A Battle of Steel and Survival
For years, the saga of Bhushan Power and Steel Ltd (BPSL) has been emblematic of India’s struggle to clean up its corporate debt mess. Once a prominent name in the steel sector, BPSL collapsed under loans exceeding ₹47,000 crore, making it one of the Reserve Bank of India’s “dirty dozen” defaulters flagged for immediate resolution in 2017. The fight to acquire the bankrupt company drew some of the country’s largest steelmakers, with JSW Steel eventually winning the bid. But what should have been a decisive turnaround soon spiraled into a protracted legal battle, delaying the company’s revival and frustrating creditors.
This week, the Supreme Court finally settled the dispute, approving JSW Steel’s ₹19,700 crore resolution plan. The ruling not only marks the end of a contentious case but also restores confidence in India’s insolvency framework.
Supreme Court’s Verdict: Final Word on a Long Battle
A special bench led by Justice B.R. Gavai, along with Justices Satish Chandra Sharma and K. Vinod Chandran, upheld approvals earlier granted by the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT). The court dismissed challenges raised by dissenting creditors, emphasizing that decisions taken by the Committee of Creditors (CoC) carry primacy under the Insolvency and Bankruptcy Code (IBC).
The judgment reversed the court’s own May ruling, which had quashed the resolution plan and ordered liquidation—a move that unsettled investors and put nearly ₹34,000 crore in bank loans at risk. Friday’s order restored stability, confirming that JSW’s takeover had not only revived BPSL but also secured thousands of jobs.
“The corporate debtor, once drowning in losses, is now a profit-making entity,” the bench noted. “JSW Steel has invested substantially in modernization and expansion, ensuring the company continues as a going concern.”
Dissenting Creditors and Their Grievances
Opposition to JSW’s plan came from several quarters. Former promoter Sanjay Singal, the Kalyani Group’s Torsteel, the Odisha government, and other creditors repeatedly challenged the resolution, alleging irregularities and seeking fresh bids.
Banks led by Punjab National Bank also pressed for additional payouts, demanding over ₹6,100 crore in claims. Their argument rested on three components:
· ₹3,569 crore in earnings before interest, tax, depreciation, and amortization (Ebitda) generated during the resolution process.
· ₹2,509 crore as interest for a 538-day delay in payments to financial creditors.
· ₹76 crore in delayed interest owed to operational creditors.
According to lenders, prolonged litigation denied them timely recoveries that could have softened their losses.
Singal and others went further, accusing JSW of infusing only ₹100 crore of the promised ₹8,000 crore working capital, delaying payments to creditors, and colluding with earlier resolution professionals.
JSW Steel’s Defence: Risks and Rewards Are Built In
JSW Steel, however, argued that such claims attempted to rewrite settled terms. Its bid, the company said, was made on an “as-is, where-is” basis, factoring in both risks and opportunities. Profits generated during the resolution process, it contended, belonged to the acquirer unless specifically stated otherwise in the plan.
The company warned that accepting lenders’ demands would set a dangerous precedent—discouraging bidders, complicating future resolutions, and undermining the very intent of the IBC.
JSW also highlighted its investments in turning around BPSL, expanding production capacity from 2.3 million tonnes per annum in 2017 to 4.5 mtpa by 2025. Without its intervention, it argued, BPSL would have faced liquidation, devastated employees and leaving banks with deeper haircuts.
Purpose of IBC Reinforced
In its ruling, the Supreme Court underlined that the essence of the IBC is not merely to recover debts but to revive sick companies and preserve economic value. Allowing fresh claims or re-litigating settled plans, it cautioned, would derail this objective and discourage investors from taking on distressed assets.
The bench also criticized the “obstructive” role of dissenting creditors whose petitions had prolonged the resolution for years. By upholding JSW’s plan, the court sought to send a signal that the insolvency process cannot be endlessly stalled.
Market and Industry Reactions
Shares of JSW Steel ticked up 0.4% following the news, with analysts calling the judgment a positive precedent for India’s stressed asset market. For industry observers, the verdict demonstrates that the IBC, despite delays, can deliver successful resolutions if backed by judicial clarity.
“This is a landmark ruling,” said a senior restructuring expert. “The Supreme Court has reinforced that revival takes precedence over liquidation and that frivolous objections cannot derail a resolution plan once approved by the CoC.”
Closure and a Cautionary Tale
The Supreme Court’s greenlight for JSW Steel’s ₹19,700 crore takeover of Bhushan Power and Steel brings closure to one of India’s most protracted insolvency cases. The judgment affirms the primacy of the CoC, restores confidence in the IBC process, and underscores the importance of giving revived companies a second chance.
Yet, the episode also highlights persistent weaknesses—endless litigations, promoter challenges, and creditor disputes—that slow down recoveries and dilute the IBC’s impact. Going forward, both regulators and courts will need to ensure speed, clarity, and consistency so that India’s insolvency framework can function as intended.
For now, however, JSW Steel’s victory is not just corporate—it is also a reassurance that India’s bankruptcy code, though battered, is still capable of delivering meaningful results.
(With agency inputs)
