SC Agrees to Reconsider May 2 Verdict Rejecting JSW Steel’s ₹19,300 Cr Resolution Plan for BPSL

The Supreme Court has agreed to reconsider its May 2, 2025 judgment that had rejected JSW Steel’s ₹19,300 crore resolution plan for Bhushan Power and Steel Ltd (BPSL). The court had earlier ruled that the resolution plan violated key provisions of the Insolvency and Bankruptcy Code, 2016 (IBC).

A bench led by Chief Justice of India B R Gavai and Justice Satish Chandra Sharma issued notice on review petitions filed by Punjab National Bank and other lenders. The court also permitted an open court hearing on the matter, listing it for July 31, 2025 at 3 PM. Notices were issued to former promoters of BPSL and operational creditors including Kalyani Transco.

The original verdict dated May 2, 2025 was passed by a bench of Justices Bela M Trivedi (since retired) and Satish Chandra Sharma. It had set aside the NCLT and NCLAT orders approving JSW Steel’s resolution plan. The bench directed initiation of liquidation proceedings against BPSL under Chapter III of the IBC, invoking powers under Article 142 of the Constitution.

On May 26, 2025, the top court ordered a status quo on the liquidation process pending before the NCLT, after JSW Steel moved the court pointing out that the timeline for filing a review petition against the May 2 judgment had not expired.

The review petitions argue that JSW Steel had already implemented the resolution plan by making payment of ₹19,350 crore. However, the May 2 ruling had observed that despite no legal impediment, JSW did not implement the resolution plan for two years post-approval by the NCLAT. The court said this defeated the objective of the Code and amounted to misuse of the process of law.

The judgment had further stated that the resolution plan, once approved under Section 31 of the IBC, is binding on all stakeholders, including the successful resolution applicant. The court criticized JSW Steel for securing the Committee of Creditors’ (CoC) approval by allegedly presenting a misleading picture and later delaying implementation without cogent reasons.

The bench had held that the successful resolution applicant’s conduct amounted to fraud upon the CoC and stakeholders. It observed that the plan was supposed to be unconditional, and JSW Steel’s justification for non-implementation citing pending proceedings was unsustainable.

The court also criticised the resolution professional for failing to discharge statutory duties under the IBC and CIRP Regulations. It held that the CoC failed to exercise commercial wisdom properly and supported JSW’s implementation of an “ill-motivated” plan, contrary to the interests of the creditors.

Further, the court found the NCLAT judgment approving JSW’s appeal and issuing directions without legal authority to be “perverse, coram non judice and liable to be set aside.” The judgment also referred to the Enforcement Directorate’s (ED) attachment order dated October 10, 2019 under Section 5 of the Prevention of Money Laundering Act (PMLA), which had been stayed by the NCLAT ex parte on October 14, 2019.

Subsequently, the Supreme Court had stayed the attachment order on December 18, 2019. However, the May 2 verdict held that NCLAT exceeded its jurisdiction by making findings on Section 32A of the IBC and granting immunity from attachment to the corporate debtor’s assets. The bench noted that such a decision was beyond the scope of NCLAT’s powers under the IBC and PMLA.

The court reiterated that timelines are crucial under the IBC framework and any delay undermines the purpose of the Code. It held that courts and tribunals must not allow successful resolution applicants excessive leeway, particularly in the implementation phase.

The judgment had invalidated the orders dated September 5, 2019 (NCLT) and February 17, 2020 (NCLAT), citing violations of the IBC and its regulations.

The matter is now scheduled for review hearing in open court.

Case Title: Punjab National Bank & Anr Vs Kalyani Transco & Ors

Order Date: July 29, 2025

Bench: Chief Justice of India B R Gavai and Justice Satish Chandra Sharma