New Delhi, September 26, 2025 — The Supreme Court of India on Friday upheld JSW Steel Ltd’s resolution plan for Bhushan Power and Steel Ltd (BPSL), bringing much-needed clarity to one of the country’s most closely watched insolvency proceedings. The judgment, delivered by a Bench led by Chief Justice of India BR Gavai along with Justices Satish Chandra Sharma and Vinod Chandran, rejected objections raised by BPSL’s former promoters and certain creditors.
The court observed that the long delays in implementing the plan were not attributable to the Committee of Creditors (CoC) or the Successful Resolution Applicant (SRA), but rather to prolonged litigation and regulatory hurdles. Importantly, the Bench ruled that compulsorily convertible debentures (CCDs) issued by JSW Steel as part of the resolution plan should be treated as equity, reaffirming the principle that the “commercial wisdom” of creditors cannot be second-guessed by judicial intervention.
“Once the resolution plan is approved by the CoC, permitting any claims to be reopened will amount to committing violence on provisions of law,” the Bench noted.
Court Protects JSW’s Investment
The Supreme Court also emphasized that JSW Steel’s substantial investment and efforts in turning around BPSL should not be penalized. Since taking over, the company claims to have nearly doubled BPSL’s production capacity from 2.3 million tonnes per annum in 2017 to 4.5 mtpa in 2025.
The ruling secures JSW Steel’s ₹19,700 crore takeover of BPSL, which had earlier been jeopardized by an unprecedented Supreme Court order in May 2025 that had struck down the resolution plan and directed liquidation of the company.
The May 2025 Setback
On May 2, 2025, a two-judge Bench led by Justices Bela M Trivedi and Satish Chandra Sharma shocked the corporate sector by setting aside JSW Steel’s plan and ordering liquidation under Article 142 of the Constitution. That judgment held that the CoC had erred in approving the resolution plan, effectively undoing one of the largest insolvency transactions under the Insolvency and Bankruptcy Code (IBC).
The decision had major consequences: banks were directed to return ₹19,350 crore already paid by JSW Steel, while nearly ₹34,000 crore of bank exposure was left hanging in uncertainty. The move rattled lenders, investors, and policymakers, raising concerns about the stability of India’s insolvency framework.
August 11 Reconsideration
Recognizing the far-reaching implications of its May verdict, the Supreme Court constituted a special three-judge Bench led by CJI Gavai on August 11 to reconsider the case. The Bench revisited whether JSW Steel’s plan complied with the IBC framework and whether creditors’ rights were adequately protected.
By Friday’s final judgment, the court restored confidence in the insolvency regime, upholding the primacy of the CoC’s commercial decisions.
Lenders’ Arguments
The lenders, led by Punjab National Bank, pressed the Supreme Court to recognize additional claims worth over ₹6,155 crore. Their demand included:
- ₹3,569 crore: Earnings before interest, taxes, depreciation, and amortisation (EBITDA) generated during the corporate insolvency resolution process (CIRP) between July 2017 and March 2021.
- ₹2,509.88 crore: Interest for delayed payments to financial creditors.
- ₹76.62 crore: Interest due to operational creditors.
Representing the lenders, Solicitor General Tushar Mehta argued that fairness required banks—custodians of public money—to be compensated for both interest and EBITDA generated during CIRP.
“Interest and EBITDA — these two things must come. There should be fairness for creditors because we are banks. We deal with public money,” he submitted.
JSW Steel’s Stand
JSW Steel, however, countered that its resolution plan did not require sharing EBITDA. Senior advocate Neeraj Kishan Kaul, appearing for JSW, stressed that distributing such earnings was not permissible unless explicitly provided in the resolution plan or in law.
Kaul pointed out that even after the Resolution Professional took control of BPSL in 2021, the company continued to post net losses. “I am taking over a loss-making company,” he argued, warning that forcing JSW Steel to share over ₹6,000 crore would “rewrite settled terms and set a dangerous precedent.”
Objections from Creditors and Promoters
BPSL’s former promoter, Sanjay Singal, along with dissenting creditors, opposed the approval of JSW Steel’s plan. They contended that if the plan was to be scrapped, fresh bids should be invited rather than sending the company into liquidation.
The objectors also accused JSW Steel of deviating from its commitments, alleging that:
- It infused only ₹100 crore instead of the ₹8,000 crore promised.
- It paid just ₹540 crore upfront to financial creditors.
- It delayed payments to operational creditors by more than 900 days.
Despite these objections, the court ruled in favor of finality, stressing that creditors’ commercial judgment could not be substituted by judicial scrutiny.
Case Background
Bhushan Power and Steel’s insolvency proceedings began in July 2017, after a consortium of banks led by Punjab National Bank filed petitions over unpaid dues of more than ₹47,000 crore. JSW Steel eventually emerged as the successful bidder, outpacing Tata Steel with a ₹19,700 crore offer.
The plan was approved by the CoC, the National Company Law Tribunal (NCLT), and the appellate tribunal. However, its implementation was delayed by years of legal challenges, including Enforcement Directorate attachments on BPSL’s assets.
Since taking over operations, JSW Steel has invested heavily in modernizing BPSL’s plants and increasing output, underlining its commitment to reviving the distressed steelmaker.
Significance of the Ruling
The Supreme Court’s decision to uphold the resolution plan has far-reaching consequences:
- Restores confidence in the IBC framework by reinforcing that CoC’s commercial wisdom is final.
- Protects creditors’ recoveries, ensuring banks do not face massive write-offs.
- Safeguards investments, reassuring bidders in future insolvency cases that their commitments will not be undone by judicial reversals.
- Stabilizes BPSL’s operations, allowing JSW Steel to focus on scaling up production without legal overhang.
Conclusion
After more than eight years of litigation, Friday’s judgment delivers closure to one of India’s most high-profile insolvency battles. By protecting the sanctity of the CoC’s decision and safeguarding JSW Steel’s investment, the Supreme Court has reinforced the credibility of the IBC process. For lenders, the verdict ensures recovery of a substantial portion of their dues, while for JSW Steel, it clears the path to fully integrate Bhushan Power and Steel into its operations.
In the larger picture, the ruling underscores the judiciary’s recognition that insolvency resolutions must be swift, commercially driven, and insulated from endless legal challenges.
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