High Court overturns decision dissolving Bhushan Power; fresh evaluation of JSW's resolution plan on the agenda
The Supreme Court has recalled its May 2 judgment that rejected JSW Steel's resolution plan for Bhushan Power and Steel Ltd (BPSL) and ordered its liquidation. The decision comes after a review petition challenging the earlier judgment, which contends that the May 2 ruling incorrectly applied the legal framework under the Insolvency and Bankruptcy Code (IBC) and overstepped on the Committee of Creditors' (CoC) commercial wisdom.
The review petition argues that the May 2 ruling failed to correctly consider established legal precedents related to insolvency resolution, mischaracterized JSW's conduct, and improperly questioned the commercial decisions of the CoC. It also challenges certain factual aspects and arguments that were not advanced during the original hearing.
The Supreme Court, led by Chief Justice BR Gavai and Justice Satish Chandra Sharma, recognized that the matter requires fresh consideration with all legal issues to be re-examined in a full hearing fixed on August 7. The Court's stance on the May 2 judgment is that it "does not correctly consider the legal position" and includes errors apparent on the face of the record.
The original judgment, which cancelled JSW Steel’s resolution plan and ordered BPSL's liquidation, was based on allegations of serious IBC violations and delays, as well as misrepresentations by JSW. However, the review petition disputes these allegations or contends they were wrongly factored in.
In September 2019, the National Company Law Tribunal approved JSW Steel's resolution plan for BPSL, offering to pay over ₹19,000 crore to financial creditors. The plan was upheld by the National Company Law Appellate Tribunal. The Enforcement Directorate, however, made a provisional attachment after the plan was approved, leading to prolonged litigation and delay. Section 32A of the IBC provides immunity to the corporate debtor and its assets from prosecution or attachment if a resolution plan of a company under insolvency is approved. This means that the attachment of properties by ED also ceased on the approval of a resolution plan.
The ED returned attached assets valued at ₹4,025 crore to JSW Steel so that the latter could take control of Bhushan Power pursuant to the insolvency resolution process under IBC. JSW Steel has been running BPSL since 2021 and currently employs 25,000 people.
The matter reached the Supreme Court amid growing concerns that JSW Steel had not implemented the plan for the years since approval. Solicitor General Tushar Mehta, representing the CoC, and Senior Advocate Neeraj Kishan Kaul, representing JSW Steel, made detailed submissions. Kaul argued that JSW had infused ₹30,000 crore into BPSL, cleared all dues, and increased turnover.
The review of the judgment will be considered afresh on August 7. The Court's decision could potentially validate JSW Steel’s resolution plan or at least reconsider it thoroughly under the correct legal framework. The potential impact on the 25,000 employees is a key factor in the Court's decision to reconsider the matter.
[1] Livemint.com, "SC to hear JSW Steel's review plea on BPSL next week," May 27, 2025. [2] The Hindu BusinessLine, "Supreme Court to reconsider JSW Steel's BPSL resolution plan," May 28, 2025. [3] Economic Times, "Supreme Court recalls its order rejecting JSW Steel's BPSL resolution plan," May 29, 2025. [4] Bar & Bench, "JSW Steel's review petition in Supreme Court: A closer look," May 30, 2025.
The review petition suggests that the May 2 judgment, which canceled JSW Steel's resolution plan and ordered Bhushan Power and Steel Ltd's liquidation, failed to correctly consider established legal precedents related to insolvency resolution and improperly questioned the commercial decisions of the Committee of Creditors. The potential impact on the 25,000 employees at Bhushan Power and Steel Ltd is a key factor in the Supreme Court's decision to reconsider the matter, which will be done afresh on August 7. This reconsideration could potentially validate JSW Steel’s business and finance decisions regarding Bhushan Power and Steel Ltd.
