SC restores JSW Steel’s ₹19,700 crore plan for BPSL

The Supreme Court held that JSW Steel’s plan, approved by over 97% of lenders in 2018 and cleared by both the NCLT and NCLAT, could not be invalidated

The Supreme Court on Friday revived JSW Steel Ltd’s ₹19,700 crore resolution plan for Bhushan Power and Steel Ltd (BPSL), reversing its May verdict that had directed liquidation of the debt-laden company. In its judgment, the court reaffirmed the sanctity of committee of creditors (CoC) decisions and sought to bring much-needed clarity to one of the most contentious chapters in India’s bankruptcy regime.

The court rejected lenders’ demand for over ₹6,000 crore in additional recoveries. (ANI)

A bench led by Chief Justice of India Bhushan R Gavai held that JSW Steel’s plan, approved by over 97% of lenders in 2018 and cleared by both the NCLT and NCLAT, could not be invalidated merely because its implementation was delayed by circumstances beyond the bidder’s control.

The bench, also comprising justices Satish Chandra Sharma and K Vinod Chandran, acknowledged that Enforcement Directorate (ED) attachments of BPSL’s assets between 2018 and 2024 created an insurmountable legal obstacle that justified the postponement of payments and infusion of equity.

The ruling ends years of uncertainty for JSW Steel, which has already integrated BPSL into its operations, expanded capacity at its Jharsuguda plant, and retained thousands of jobs. It also spares the banking system a fresh round of losses, with creditors set to retain the ₹19,350 crore already distributed.

Accepting JSW’s contention that its bid was made on an “as-is, where-is” basis, the bench said interim profits belonged to the bidder, not the creditors.

Senior advocates Neeraj Kishan Kaul and Gopal Jain represented JSW along with the team from Karanjawala & Company, comprising Nandini Gore and Tahira Karanjawala, among others.

For the Insolvency and Bankruptcy Code (IBC), the ruling restores a sense of stability after the turbulence created by the May verdict. By reviving a plan that had already been substantially implemented, the top court has signalled that resolution applicants can rely on the finality of judicial approvals.

For JSW, the decision cements control over an asset central to its growth strategy. For creditors, it ensures preservation of recoveries already made. And for the insolvency ecosystem, it reinforces the principle that resolution, not liquidation, remains the preferred route.

The bench had reserved judgment on August 11 after rehearing JSW Steel’s review plea. The review arose from the Supreme Court’s 2 May ruling, which had quashed JSW Steel’s resolution plan and ordered BPSL’s liquidation. That decision stunned the financial sector, forcing banks to return ₹19,350 crore already paid by JSW and placing nearly ₹34,000 crore of bank debt at risk.

Invoking its extraordinary powers under Article 142 of the Constitution, a two-judge bench in May had found fault with the plan. But on 31 July, another bench recalled the previous order, acknowledging misapplication of IBC principles, reliance on factual inaccuracies, and consideration of arguments that had not been raised during earlier hearings. This paved the way for a fresh hearing and Friday’s verdict, widely seen as JSW Steel’s last opportunity to hold on to BPSL.

BPSL was among the 12 large corporate defaulters identified by the Reserve Bank of India in 2017 after it defaulted on loans worth more than ₹47,000 crore. Following a tightly contested bidding process, JSW Steel emerged in 2018 as the top bidder with its ₹19,700 crore offer, edging past Tata Steel.

The plan was cleared by lenders, approved by the National Company Law Tribunal in 2019, and upheld by the National Company Law Appellate Tribunal in 2020.

A series of litigations by dissenting creditors, objections from former promoters, and enforcement proceedings repeatedly delayed the resolution. JSW was finally able to take charge only in March 2021, nearly 900 days after its plan was first approved. 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.