Supreme Court upholds JSW Steel's takeover plan for Bhushan Power & Steel

The Supreme Court has upheld JSW Steel's ₹19,700-cr Bhushan Power takeover plan, and rejecting lenders' demand for share of Ebitda

The Supreme Court on Friday upheld JSW Steel Ltd’s resolution plan for Bhushan Power and Steel Ltd (BPSL), rejecting objections from its former promoters and certain creditors, Bar and Bench reported.

 

A Bench led by Chief Justice of India BR Gavai, along with Justices Satish Chandra Sharma and Vinod Chandran, observed: "We have held that the delay is not attributable to CoC or SRA. They have been trying to sort it out and enforce the resolution plan. We have held that CCDs issued by SRA are to be treated as equity. Commercial wisdom cannot be interfered with... Once the resolution plan to be approved by committee of creditors (CoC), permitting any claims to be reopened will amount to committing violence on provisions of law."

 

 

The court also noted that JSW’s significant investment in turning BPSL into a profitable company should not be penalised.

 

The case traces back to the Supreme Court’s May 2, 2025 ruling, which had struck down JSW Steel’s takeover plan and ordered BPSL’s liquidation under Article 142 of the Constitution. That judgment, delivered by Justices Bela M Trivedi and Satish Chandra Sharma, held that the CoC had erred in approving the plan.

 

August 11 ruling

 

On August 11, a special Bench, led by CJI Gavai along with Justices K Vinod Chandran and Satish Chandra Sharma, heard the matter afresh. The Bench revisited the court’s earlier 2 May ruling, which had set aside JSW Steel’s ₹19,700 crore takeover plan of BPSL citing alleged violations of the Insolvency and Bankruptcy Code (IBC). The earlier decision had ordered banks to return ₹19,350 crore paid by JSW Steel and put around ₹34,000 crore of bank exposure at risk, sending shockwaves through the IBC framework.     

 

Lenders’ arguments

 

Lenders, led by Punjab National Bank, told the court that their support for JSW Steel’s plan was based on certain conditions, including an understanding that the company would share part of the business proceeds. They are seeking over ₹6,155 crore, which includes ₹3,569 crore in earnings before interest, taxes, depreciation, and amortisation (EBITDA) during the corporate insolvency resolution process (CIRP) from July 2017 to March 2021, ₹2,509.88 crore as interest for delayed payments to financial creditors, and ₹76.62 crore as interest to operational creditors.

 

Solicitor General Tushar Mehta, representing the lenders, said, “Interest and Ebitda — these two things must come. There should be fairness for creditors because we are banks. We deal with public money.”

 

JSW Steel’s stand

 

JSW Steel argued that its resolution plan did not require sharing Ebitda, and such earnings cannot be distributed unless expressly allowed in the plan or under law. Senior advocate Neeraj Kishan Kaul, representing JSW Steel, said, “Even after the resolution professional (RP) started running the company by 2021, it was still a net loss… I am taking over a loss-making company.” The company also warned that accepting the creditors’ claim of over ₹6,000 crore could rewrite settled terms and set a dangerous precedent.     

 

Creditors’ objections

 

Former BPSL promoter Sanjay Singal and other dissenting creditors argued that if JSW Steel’s plan is scrapped, fresh bids should be invited rather than moving to liquidation. They alleged that JSW Steel deviated from commitments, infusing only ₹100 crore instead of ₹8,000 crore promised, paying just ₹540 crore upfront to financial creditors, and delaying payments to operational creditors by over 900 days.

 

Case background

 

BPSL’s insolvency process began in July 2017 after banks, led by Punjab National Bank, filed petitions over unpaid dues exceeding ₹47,000 crore. JSW Steel emerged as the successful bidder, outbidding Tata Steel, and its plan was approved by creditors, the National Company Law Tribunal (NCLT), and the appellate tribunal. Implementation, however, faced delays due to legal challenges and Enforcement Directorate attachments. Since taking over, JSW Steel says it has nearly doubled BPSL’s production capacity from 2.3 million tonnes per annum in 2017 to 4.5 mtpa in 2025.