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Informist, Friday, Sept. 26, 2025

 

--SC upholds JSW Steel's INR 193.50-billion resolution plan for Bhushan Power 

--CONTEXT: SC order on pleas against JSW Steel's IBC plan for Bhushan Power 

--SC junks Bhushan Power lenders' plea seeking share in co's EBITDA 

 

NEW DELHI – The Supreme Court on Friday upheld JSW Steel Ltd.'s INR 193.50-billion resolution plan for debt-ridden Bhushan Power & Steel Ltd. and dismissed pleas by its operational creditor Kalyani Transco and former promoter Sanjay Singhal, among others. The apex court held that delay in implementing the resolution plan for Bhushan Power was not attributable to its committee of creditors and successful resolution applicant JSW Steel Ltd.

 

The top court dismissed the plea of Bhushan Power's lenders, including State Bank of India and Punjab National Bank, seeking INR 35.69 billion of earnings before interest, taxes, depreciation, and amortisation generated during the insolvency process of the debt-ridden company. Further, the apex court rejected the lenders' demand for INR 25 billion as interest towards the delay in implementing the resolution plan for Bhushan Power.

 

The bench led by Chief Justice of India B.R. Gavai said the request for the resolution plan did not provide for treatment of EBITDA. Bhushan Power in the present case was running into substantial losses, which has now become a profit-making entity earning substantial profits, said the top court. JSW Steel invested huge amounts in modernisation and expansion of Bhushan Power. "If, after the implementation of the resolution plan, the SRA (successful resolution applicant) -- JSW – has converted a loss-making entity into one making profits, can it be penalised for that?" asked the top court.

 

If the top court permits the claim not to be part of the resolution plan which has been approved by the committee of creditors and the National Company Law Tribunal to be raised at such a belated stage, it "could open a Pandora's Box" and the very purpose of the insolvency law providing sanctity to the finality of the resolution plan duly approved would stand vitiated, said the bench, also comprising Justices Satish Chandra Sharma and K. Vinod Chandran. 

 

"It has been categorically held that the SRA (successful resolution applicant) cannot be forced to deal with claims that are not a part of the RfRP (request for resolution plan) issued in terms of Section 25 of the IBC (Insolvency and Bankruptcy Code, 2016) or a part of its resolution plan," said the bench. Permitting the erstwhile promoters or the committee of creditors to raise an argument in that regard at such a belated stage would amount to doing violence to the very intention with which the insolvency law was enacted, said the top court. "We, therefore, do not find any merit in the contention of either the ex-promoters-cum-directors of the corporate debtor or the CoC (committee of creditors) in that regard. If such a contention is accepted, it will frustrate the very purpose for which the IBC came to be enacted," it said.

 

JSW Steel had said the lenders have changed their stand, as the committee of creditors had not earlier demanded Bhushan Power's EBITDA generated during insolvency. JSW Steel argued that if the resolution plan of Bhushan Power and the law do not contain EBITDA, the lenders cannot force them to share it. JSW Steel said the delay in implementation of resolution plan for Bhushan Power was not attributable to them, adding that the two-year delay was caused entirely by the Directorate of Enforcement's provisional attachment of Bhushan Power's assets, lifted only on Dec. 11, 2024.

 

In July, the Supreme Court had recalled its May 2 verdict rejecting JSW Steel's INR 193.50-billion resolution plan for Bhushan Power and directing the latter's liquidation. The bench led by Chief Justice Gavai allowed the review pleas filed by JSW Steel and Bhushan Power's lenders, including SBI and PNB. Thereafter, the apex court started hearing afresh the pleas by operational creditor Kalyani Transco, former promoter Sanjay Singhal and others challenging the resolution plan for the debt-ridden company. 

 

The implementation of the Bhushan Power resolution plan by JSW Steel was significantly delayed, with the payments to financial creditors delayed by 540 days and operational creditors by over 900 days beyond the initially approved timeline.

 

The National Company Law Tribunal had started insolvency proceedings against Bhushan Power on a petition by Punjab National Bank in 2017 and approved the resolution plan submitted by JSW Steel in 2019.

 

In its May 2 order, the Supreme Court had termed JSW Steel's resolution plan as illegal. The apex court said JSW Steel's plan should not have been accepted by the committee of creditors of the debt-ridden company and directed the company's liquidation.

 

At 1118 IST, shares of JSW Steel were down 1.2% at INR 1,134.60 on the National Stock Exchange. Shares of Punjab National Bank were down 2.3% at INR 108.83 and those of State Bank of India were down 0.3% at INR 858.00.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Surya Tripathi

Edited by Tanima Banerjee

 

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