Supreme Court upholds JSW’s resolution plan for Bhushan Power and Steel Ltd

The Supreme Court of India today reversed its recent decision quashing JSW Steel’s resolution plan for Bhushan Steel and Power Limited (BSPL).

Last month, the court had reserved its verdict on the review petitions 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. 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”.

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.

The original verdict dated May 2, 2025 was passed by the 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 had 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 Apex Court had 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 Rs. 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 Committee of Creditors (CoC) was represented by Solicitor General of India Tushar Mehta along with Raunak Dhillon of Cyril Amarchand Mangaldas. JSW Steel Ltd. was represented by Senior Advocates Neeraj Kishan Kaul and Gopal Jain, along with a legal team from Karanjawala & Co., including Nandini Gore (Senior Partner), Tahira Karanjawala (Partner), Swati Bhardwaj, Akarsh Sharma, Shreyas Maheshwari, Manvi Rastogi, Sharanya Ghosh and Mahek Karanjawala, and a team from AZB & Partners led by Senior Partner Rajendra Barot with Vivek Shetty, Suharsh Sinha, Sherna Doongaji and Akhilesh Menezes. The Resolution Professional (RP) was represented by Senior Counsel Navin Pahwa along with Shardul S. Shroff. Dhruv Mehta appeared for the ex-promoter, Sanjay Singhal.

Case Title: Kalyani Transco v. M/S Bhushan Power and Steel Ltd.

Judgment Date: September 26, 2025

Bench: CJI BR Gavai, Justice Satish Chandra Sharma and Justice K. Vinod Chandran