Supreme Court upholds JSW Steel’s resolution plan for debt-ridden Bhushan power and Steel Ltd

New Delhi: The Supreme Court on Friday upheld the resolution plan by JSW Steel for M/s Bhushan Power and Steel Limited, rejecting the plea by the ex promoters and creditors of the firm in red.

A bench of Chief Justice of India B R Gavai and Justices Satish Chandra Sharma and K Vinod Chandran noted the investment of nearly Rs 20,000 Crores made by JSW Steel in the company.

"We do not find any merit in the appeals. The appeals are therefore dismissed," the bench said, upholding the judgment of  February 17, 2020 passed by the NCLAT.

The apex court had on August 11 reserved in the matter.

In its 136-page judgment, the bench said, "The SRA (Successful Resolution Applicant) – JSW invested huge amounts in modernization and expansion of the entity (Corporate Debtor). Not only that but thousands of employees have been earning their livelihood on account of the corporate debtor running as an on-going concern due to the resolution plan being implemented by the SRA – JSW".

The court said that delays in implementation were not attributable to either JSW or the lenders’ committee of creditors (CoC), and both had been trying to enforce the plan despite hurdles.

It pointed out, the very purpose for which the Insolvency and Bankruptcy Code (IBC) was enacted—namely, to ensure that the corporate debtor continues as a going concern—has not only been achieved, but the corporate debtor has been transformed from a loss making to a profit-making entity.

“If, after the implementation of the resolution plan, the SRA – JSW has converted a loss making entity into the one making profits, can it be penalised for that,” the bench asked.

The court said suppose if instead of the corporate debtor being converted into a profit-making entity, the losses would have increased, can the corporate debtor claim refund of the amount paid? 

“If we permit the claim not to be part of the resolution plan which has been approved by the CoC and the NCLT to be raised at such a belated stage, it could open a pandora’s box and the very purpose of the IBC providing sanctity to the finality of the resolution plan duly approved would stand vitiated,” the bench said.

“This court, in the case of Essar has clearly held that such could not have been the intention of the legislature as this would amount to hydra heads popping up after the approval of the resolution plan,” the court pointed out.

The bench said it has been categorically held that the SRA cannot be forced to deal with claims that are not a part of the Request for Resolution Plan (RfRP) issued in terms of Section 25 of the IBC or a part of its resolution plan.

The court also emphasised the commercial wisdom of the CoC could not be interfered with and cautioned that once a resolution plan is approved, then reopening claims would amount to “committing violence” on the provisions of the IBC. 

"Permitting the erstwhile promoters or the CoC to raise an argument in that regard at such a belated stage would amount to doing violence to the very intention with which the IBC was enacted. We therefore do not find any merit in the contention of either the ex-promoters-cum-directors of the Corporate Debtor or the CoC in that regard. If such a contention is accepted, it will frustrate the very purpose for which the IBC came to be enacted," the bench said.

The bench pointed out, this court has held that the legislature purposefully did not include a means to challenge the commercial wisdom exercised by the CoC, and this makes a challenge to the same non – justiciable.

“It has been further held that a challenge cannot be raised against the decision making of the CoC unless and until the grounds for challenge as given in the code are satisfied. Any interference in the paramount objective of the CoC of exercising its commercial wisdom would amount to the Court rewriting the law and going against the very objectives of the IBC,” the bench said.

The court said that compulsorily convertible debentures (CCDs) issued by JSW as the successful resolution applicant are to be treated as equity. 

“It can thus be seen that this court has reaffirmed its view that if a CCD is to be compulsorily converted at the time of maturity, without any obligation of repayment of a debt. It has been held that it must be treated the same as an equity instrument. We are therefore of the view that the CCDs infused by the SRA – JSW are to be treated the same as an equity infusion,” the bench said.

In view of the factual position as well as the law laid down by this court with regard to the CCDs being equivalent to equity instruments and the specific stand of the CoC, the court rejected the contention of the appellants in this regard.

The court had on July 31, 2025 recalled its May 2, 2025 judgment which has rejected the resolution plan by JSW Steel for M/s Bhushan Power and Steel Limited, and ordered the liquidation of the debt-ridden company.

Upon review petitions filed by JSW Steel and lenders of BPSL, Punjab National Bank, State Bank of India and others, the bench had said the previous judgement did not correctly consider the legal position as has been laid down by a catena of judgments.

The court had then noted that the investment of nearly Rs 20,000 Crores made by JSW Steel as well as the livelihood of about 25,000 workers, need to be taken into account.

The petitioners sought review of the judgment, which found Rs 19,700 Cr resolution plan of the BPSL, was not in conformity with the provisions of the Insolvency and Bankruptcy Code, 2016.

By the May 2, 2025 judgment, a bench of Justices Trivedi (since retired) and Sharma had set aside the resolution plan of JSW Steel.

On May 26, 2025, a bench led by Justice B V Nagarathna, however, had ordered status quo on the liquidation proceedings pending before the National Company Law Tribunal, as the time for filing the review petition for the aggrieved party had not elapsed then.

In its May 2, 2025 judgment, the court had invoked jurisdiction conferred under Article 142 of the Constitution and directed the adjudicating authority i.e. the National Company Law Tribunal to initiate the liquidation proceedings against the corporate debtor-BPSL under Chapter III of the IBC and in accordance with law.

The bench had then held JSW Steel did not implement the resolution plan for about two years since its approval by the NCLAT, though there was no legal impediment in implementing it. 

The court had then set aside the judgments and orders of September 05, 2019 and February 17, 2020 passed by the NCLT and NCLAT respectively.