CourtKutchehry

Supreme Court Clears JSW Steel’s ₹20,000 Crore Takeover of Bhushan Power & Steel, Reverses Earlier Liquidation Order

CJI B.R. Gavai-led bench says Insolvency Code’s purpose achieved as loss-making firm turned profitable under JSW

Court stresses on finality of resolution plans, warns against undermining creditors’ commercial wisdom

By Our Legal Correspondent

New Delhi: September 27, 2025: In a landmark judgment, the Supreme Court of India has allowed JSW Steel Ltd to complete its ₹20,000 crore acquisition of Bhushan Power and Steel Ltd (BPSL), reversing its own earlier order that had directed liquidation of the bankrupt company.

The ruling, delivered by a bench led by Chief Justice of India B.R. Gavai along with Justices Satish Chandra Sharma and K. Vinod Chandran, restores the National Company Law Appellate Tribunal (NCLAT)’s 2020 approval of JSW’s resolution plan.

This decision is being seen as a major boost for India’s Insolvency and Bankruptcy Code (IBC) framework, reaffirming the principle that courts should not interfere with the commercial wisdom of creditors.

Background of the Case

Bhushan Power and Steel Ltd (BPSL) was one of India’s largest steel producers but fell into deep financial trouble, accumulating debts of over ₹47,000 crore.
In 2017, the company was admitted into insolvency proceedings under the IBC.
After a competitive bidding process, JSW Steel, led by industrialist Sajjan Jindal, emerged as the successful resolution applicant with a bid of around ₹19,700 crore.
The Committee of Creditors (CoC) approved the plan, and both the National Company Law Tribunal (NCLT) and NCLAT upheld it in 2020.

However, in May 2025, a two-judge bench of the Supreme Court set aside the NCLAT order, citing concerns that the resolution plan was not fully compliant with the IBC. The Court directed liquidation of BPSL, a move that shocked the corporate and legal community.

Supreme Court’s Reversal

On September 26, 2025, the Supreme Court reversed its earlier order after reviewing petitions filed by JSW Steel and the CoC.

Key observations from the judgment:

On IBC’s purpose: The Court said the Insolvency Code was enacted to ensure that distressed companies continue as going concerns rather than being liquidated.
On JSW’s role: The bench noted that JSW had already invested heavily in modernisation and expansion, turning BPSL from a loss-making entity into a profitable one.
On fairness: The Court asked rhetorically, “If, after implementing the resolution plan, JSW has converted a loss-making entity into one making profits, can it be penalised for that?”
On commercial wisdom: The Court reiterated that the CoC’s decisions are non-justiciable and cannot be second-guessed by courts, except in cases of fraud or illegality.

Why the Court Changed Its Mind

The reversal highlights the Court’s recognition of the practical consequences of its earlier liquidation order:

Thousands of employees would have lost jobs.
Creditors would have faced steep losses compared to recoveries under the resolution plan.
A profitable company would have been dismantled, defeating the very purpose of the IBC.

CJI Gavai observed that “the clock cannot be put back” once a resolution plan has been implemented and the company revived.

Impact on JSW Steel

For JSW Steel, the ruling is a huge relief. The acquisition of BPSL significantly strengthens its presence in eastern India and boosts its overall production capacity.

JSW had already taken operational control of BPSL in 2021, investing in technology upgrades and expansion.
The company’s stock initially rose after the verdict, reflecting investor confidence, though some profit booking later trimmed gains.
Analysts believe the acquisition will help JSW compete more aggressively with rivals like Tata Steel and ArcelorMittal in the Indian and global markets.

Broader Implications for IBC

The judgment is being hailed as a watershed moment for India’s insolvency regime.

Certainty for investors: Resolution applicants will now have greater confidence that once their plans are approved by creditors and tribunals, they will not be overturned arbitrarily.
Strengthening CoC authority: The ruling reinforces the principle that the commercial wisdom of creditors is paramount.
Judicial restraint: The Court has signalled that it will not interfere in economic decisions unless there is clear evidence of fraud or violation of law.
Encouragement for bidders: Potential investors in distressed assets will be more willing to participate, knowing that their investments will not be undone years later.

Reactions from Legal and Business Circles

Legal experts welcomed the ruling, saying it restores faith in the IBC process and prevents uncertainty in corporate resolutions.
Industry leaders noted that the decision will encourage more global and domestic players to invest in India’s stressed assets market.
Employee unions expressed relief that jobs at BPSL are secure, and the company will continue operations under JSW.

The Road Ahead

While the Supreme Court’s ruling provides clarity in this case, it also raises important questions for the future:

Should there be stricter timelines for courts to decide insolvency appeals to avoid prolonged uncertainty?
How can the IBC framework be further strengthened to balance creditor rights with the need for revival of companies?
Will this judgment set a precedent for other high-profile insolvency cases currently pending before courts?

For now, the ruling is seen as a victory for economic pragmatism and a reaffirmation of India’s commitment to a modern insolvency regime.

Conclusion

The Supreme Court’s decision to clear JSW Steel’s takeover of Bhushan Power and Steel marks a turning point in India’s corporate insolvency landscape. By prioritising the revival of distressed companies, protecting jobs, and respecting the commercial wisdom of creditors, the Court has reinforced the core objectives of the IBC.

For JSW Steel, it is a strategic win that cements its position as one of India’s leading steelmakers. For India’s legal and business ecosystem, it is a reminder that certainty, stability, and fairness are essential for economic growth.

SC Approves JSW Steel’s ₹20,000 Cr Bhushan Power Takeover