Directorate for attachment, wherein NCLAT while staying the order passed by the ED held that as JSW's Assets were immune from attachment. SC has held that PMLA being a public law, NCLAT did not have any jurisdiction or power to review the decision of a Statutory Authority under PMLA. 

The Court ordered the return of payments made by JSW to financial and operational creditors and towards equity contribution within two months from the date of the judgment, placing banks at risk of refunding over ₹19,000 crore .

Implications

This judgment has significant implications for the insolvency regime in India  :

  1. It emphasizes that procedural and substantive compliance with the IBC is mandatory, not merely directory, establishing binding parameters for all future insolvency proceedings .
  2. It underscores that while the commercial wisdom of the CoC enjoys primacy, such discretion must be exercised within the boundaries of legality, reasonableness, and due process. 
  3. It places a greater responsibility on Resolution Professionals and CoC to ensure strict adherence to statutory timelines and thorough verification of resolution applicants' eligibility. 
  4. It raises concerns about the viability of the IBC as a resolution strategy and may cause resolution applicants to approach the process with increased caution, potentially resulting in more conservative bids and reduced participation in future CIRPs. 

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