Supreme Court on IBC: Bhushan Power & Steel Resolution Plan by JSW Rejected, Liquidation Ordered — Delay, Contraventions, and EBITDA Dispute Examined
Case Name: Kalyani Transco v. M/s Bhushan Power and Steel Limited & Ors. (with connected appeals)
Date of Judgment: September 26, 2025
Citation: 2025 INSC 1165, Civil Appeal No. 1808 of 2020 & batch
Bench: Hon’ble Chief Justice B.R. Gavai and Hon’ble Mr. Justice J.K. Maheshwari
Held: The Supreme Court quashed the NCLT (05.09.2019) and NCLAT (17.02.2020) orders approving the JSW Steel resolution plan for Bhushan Power and Steel Limited (BPSL). It ruled that the plan violated Section 30(2) and 31(2) of the Insolvency and Bankruptcy Code, 2016, was marred by delays, non-compliance, and questionable clauses. The Court rejected the resolution plan, directed NCLT to initiate liquidation of BPSL under Section 33 of the IBC, and kept the legal question regarding distribution of EBITDA open for future consideration.
Summary: Bhushan Power and Steel Limited (BPSL), one of RBI’s “dirty dozen” large defaulters, faced CIRP after PNB’s Section 7 petition in 2017. The CoC approved JSW Steel’s resolution plan in 2018, but its implementation was delayed due to ED’s provisional attachment order under PMLA, disputes over equity infusion, and claims of operational creditors like Medi Carrier, Darcl Logistics, and Jaldhi Overseas. The erstwhile promoters argued JSW opportunistically delayed implementation to benefit from steel price fluctuations and failed to infuse committed working capital. They also challenged treatment of EBITDA earned during CIRP, classification of contingent claims, and priority of payments. The Court examined locus of promoters, existence of CoC post-approval, and compliance of the plan. It found the resolution plan vague, delayed, and contrary to statutory timelines, holding that CIRP must be strictly time-bound to achieve IBC objectives.
Decision: The Supreme Court set aside the approval of JSW’s resolution plan, ordered liquidation of BPSL, and directed NCLT to proceed under Chapter III of the IBC. Payments already made by JSW to creditors were directed to be adjusted as per earlier undertakings. Issues relating to EBITDA distribution were left undecided. The batch of civil appeals was accordingly allowed.