On the receiving end of the ruling was JSW Steel Ltd. The company, among India’s largest steelmakers, acquired BPSL through a winning ₹19,000 crore bid in 2021, injected capital, integrated operations, and gained control of its assets, but now finds its plans quashed.
A Supreme Court bench led by Justices Bela Trivedi and Satish Sharma effectively mandated the liquidation of BPSL, marking a dramatic end to the longest-running insolvency case under India’s Insolvency and Bankruptcy Code.
Mint breaks down the key aspects of the judgment, the reasons behind it, its immediate fallout, and why this ruling could redefine India’s insolvency resolution landscape.
What did the Supreme Court rule?
The Supreme Court invalidated JSW Steel’s ₹19,350 crore resolution plan for Bhushan Power and Steel Ltd citing violations of key provisions of the Insolvency and Bankruptcy Code.
The ruling was passed on several pleas opposing JSW Steel’s plan, including those filed by former promoter Sanjay Singal, operational creditor Kalyani Transco, and the state of Odisha.
The apex court found JSW Steel had delayed implementation, failed to make mandatory payments to creditors, and attempted to bypass obligations. It also criticized the committee of creditors (CoC) for approving the plan.
Using Section 142 of the IBC, the court directed the National Company Law Tribunal (NCLT) to initiate fresh liquidation proceedings, effectively ending any chance of BPSL’s revival under the existing resolution plan.
“There was a dishonest and fraudulent attempt made by JSW, misusing the process of the Court by not making the upfront payments as committed by it for about two and a half years and thereby enriching itself unjustly, and thereafter considering the rising prices of steel in the market, JSW sought to comply with the terms of Resolution Plan at a very belated stage, in collusion with the CoC and the Resolution Professional,” the Supreme Court stated in its judgement.
What were the specific reasons behind the decision?
The Supreme Court cited several serious lapses to justify its decision to scrap JSW Steel’s resolution plan for Bhushan Power and Steel and order liquidation:
- A clear violation of statutory timelines, as the resolution plan was submitted well beyond the 270-day limit without seeking timely extension under Section 12(2) of the IBC.
- The court also found that JSW Steel had unjustly enriched itself by delaying creditor payments while benefiting from favourable market conditions such as rising steel prices.
- JSW Steel’s resolution plan breached provisions of the IBC by failing to prioritize operational creditors, which the court saw as a fundamental violation of insolvency rules.
- The court also indicated a possible collusion between JSW Steel, Bhushan Power’s resolution professional, and the committee of creditors , highlighting manipulation of the process for financial advantage and non-compliance with plan obligations until conditions became favourable.
“Such flagrant violation of the terms of the resolution plan, has frustrated the very object and purpose of the Code,” the court said.
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Why was the judgment a surprise?
Insolvency experts said the Supreme Court’s ruling was unprecedented as it effectively sent a company—whose revival had been carried out through a court-approved plan five years ago—into liquidation. The ruling has not only disrupted the resolution process but also raises concerns about the future of insolvency proceedings in India, they said.
“Reversing a resolution plan after (five) years introduces an unprecedented element of retrospective disruption,” said Ritesh Kumar Adatiya, director of NPV Insolvency Professionals. “It not only questions the sanctity of approved plans but also puts commercial decisions at risk. Unwinding such transactions carries monetary costs, reputational damage, and systemic inefficiencies.”
Adatiya also stressed that the ruling could shake confidence in the insolvency process, making stakeholders more cautious. “The ruling weakens the confidence of key stakeholders… CoC may hesitate to take decisions, and resolution applicants may become more risk-averse. The process may now become cautious and prolonged, defeating the objective of time-bound resolution.”
Other legal experts offered similar opinions:
“Investors who have relied on the IBC’s principles of finality and the clean slate theory to avoid post-deal liabilities may now face legal risks even after successful implementation. This could chill participation in distressed asset markets, making investors more cautious when proposing resolution plans.” — Yogendra Aldak, partner, Lakshmikumaran & Sridharan Attorneys
“Interference after so many years makes IBC another statute filled with uncertainties… Lenders may be wary of taking decisions, and SRAs (successful resolution applicant) may hesitate to submit plans.” — Sushmita Gandhi, partner, IndusLaw
Shashank Agarwal, an advocate at the Delhi High Court, said the IBC needed reforms to enable effective supervision over the implementation of the resolution plan, indicating that the current system has gaps in terms of monitoring and ensuring timely execution of approved plans.
