Mint Explainer | How JSW Steel won back Bhushan Power and why it matters

In a dramatic reversal, the Supreme Court on 26 September restored JSW Steel’s rights and upheld its resolution plan, undoing its own 2 May order that had quashed the five-year-old plan and directed liquidation. The new ruling not only secures JSW’s hold on one of its most prized acquisitions but also restores confidence in India’s Insolvency and Bankruptcy Code (IBC), which had been shaken by the earlier verdict.

The May judgment had rattled the insolvency ecosystem by putting at risk over ₹34,000 crore in bank debt and ₹19,350 crore already paid by JSW Steel. The 26 September ruling offered relief to lenders and investors who feared the precedent could unravel other long-settled deals.

Mint breaks down what changed, what worked for JSW Steel, and what this means for the IBC.

How the case unfolded

On 2 May, a bench of Justices Satish Chandra and Bela Trivedi struck down JSW Steel’s resolution plan, siding with dissenting creditors such as Kalyani Torson, the state of Odisha, and former BSPL promoter Sanjay Singhal.

The court cited procedural lapses—delayed payments, dubious committee of creditors (CoC) eligibility certificates, and suppression of key facts—as violations of the IBC’s time-bound framework.

After Justice Trivedi’s retirement in June, JSW sought a review in late July. A new three-judge bench led by Chief Justice B.R. Gavai, with Justices Satish Chandra Sharma and K. Vinod Chandran, re-heard the case and, after marathon hearings, approved JSW’s plan on 26 September.

Tabrez Malawat, partner at The Guild, Advocates & Associate Counsel, called it a landmark judgment. He said a key reason is the court’s clear conclusion that interfering with the commercial wisdom of the CoC would undermine the spirit of the IBC and effectively amount to rewriting the law.

The time-bound question

At the heart of the dispute was the question of whether JSW’s delays fatally undermined the IBC’s strict timelines.

The May ruling faulted JSW for long delays in payments. The company had committed to pay ₹19,350 crore upfront and infuse ₹8,550 crore in equity within 30 days of NCLT approval. Instead, payments to financial creditors were made after 540 days and to operational creditors after nearly 900 days. The bench argued that this defeated the IBC’s goal of swift resolution.

The September bench acknowledged the delays but found they were triggered by factors beyond JSW’s control, including steel price volatility and Enforcement Directorate attachment orders that set off multiple litigations. It held that the focus should be on the intent and bona fides of bidders rather than rigid adherence to timelines.

Commercial wisdom of creditors

Another key shift lay in how the court viewed the CoC.

The earlier bench had castigated the CoC for informally allowing extensions, calling it illegal collusion. The new ruling reaffirmed that the CoC’s commercial judgment is sacrosanct, and courts must avoid second-guessing creditor decisions unless there is clear mala fide intent.

The September bench noted that the CoC had monitored progress, approved extensions after deliberation, and acted in good faith under difficult circumstances.

Role of dissenting creditors

In May, the top court had sided with dissenters, holding that their objections exposed serious statutory breaches.

In September, the bench took a more balanced approach, warning that endless litigation by minority creditors could derail resolutions and destroy value. It noted that petitions by dissenters, including former promoter Singhal, had themselves delayed the process and risked obstructing closure.

The fight over ₹6,155 crore Ebitda

One of the most contentious disputes centred on the ₹6,155 crore in Ebitda (earnings before interest, taxes, depreciation and amortization) generated by Bhushan Power during its insolvency process.

In its May judgment, the bench had acknowledged these earnings, noting they came from company assets and creditor-funded operations. Dissenting creditors argued the sum should be distributed among lenders, but the court left the issue unresolved after quashing the plan on procedural grounds.

The September verdict closed the debate. The Supreme Court rejected creditor claims and ruled the Ebitda rightfully belongs to JSW Steel, stressing that once a resolution plan reaches finality, its terms cannot be reopened or renegotiated. The bench also credited JSW with reviving BPSL, restoring profitability, and protecting thousands of jobs—factors that weighed in favour of upholding its ownership.

What this means for JSW Steel

The ruling is a major reprieve for JSW Steel.

Since its acquisition in 2021, BPSL has been integral to JSW’s consolidated performance, posting a ₹300 crore profit in Q1 FY25, a ₹93 crore loss in Q2, and a modest ₹11 crore profit in Q3.

Analysts had cautioned that liquidation could shave 8-10% off JSW’s FY26 Ebitda and revenue, while also forcing the company to claw back more than ₹19,300 crore already paid to lenders.

BPSL has expanded capacity from 3.5 million tonnes per annum (mtpa) to 5 mtpa, and runs advanced plants in Chandigarh, Derabassi, Kolkata, and Odisha, producing both flat and long steel products. With ownership restored, JSW now enjoys legal certainty that lowers its cost of capital and strengthens investor confidence.

Markets are likely to read the verdict as a strong endorsement of JSW’s IBC-led acquisition strategy. Operationally, the company can move ahead with integrating BPSL’s assets, scaling expansion projects, and unlocking synergies across eastern India.

Implications for India’s insolvency framework

Had the May verdict stood, the liquidation of BPSL would likely have been the largest in India’s corporate history—by both debt size and systemic impact. It risked undoing a five-year-old plan and undermining investor confidence in the IBC.

Raheel Patel, partner at Gandhi Law Associates, said, “The key takeaway is that the Supreme Court has reaffirmed the sanctity and finality of approved resolution plans, underscoring that insolvency is meant to resolve stress, not perpetuate litigation."

Patel added that ruling draws sharper boundaries between insolvency law and other regulatory interventions, ensuring that once a plan is approved by the CoC and NCLT, its implementation cannot be derailed except in the rarest of cases.