The Supreme Court on Monday reserved its verdict in the dispute pertaining to the liquidation of Bhushan Power and Steel Limited (BPSL) and rejection of JSW Steel’s ₹19,700 crore resolution plan [Kalyani Transco v. Bhushan Power & Steel Limited]

The case was heard and reserved by a Bench of Chief Justice of India (CJI) BR Gavai and Justices Satish Chandra Sharma and Vinod Chandran after three hearings. Arguments commenced on August 7 and the case was reserved on August 11.

The Court heard detailed arguments on the Committee of Creditors’ (CoC's) role post-plan approval, the allocation of earnings before interest, tax, depreciation and amortisation (EBITDA), and alleged non-compliance with working capital commitments.

Senior Advocate Neeraj Kishan Kaul, appearing for JSW Steel, argued that the company took over a loss-making entity and had implemented the resolution plan despite delays caused by Enforcement Directorate (ED) attachments. Addressing the Committee of Creditor's (CoC) claim for EBITDA, he said,

“Even after the resolution professional (RP) started running the company by 2021, it was still a net loss. Loss reduced after the RP took over, but it was still net loss. I am taking over a loss-making company."

When CJI Gavai pointed out that the RP had reduced losses by over ₹1,000 crore and asked whether that amounted to unjust enrichment, Kaul responded,

“When I bid, I am ready to take the loss and profit…Because losses are cut down, it’s still not profit.”

Kaul said that the CoC itself had acknowledged that ED’s attachment of assets delayed implementation, and that once an escrow account was created after discussions with 37 lenders, JSW implemented the plan in 2021, three years before the Supreme Court formally restituted the attached assets in 2024.

“I am taking a loss over the company, infusing the funds. The rules of the game are being altered, it will open a floodgate. Today you suddenly decide you want ₹6,000 crore extra,” he argued, contrasting the case with Jet Airways where the CoC had itself sought liquidation.

Kaul also submitted that the erstwhile promoters had no locus to challenge the plan when the CoC was satisfied. “A promoter is after me to say that I have not implemented the plan. I have shown that ED was insistent and stubborn…The only reason I did not implement was my plan was unencumbered as a going concern.”

Senior Advocate Dhruv Mehta, appearing for the erstwhile promoters, countered that once a resolution plan is approved by the Adjudicating Authority, the CoC becomes functus officio and cannot revisit or modify it.

“You can have a monitoring committee for implementation of the plan. Monitoring committee is not the CoC,” he said.

The Chief Justice observed,

“At least prima facie they recover their amount, CoC has to be on the seat.”

Mehta replied that the only remedy for lenders if dues were not recovered was to approach the NCLT. He added that bids are based on profits and losses, not EBITDA, and that the CoC had rightly opposed its absorption by JSW Steel. He also stressed that subsequent profitability could not justify reopening an approved plan under the Insolvency and Bankruptcy Code (IBC).

In the earlier hearings, the CoC claimed that the EBITDA generated from Bhushan power must be paid to it by JSW as it had not taken over the company as planned. The erstwhile promoter of BSPL told the Court that liquidation of the company was not the objective, and that a fresh corporate insolvency resolution process (CIRP) should be initiated if JSW's resolution plan is found to be flawed. The promoters had also argued that the CoC could not have extended the time for implementing the resolution plan as it had become functus officio after the approval of the plan by NCLT.

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

JSW Steel, chosen as the successful resolution applicant in 2019, offered over ₹19,000 crore to creditors. The plan was approved by the NCLT in September 2019 and upheld by the NCLAT. The ED challenged the plan citing alleged money laundering by BPSL’s former promoters.

On July 31, 2025, the Supreme Court recalled its May 2 judgment, noting that it may have misapplied settled IBC principles and relied on inaccurate or unargued points, and decided to rehear the matter.

The CoC was represented by Solicitor General Tushar Mehta with a team from Cyril Amarchand Mangaldas comprising Raunak Dhillon (Partner), Uday Khare (Partner), Aishwarya Gupta (Principal Associate), Isha Malik (Principal Associate) and Anchit Jasuja (Associate).

The resolution professional was represented by Senior Advocate Navin Pahwa with a team from Shardul Amarchand Mangaldas comprising Advocates Misha, Vaijayant Paliwal, Charu Bansal, Nikhil Mathur and Kirti Gupta.

Senior Advocate Gopal Jain represented JSW alongside Kaul. They were briefed by teams from AZB & Partners and Karanjawala & Co. The AZB team comprised Senior Partner Rajendra Barot and Partners Vivek Shetty, Suharsh Sinha along with Advocates Sherna Doongaji and Akilesh Menezes.

The Karanjawala team comprised Nandini Gore (Senior Partner), Tahira Karanjawala (Partner) with Advocates Swati Bhardwaj, Akarsh Sharma, Shreyas Maheshwari, Manvi Rastogi, Sharanya Ghosh and Mahek Karanjawala.