However, some lawyers suggested that while the ruling may be harsh, it sent an important message to stakeholders.
“The Supreme Court has sent a clear message—CoC cannot keep changing its stand. Resolution applicants must stick to timelines and not prolong the implementation of the plan once approved by the adjudicating authority,” said Amir Bavani, founder of AB Legal.
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Can the Supreme Court review its ruling?
According to lawyers, the committee of creditors and JSW Steel may seek a review of the judgment, as the Supreme Court retains the power to review its own decisions under Article 137 of the Constitution.
However, lawyers said a mere apprehension of far-reaching consequences does not, by itself, warrant an immediate review. “Unless it can be shown that the ruling creates systemic disruption or results in gross injustice, an immediate review may not be necessary,” said Tushar Kumar, a Supreme Court lawyer.
Why is the ruling a huge blow for JSW Steel?
The judgment is a significant setback for JSW Steel, which owns 83.3% of Bhushan Power and Steel. Acquired for around ₹19,000 crore, BPSL’s 2.5 million tonnes per annum (mtpa) Jharsuguda plant is central to JSW Steel’s eastern India strategy and accounts for about 13% of its capacity and 10-11% of its consolidated EBITDA.
The ruling puts JSW Steel’s revenue, operational control, and expansion plans at risk, potentially impacting cash flows and debt servicing. JSW Steel had expected value gains from BPSL’s expansion, but the uncertainty now threatens its 2030 target of reaching 45 mtpa steelmaking capacity.
What factors led to the Supreme Court ruling?
Bhushan Power , founded in the late 1970s by Sanjay Singal, grew from a small steel processing unit into one of India’s major secondary steel producers. It specialized in manufacturing cold-rolled steel strips, pipes, tubes, HR coils, and alloy steel products. During the 2000s and early 2010s, BPSL undertook aggressive expansion, particularly in Odisha, backed by large-scale borrowing from public sector banks.
However, its overambitious growth plans, coupled with delays in execution and a downturn in the steel sector, led to severe financial stress. By 2017, BPSL had defaulted on loans exceeding ₹47,000 crore, prompting the Reserve Bank of India to classify it among the “Dirty Dozen”—a list of top 12 non-performing corporate accounts.
That year, BPSL was admitted to insolvency proceedings under the IBC. JSW Steel emerged as the successful bidder in 2019 for Bhushan Power with a ₹19,700 crore resolution plan.
JSW Steel’s resolution plan for Bhushan Power was first approved by NCLT in September 2019. However, Singal, along with several operational creditors including Jaldhi Overseas, Medi Carrier, and Kalyani Transco, challenged the resolution plan before the National Company Law Appellate Tribunal (NCLAT), alleging arbitrary claim rejections and lack of transparency.
The state of Odisha also sought recovery of ₹139 crore in entry tax dues, though its plea was dismissed as time-barred. Additionally, CJ Darcl Logistics questioned the resolution professional’s claim collation process.
In February 2020, NCLAT upheld the resolution plan and dismissed all objections. This led the opposing parties—including Singal and Kalyani Transco—to move the Supreme Court in March 2020. On Friday, the Supreme Court ruled in their favour and struck down JSW Steel’s plan.
What is the Enforcement Directorate’s role in this case?
The Enforcement Directorate had also raised concerns given its attachment of BPSL’s assets due to a money laundering investigation against the company’s former promoters. The ED had initially attached these assets under Section 5 of the Prevention of Money Laundering Act (PMLA), alleging that BPSL’s former promoters had diverted bank loans for personal gains.
The CoC had contested the ED’s action, arguing it violated IBC provisions that protect resolution applicants. NCLAT in its ruling had also rejected ED claims.
The ED later withdrew its objections, citing Section 32A of the IBC, which offers immunity to resolution applicants from the liabilities of previous management. In December 2024, the ED chose not to pursue its own challenge against JSW Steel’s takeover of BPSL.
Following the Supreme Court’s direction on 11 December, 2024, the ED returned attached assets worth ₹4,025 crore to JSW Steel, clearing the way for the implementation of the resolution plan.
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