Supreme Court Approves JSW Steel's Takeover Of Bhushan Power Reverses May Ruling

(MENAFN- Live Mint) In a win for JSW Steel Ltd, the Supreme Court has approved the company's ₹19,700 crore plan to take over bankrupt Bhushan Power and Steel Ltd, marking the end of one of India's longest-running insolvency battles.

The court rejected a challenge from dissenting creditors, saying the decisions of the committee of creditors (CoC) must be respected under the Insolvency and Bankruptcy Code (IBC).

A special bench led by Justice B.R. Gavai, along with Justices Satish Chandra Sharma and K. Vinod Chandran, noted that JSW Steel has made BPSL profitable and upheld earlier approvals by the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT).

Immediately following the Supreme Court's ruling, shares of JSW Steel were up 0.39% at ₹1,153.55 apiece on NSE.

The bench had reserved its order on 11 August after rehearing the case following review pleas filed by JSW Steel and lenders against the Supreme Court's 2 May ruling, which had quashed the resolution plan and ordered liquidation. That decision forced lenders to return ₹19,350 crore already paid by JSW Steel and put nearly ₹34,000 crore of bank debt at risk.

On 31 July, the bench recalled that order, citing potential misapplication of Insolvency and Bankruptcy Code (IBC ) principles, reliance on factual inaccuracies, and consideration of arguments not raised earlier.

Also Read | Mint Explainer: Why the Bhushan Power judgment stunned the insolvency ecosystem The background

Bhushan Power and Steel (BPSL) was among 12 large defaulters flagged by the Reserve Bank of India in 2017 after defaulting on over ₹47,000 crore in loans. JSW Steel emerged as the highest bidder in 2018 with its ₹19,700 crore offer, edging out Tata Steel.

However, dissenting creditors such as former promoter Sanjay Singal, Kalyani Group's Torsteel, the state of Odisha, and other stakeholders challenged the plan in multiple forums, citing irregularities and repeated delays.

The plan was cleared by lenders, approved by NCLT in 2019, and upheld by the NCLAT in 2020.

When dissenting creditors took the matter to the Supreme Court, the 2 May ruling quashed the five-year-old approved plan. JSW finally took charge of BPSL in March 2021. Since then, the company claims it has nearly doubled BPSL's production capacity-from 2.3 million tonnes per annum in 2017 to 4.5 mtpa in 2025.

Also Read | JSW Steel: Compensation from creditors enough to cover for Bhushan Power assets What lenders want

During the rehearing, lenders led by Punjab National Bank said they supported JSW's plan but subject to certain conditions, including sharing part of the business proceeds.

They are seeking over ₹6,155 crore- ₹3,569 crore in earnings before interest, tax, depreciation and amortisation generated during the corporate insolvency resolution process; ₹2,509.88 crore in interest for a 538-day payment delay to financial creditors; and ₹76.62 crore in interest owed to operational creditors. Lenders argued that the prolonged resolution deprived them of returns that could have reduced their losses.

JSW Steel's defence

JSW countered that the resolution plan did not mandate sharing Ebitda and that such earnings cannot be distributed unless explicitly provided for in the plan or under law. Its ₹19,700 crore offer, the company had argued, was made on an“as-is, where-is” basis, with both risks and rewards. Profits during CIRP, therefore, belonged to JSW.

The company said accepting the lenders' claims would amount to rewriting settled terms, set a dangerous precedent, and invite future disputes. JSW argued that it had acquired a loss-making company and turned it around despite delays caused by Enforcement Directorate attachments.

Also Read | House panel to scan IBC functioning after SC's Bhushan order Dissenting voices

Former BPSL promoter Singal and other dissenting creditors had urged the Supreme Court to invite fresh bids if JSW Steel's plan is scrapped, instead of ordering liquidation.

They alleged that JSW had failed to meet its commitments, pointing to only ₹100 crore infused against a promised ₹8,000 crore in working capital, ₹540 crore paid upfront to financial creditors, and delays of over 900 days in payments to operational creditors.

They had also alleged misconduct and collusion with the earlier committee of creditors and resolution professionals. Petitions challenging the plan had also come from dissenting creditors such as Kalyani Group's Torsteel and the Odisha government citing irregularities and repeated delays.

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