Supreme Court Quashes JSW’s Bhushan Power Resolution Plan, Orders Liquidation
In a landmark judgment that sends shockwaves through India’s corporate insolvency landscape, the Supreme Court has quashed JSW Steel’s resolution plan for Bhushan Power and Steel Ltd (BPSL) and ordered the company’s liquidation. The verdict, delivered on May 2, 2025, exposes massive irregularities in the corporate insolvency resolution process (CIRP) and highlights how the successful resolution applicant (SRA) deliberately delayed implementation while the Committee of Creditors (CoC) and resolution professional failed in their statutory duties.
The case involved one of India’s infamous “dirty dozen” accounts identified by the Reserve Bank of India in 2017 for immediate resolution under the Insolvency and Bankruptcy Code (IBC). BPSL, with total admitted claims of over ₹47,000 crore from financial creditors and ₹621 crore from operational creditors, represented one of the largest and most complex insolvency cases in the country’s history.
The Supreme Court’s scathing judgment pulls no punches in criticizing JSW Steel for “misusing the process of law” and “fraud committed with the CoC and other stakeholders.” The court found that JSW, after securing the highest score in the evaluation matrix, submitted a revised consolidated resolution plan but then willfully contravened and failed to comply with the terms of the approved plan for about two years.
The court made it clear that “nobody should be permitted to misuse the Process of law nor should be permitted to take undue advantage of the pendency of any proceedings in any Court or Tribunal.” The judgment emphasizes that “instituting vexatious and frivolous litigations in the NCLT or NCLAT and delaying the implementation of Resolution Plan under the garb of pendency of proceedings, has clearly proved the mala fide and dishonest intention on the part of JSW.”
The court was particularly critical of JSW’s changing stance, noting that “though all throughout from the date of order passed by the NCLT till March, 2021, the stand of the JSW evidenced through an affidavit was that it was not obliged to implement the plan because of the pendency of these Appeals, however JSW played smart by making part payment to the Financial Creditors in March, 2021, realizing the beneficial market trend of the Steel.”
The judgment reveals shocking details about how JSW managed to delay payments that were supposed to be made within 30 days of NCLT approval. The upfront payments to financial creditors were delayed by 540 days, while payments to operational creditors were delayed by 900 days. The equity commitment of ₹8,550 crores that was supposed to be infused upfront was also not complied with.
The court observed that “the net result is that the upfront payments as agreed to be made in the Resolution Plan within thirty days of the approval of the plan by NCLT was delayed by 540 days in respect of payment to the Financial Creditors and by 900 days in respect of payment to the Operational Creditors.”
The Supreme Court was equally critical of the Resolution Professional, Mr. Mahendra Kumar Khandelwal, for his complete failure to discharge statutory duties. The court found that the Resolution Professional had “utterly failed in discharging his duties under the Code, by not making Application for extension of time under Section 12 and by not certifying as to whether the Resolution Applicant-JSW was an ‘eligible’ person under Section 29A to submit the plan.”
The judgment notes that “the Resolution Professional had also failed to confirm that the Resolution Plan of JSW met with the requirements under Section 30(2) more particularly with regard to non-contravention of any provision of law and with regard to the payment of debts to the Operational Creditors in priority.”
The Committee of Creditors also came under severe criticism for its “changing stance” and “dubious role” in the entire process. The court noted that despite making serious allegations against JSW for misusing the process of law and not implementing the resolution plan in a time-bound manner, the CoC suddenly accepted the payment of ₹19,350 crores after about two years without any objection.
The court observed that “the CoC also had failed to protect the interest of the Creditors by taking contradictory stands before this Court, and accepting the payments from JSW without any demurrer, and supporting JSW to implement its ill-motivated plan against the interest of the creditors.”
One of the most significant findings was regarding the violation of mandatory timelines under the IBC. The court emphasized that “the provision contained in Section 12(1) is mandatory in nature as the expression ‘shall be completed’ is used.” The CIRP against BPSL commenced on July 26, 2017, and should have been completed within a maximum of 270 days, but the resolution professional filed the application for approval of JSW’s plan only on February 14, 2019 – well beyond the statutory timeline.
The court made it clear that “such an Application filed by the Resolution Professional being ex-facie in contravention of Section 12 read with Regulation 39(4) of the Regulations 2016, should not even have been entertained by the NCLT.”
The Supreme Court also addressed the issue of JSW’s appeal before the NCLAT, finding it completely untenable. The court stated that “JSW as such, could not be said to be the ‘person aggrieved’ by the order of NCLT approving the Resolution Plan of JSW itself.” The court further noted that “for filing such an Appeal under Section 61, the grounds specified in sub-section (3) thereof must exist” and none of those grounds were present in JSW’s case.
In its final order, the Supreme Court took the extraordinary step of quashing both the NCLT and NCLAT judgments and rejecting JSW’s resolution plan. The court directed that “the Adjudicating Authority i.e. the NCLT is directed to initiate the Liquidation Proceedings against the Corporate Debtor-BPSL under Chapter III of the IBC and in accordance with law.”
The court also addressed the payments already made by JSW, stating that “the payments made by the JSW to the Financial Creditors and the Operational Creditors, as also the Equity contribution if any infused, under the garb of the implementation of the Resolution Plan, being subject to the outcome of the present set of Appeals, shall be dealt with by the parties as per the statement of Senior Advocate Dr. Abhishek Manu Singhvi appearing for the CoC, recorded in the order dated 06.03.2020.” This referred to the earlier commitment that if the appeal succeeded, the money would be returned within two months.
The judgment serves as a stark reminder that the IBC’s time-bound resolution mechanism cannot be subverted through deliberate delays and procedural manipulations. The court’s strong stance against the creation of a “fait accompli” situation sends a clear message to all stakeholders in the insolvency ecosystem that illegal acts cannot be perpetuated through strategic delays and subsequent implementation.
As the court powerfully stated, “An illegality of any nature cannot be permitted to be perpetuated, and a plea of fait accompli cannot be permitted to be raised by any party to cover up their illegal acts, after achieving the ill motivated intentions circumventing the law.”
This judgment is likely to have far-reaching implications for ongoing and future insolvency resolutions, emphasizing that successful resolution applicants must honor their commitments and that all stakeholders – including resolution professionals and committees of creditors – must strictly adhere to their statutory obligations under the IBC.
Petitioner Name: Kalyani Transco, Sanjay Singal, Jaldhi Overseas Pte. Limited, Medi Carrier Private Limited, CJ Darcl Logistics Limited, Government of Odisha.Respondent Name: M/s. Bhushan Power and Steel Ltd., JSW Steel, Committee of Creditors.Judgment By: Justice Bela M. Trivedi, Justice Satish Chandra Sharma.Place Of Incident: Multiple locations including Odisha.Judgment Date: 02-05-2025.Result: allowed.
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