JSW-BPSL Case: Supreme Court Reserves Verdict on Pleas
Supreme Court reserved verdict in pleas challenging its recent decision quashing JSW Steel’s resolution plan for Bhushan Steel and Power Limited (BSPL), after days of sharp exchanges between Senior lawyers over the fate of nearly Rs. 6,000 crore in earnings before interest, taxes, depreciation and amortisation (EBITDA) generated during the corporate insolvency process;
The Supreme Court on Monday reserved its verdict on petitions challenging its recent decision quashing JSW Steel’s resolution plan for Bhushan Steel and Power Limited (BSPL), after days of sharp exchanges between Senior lawyers over the fate of nearly Rs. 6,000 crore in earnings before interest, taxes, depreciation and amortisation (EBITDA) generated during the corporate insolvency process.
Notably, on July 31, the CJI-led bench had recalled the May 2 verdict and decided to re-hear the matter.
The Bench of Chief Justice B.R. Gavai, Justice Satish Chandra Sharma and Justice K. Vinod Chandran heard detailed arguments from Senior Advocates Neeraj Kishan Kaul for JSW Steel, Dhruv Mehta for former promoters, and Solicitor General Tushar Mehta.
Kaul contended that EBITDA was an operational asset of the company, not a distributable profit, and that neither the request for resolution plan (RFRP), the approved plan, nor the Insolvency and Bankruptcy Code mandated its distribution to lenders. “When I bid, I took the company ‘as is, where is’, losses included. Cutting losses doesn’t make it profit,” he argued, stressing that delays in implementation were caused by Enforcement Directorate (ED) asset attachments, not by JSW.
The CJI, however, questioned whether retaining the benefit of reduced losses under the Resolution Professional’s management, amounting to over Rs. 1,000 crore, would amount to “unjust enrichment.”
Appearing for Former promoters’ Senior Advocate Dhruv Mehta countered that JSW had failed to meet a key funding commitment of Rs. 7,000 crore in working capital and accused the company of “illegality” and “fraud” by raising funds via compulsorily convertible debentures through a subsidiary instead. He also asserted his locus to challenge the plan as both promoter and guarantor, warning against a “dangerous proposition” where the Committee of Creditors (CoC) retains powers after plan approval.
The Solicitor General submitted that the government’s case has consistently been that the funds were brought in via CCDs, but he could not confirm full compliance with the plan on record.
After hearing all sides, the Bench then reserved its judgment.
It is to be noted that on August 8, appearing for the Committee of Creditors (CoC), Solicitor General Tushar Mehta had strongly defended the CoC's continuing authority post-approval of the resolution plan. “Once a CoC is constituted under Section 21 of the Insolvency and Bankruptcy Code (IBC), it remains in place until proceedings conclude under Section 62. If a body has power to act, that power can be exercised periodically. The CoC’s authority doesn’t vanish just because the resolution plan is approved,” Mehta submitted. Calling the matter “one of the worst cases of siphoning” he had seen, Mehta had criticised attempts to “target the party who has come forward with the best resolution plan”.
On the issue of surplus value in the company, Mehta had stated: “When the IRP took over, the company was worth Rs. 1,000 crore. Three years later, it's valued at Rs. 4,000 crore. Who gets the Rs. 3,000 crore increase? The Court must answer that. If the RFRP specified this, the resolution applicant could have quoted accordingly.” Mehta had also defended continued CoC oversight, saying only some members move into the Monitoring Committee post-implementation, and “I’m represented there, so the CoC’s role continues through me.”
On August 7, the Solicitor General Tushar Mehta had claimed that the Enforcement Directorate (ED) has recovered around Rs. 23,000 crore in laundered money and returned it to victims of financial crimes. Mehta clarified that the recovered amount doesn’t remain with the state and is returned to those defrauded in financial crimes.
In another hearing, the CJI led bench on May 22, had strongly criticised the ED's actions, particularly questioning the agency’s authority to initiate proceedings against a government-owned corporation. Senior Advocate Kapil Sibal had alleged gross overreach by the central agency: “All phones of employees were seized, everything cloned. There is something called privacy. They should have investigated first.” Echoing similar concerns, Senior Advocate Mukul Rohatgi had also representing the State, said, “Every employee’s phone was cloned. This is beyond investigative necessity.” Taking serious note, CJI Gavai had observed, “You may register against an individual, but a Corporation? How can you register? Your ED is passing all limits!"
The Committee of Creditors (CoC) was represented by Solicitor General of India Tushar Mehta along with Raunak Dhillon of Cyril Amarchand Mangaldas.
Case Title: Kalyani Transco v. M/S Bhushan Power and Steel Ltd.
Hearing Date: August 11, 2025
Bench: CJI BR Gavai, Justice Satish Chandra Sharma and Justice K. Vinod Chandran