Supreme Court Upholds JSW’s Resolution Plan for Bhushan Power and Steel Limited

In a significant judgment dated September 26, 2025, the Supreme Court dismissed a batch of six appeals filed by erstwhile promoters and various operational creditors against the resolution plan approved for M/s Bhushan Power and Steel Limited (BPSL). The Judgment in Kalyani Transco v. M/s Bhushan Power and Steel Limited and Others (Civil Appeal No. 1808 of 2020) provides important clarifications on several aspects of the Insolvency and Bankruptcy Code, 2016 (IBC).

The Supreme Court’s Judgment comes after a roller coaster history of litigations wherein the Hon’ble Court had earlier (on May 2, 2025) rejected JSW’s resolution plan and ordered for commencement of liquidation proceedings of BPSL. As an unusual step, the said Judgment was later recalled on July 31, 2025, before finally delivering this definitive ruling. The Court addressed key issues including locus standi of erstwhile promoters, existence of the Committee of Creditors (CoC) post-approval of resolution plan, distribution of Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA), and classification of operational creditors.

The appeals were filed against the common final judgment and order dated February 17, 2020, passed by the National Company Law Appellate Tribunal (NCLAT) which had approved JSW Steel Limited’s resolution plan for BPSL. These appeals had previously been decided on May 2, 2025, but were reopened after review petitions were allowed on July 31, 2025.

Key Issues Addressed: 

1. Locus Standi of Erstwhile Promoters: The Court rejected the contention that erstwhile promoters lacked locus standi to challenge the resolution plan. Citing Vijay Kumar Jain v. Standard Chartered Bank and Others, the Court recognized that since the Resolution Plan affects the rights of guarantors, the erstwhile promoters had standing to appeal.

2. Existence of CoC Post-Approval: The Court held that the CoC does not become functus officio upon the approval of the plan by the National Company Law Tribunal (NCLT). It continues to operate until the plan is fully implemented or any challenge to its approval attains finality.

3. Delay in Implementation: The Court found that the delay in implementing the resolution plan was not attributable to either the CoC or the Successful Resolution Applicant (SRA) – JSW. Both parties had made consistent efforts to expedite implementation despite challenges, including proceedings under the Prevention of Money Laundering Act and various court proceedings.

4. Upfront Infusion of Funds: The Court confirmed that Compulsorily Convertible Debentures (CCDs) issued by JSW are to be treated as equity instruments, satisfying the requirement for upfront equity infusion under the resolution plan. The Court relied on its earlier judgments in Narendra Kumar Maheshwari v. Union of India and Others and subsequent cases.

5. Distribution of EBITDA: The Court rejected the CoC’s belated claim for entitlement to EBITDA generated during the Corporate Insolvency Resolution Process (CIRP). The CoC had previously taken a position, based on the Supreme Court’s decision in Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta & Others, that EBITDA would remain with the corporate debtor. The Court held that the CoC could not change its stance at this late stage.

6. Classification of Operational Creditors: The Court upheld the classification of Jaldhi Overseas Pte. Limited as a “contingent creditor” rather than a regular operational creditor. The Court noted that such classification falls under the “commercial wisdom” of the CoC, which has been given paramount status in previous judgments.

The Court concluded by highlighting the potential disastrous results if the contentions of the erstwhile promoters or the CoC’s stand on EBITDA had been accepted. It was emphasized that permitting claims not part of the approved plan to be raised later would “open a Pandora’s Box” and undermine the IBC’s objectives. The Court also celebrated the success of the resolution process, noting that BPSL had transformed from a loss-making entity to a profitable one under JSW’s management, asking rhetorically: “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?