The Supreme Court of India has upheld JSW Steel's resolution plan worth ₹19,700 crore for Bhushan Power and Steel Limited (BPSL), putting an end to a long-standing legal battle. The ruling dismisses appeals challenging the takeover by JSW Steel, thereby confirming the final order passed by the National Company Law Appellate Tribunal (NCLAT) on February 17, 2020. This decision provides finality to the Corporate Insolvency Resolution Process (CIRP) that was initiated against BPSL.

BPSL was identified as one of the "dirty dozen" large corporate defaulters by the Reserve Bank of India (RBI) in 2017, and its CIRP commenced on July 26, 2017. The legal process has been fraught with challenges from former promoters and various creditors.

Key Issues Addressed by the Supreme Court

The Supreme Court addressed several contentious issues raised by the erstwhile promoters and some operational creditors:

• EBITDA Distribution: The court upheld the NCLAT's decision that the Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) generated by BPSL during the CIRP period would remain with the company. It rejected arguments for its distribution among creditors, stating that neither the Request for Resolution Plan (RfRP) nor the Resolution Plan itself provided for such distribution. Allowing the claim at this stage would "frustrate the very purpose for which the IBC came to be enacted". Senior Advocate Neeraj Kishan Kaul, representing JSW Steel, argued that EBITDA was an operational asset and not a distributable profit.
• Finality of Resolution Plan: The judgment emphasized the importance of finality in the CIRP process. The court noted that JSW Steel had successfully revived the company, transforming it from a loss-making to a profit-making entity. Permitting new claims after the approval of the resolution plan would "open a Pandora's Box".
• Continuity of CoC: The court rejected the argument that the Committee of Creditors (CoC) becomes functus officio (ceases to have legal authority) once the Resolution Plan is approved. The court underlined that the CoC continues to exist until the resolution plan is fully implemented.
• Rejection of Challenges: The Supreme Court effectively rejected challenges raised by BPSL's former promoters and certain creditors. The court observed that delays in implementation were not attributable to either JSW or the lenders' Committee of Creditors (CoC), observing that both had been trying to enforce the plan despite hurdles.

Background of the Case

JSW Steel's resolution plan faced numerous hurdles, including the Enforcement Directorate's (ED) attachment of BPSL's assets in connection with alleged fraud by its former promoters. These attachments were eventually lifted in December 2024.

In May 2025, the Supreme Court had initially ordered the liquidation of BPSL, setting aside JSW Steel's resolution plan, criticizing the conduct of the CoC, the resolution professional, and the NCLT. However, this order was recalled in July 2025, and the matter was reheard.

Arguments Presented During the Rehearing

During the rehearing, the former promoters argued that JSW Steel had failed to meet a key funding commitment of ₹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. They also alleged misconduct and collusion with the former committee of creditors and resolution professionals.

JSW Steel maintained that it bid for BPSL on an “as is, where is” basis, and that the delays were caused by the asset attachment case.

Impact of the Ruling

The Supreme Court's decision is a significant development for the Insolvency and Bankruptcy Code (IBC) process. The court emphasized that once a resolution plan is approved, reopening claims would amount to "committing violence" on the provisions of the IBC. The court also clarified that Compulsorily Convertible Debentures (CCDs) issued by JSW as the successful resolution applicant are to be treated as equity.

The ruling is expected to provide greater clarity and certainty for future insolvency resolutions, reinforcing the importance of adhering to the approved resolution plan and avoiding unnecessary delays.