Supreme Court upholds JSW’s takeover of Bhushan Power in review

In a win for JSW Steel Ltd, the Supreme Court has approved the company's ₹19,700 crore plan to take over bankrupt Bhushan Power and Steel Ltd, marking the end of one of India’s longest-running insolvency battles.

The court rejected a challenge from dissenting creditors, saying the decisions of the committee of creditors (CoC) must be respected under the Insolvency and Bankruptcy Code (IBC).

A special bench led by Justice B.R. Gavai, along with Justices Satish Chandra Sharma and K. Vinod Chandran, noted that JSW Steel has made BPSL profitable and upheld earlier approvals by the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT).

The bench had reserved its order on 11 August after rehearing the case following review pleas filed by JSW Steel and lenders against the Supreme Court’s 2 May ruling, which had quashed the resolution plan and ordered liquidation. That decision forced lenders to return ₹19,350 crore already paid by JSW Steel and put nearly ₹34,000 crore of bank debt at risk.

On 31 July, the bench recalled that order, citing potential misapplication of IBC principles, reliance on factual inaccuracies, and consideration of arguments not raised earlier.

“Today’s Supreme Court verdict is a clear positive for JSW Steel,” said Manav Gogia, lead analyst for metals and mining at Yes Securities. “It removes the legal uncertainty on the BPSL acquisition and provides continuity for the turnaround that’s already underway.”

With the Supreme Court upholding JSW Steel's resolution plan and rejecting the objections raised by Bhushan Power's creditors and former promoters, “the overhang of forced liquidation and rejection of JSW Steel’s acquisition of BPSL is gone”, added Suman Kumar, vice president for metals and mining at financial services firm Philip Capital.

According to lawyers, although the case is now closed and has attained finality, dissenting creditors could still file a curative petition as a last resort. JSW Steel will need to implement the terms of the resolution plan, though it may face certain procedural and sectoral hurdles along the way.

“The resolution applicant will implement the court-sanctioned plan, invest as planned, and focus on BPSL’s turnaround. Creditors will be paid as per the terms, and regulatory authorities will facilitate the asset transfer,” explained Alay Razvi, managing partner at law firm Accord Juris. “Any pending regulatory filings or technical compliance will be completed, but the substantive insolvency process is concluded.”

In a stock exchange filing, JSW Steel said the Supeme Court had “delivered a landmark judgement concerning one of the largest corporate resolutions in the history of the Insolvency and Bankruptcy Code”.

The company's shares closed 1.78% lower on Friday at Rs1,128.40 apiece, while the benchmark Nifty 50 index ended 0.95% lower.

‘Delays not due to JSW Steel’

The Supreme Court in its ruling on Friday said the delays in implementing the resolution plan for Bhushan Power were not attributable to JSW Steel or the CoC, citing legal challenges, property attachments, and other orders.

“As a matter of fact, both JSW and the CoC were making consistent efforts to get the matter sorted out before this Court to ensure the implementation of the resolution plan,” the court observed.

It also highlighted that BPSL, previously running at a loss, had been turned into a profitable entity under JSW Steel, with substantial investments in modernization and expansion and it's plight of thousands of employees is also on stake.

“The corporate debtor in the present case was running into substantial losses, which has now been transformed into a profit-making entity, ensuring substantial returns. JSW Steel invested significant amounts in the modernization and expansion of the company,” the bench said. “Not only that, but thousands of employees have been able to earn their livelihood because the company continues to operate as an ongoing concern, thanks to the resolution plan being effectively implemented by JSW.”

The court further observed that various applications filed by dissenting creditors, including former Bhushan Power promoter Sanjay Singhal had caused delays in the NCLT’s approval and appeared to obstruct the resolution process.

It also rejected claims by creditors for encashing the earnings before interest, tax, depreciation and amortisation (ebitda) generated by JSW Steel during the resolution process, emphasizing that the approved plan cannot be reopened.

“Only after the resolution plan is fully implemented can creditors be paid according to the plan. Allowing claims outside the approved plan would create an anomalous situation contrary to the legislature’s intent,” the court said.

Lawyers termed the Supreme Court's decision in the case a landmark ruling, saying it could bolster investor confidence and accelerate insolvency proceedings.

The ruling “reinforces commercial wisdom and the sanctity of approved resolution plans under the IBC, curbing endless challenges. While regulatory hurdles, such as ED attachments or sectoral approvals, may still arise, they are now far less likely to derail the implementation of the plan”, said Raheel Patel, partner, Gandhi Law Associates.

Shruti Kanodia, managing partner at Sagus Legal, pointed out that the Supreme Court had clarified that only “aggrieved persons” under the IBC can challenge a resolution plan. Delayed objections by former promoters or dissenting creditors cannot obstruct the approved plan, thereby safeguarding the interests of the successful bidder.

The background

Bhushan Power and Steel (BPSL) was among 12 large defaulters flagged by the Reserve Bank of India in 2017 after defaulting on over ₹47,000 crore in loans. JSW Steel emerged as the highest bidder in 2018 with its ₹19,700 crore offer, edging out Tata Steel.

However, dissenting creditors such as former promoter Sanjay Singal, Kalyani Group’s Torsteel, the state of Odisha, and other stakeholders challenged the plan in multiple forums, citing irregularities and repeated delays.

The plan was cleared by lenders, approved by NCLT in 2019, and upheld by the NCLAT in 2020.

When dissenting creditors took the matter to the Supreme Court, the 2 May ruling quashed the five-year-old approved plan. JSW finally took charge of BPSL in March 2021. Since then, the company claims it has nearly doubled BPSL’s production capacity—from 2.3 million tonnes per annum in 2017 to 4.5 mtpa in 2025.

What lenders wanted

During the rehearing, lenders led by Punjab National Bank said they supported JSW’s plan but subject to certain conditions, including sharing part of the business proceeds.

They are seeking over ₹6,155 crore— ₹3,569 crore in ebitda generated during the corporate insolvency resolution process; ₹2,509.88 crore in interest for a 538-day payment delay to financial creditors; and ₹76.62 crore in interest owed to operational creditors. Lenders argued that the prolonged resolution deprived them of returns that could have reduced their losses.

Also, former BPSL promoter Singal and other dissenting creditors had urged the Supreme Court to invite fresh bids if JSW Steel’s plan was scrapped instead of ordering liquidation.

They alleged that JSW had failed to meet its commitments, pointing to only ₹100 crore infused against a promised ₹8,000 crore in working capital, ₹540 crore paid upfront to financial creditors, and delays of over 900 days in payments to operational creditors.

They had also alleged misconduct and collusion with the earlier committee of creditors and resolution professionals. Petitions challenging the plan had also come from dissenting creditors such as Kalyani Group’s Torsteel and the Odisha government citing irregularities and repeated delays.

JSW Steel’s defence

JSW Steel countered that the resolution plan did not mandate sharing Ebitda and that such earnings cannot be distributed unless explicitly provided for in the plan or under law.

Its ₹19,700 crore offer, the company had argued, was made on an “as-is, where-is” basis, with both risks and rewards. Profits during the corporate insolvency resolution process, therefore, belonged to JSW Steel, the company had argued.

JSW Steel had said accepting the lenders’ claims would amount to rewriting settled terms, set a dangerous precedent, and invite future disputes. It also argued that it had acquired a loss-making company and turned it around despite delays caused by Enforcement Directorate attachments.