The rehearing of the Bhushan Power and Steel Ltd (BPSL) insolvency case concluded on Monday, with the Supreme Court’s special bench reserving its verdict on challenges to JSW Steel Ltd’s ₹19,700 crore resolution plan.

The bench, comprising Chief Justice B.R. Gavai, Justice K. Vinod Chandran, and Justice Satish Chandra Sharma, heard the matter afresh after recalling the Supreme Court’s 2 May ruling that had quashed the JSW Steel’s plan for alleged violations of the Insolvency and Bankruptcy Code (IBC).

That earlier decision sent shockwaves through the IBC framework, ordering banks to return ₹19,350 crore paid by JSW Steel and placing nearly ₹34,000 crore of total bank exposure at risk.

This upcoming judgment is seen as JSW Steel’s last opportunity to retain BPSL.

Lenders led by Punjab National Bank backing JSW Steel’s plan told the Supreme Court that their support was based on certain conditions, including an understanding that JSW Steel would share part of the business proceeds.

The lenders are seeking over ₹6,155 crore. This includes ₹3,569 crore in earnings before interest, taxes, depreciation, and amortisation recorded during the corporate insolvency resolution process (CIRP) from July 2017 to March 2021, ₹2,509.88 crore in interest for a 538-day delay in payments to financial creditors, and ₹76.62 crore in interest to operational creditors.

They argued that the prolonged implementation of the resolution plan deprived banks of returns that could have substantially reduced their losses.

“Interest and Ebitda—these two things must come. There should be fairness for creditors because we are banks. We deal with public money,” said solicitor general Tushar Mehta, representing the lenders.

What JSW Steel said

JSW Steel argued that the resolution plan did not mandate sharing Ebitda and that such earnings cannot be distributed unless expressly provided in the request for resolution plan, the plan itself, or under law—a position the committee of creditors had previously accepted.

The company said its offer was made on an “as-is, where-is” basis, taking on both risks and rewards, so profits during the CIRP were JSW Steel’s, not the creditors’.

JSW Steel added that granting the claim of over ₹6,000 crore would rewrite settled terms, set a dangerous precedent, and invite future disputes.

Senior advocate Neeraj Kishan Kaul, representing JSW Steel, contended that the company had acquired a loss-making firm and still went ahead with implementing the resolution plan, even though the process was delayed due to attachments by the Enforcement Directorate (ED).

“Even after the resolution professional (RP) started running the company by 2021, it was still a net loss. Loss reduced after the RP took over, but it was still net loss. I am taking over a loss-making company,” Kaul argued on behalf of JSW Steel.

What creditors argued

Former BPSL promoter Sanjay Singal and other dissenting creditors told the court that if JSW Steel’s plan is scrapped, fresh bids should be invited instead of liquidation.

They accused JSW Steel of deviating from commitments by infusing only ₹100 crore in working capital against a promised ₹8,000 crore, paying just ₹540 crore upfront to financial creditors, and delaying payments to operational creditors by over 900 days.

The creditor also alleged misconduct and collusion with the former committee of creditors and resolution professionals.

Petitions against JSW Steel’s resolution plan also came from dissenting financial creditors, including Kalyani Group’s Torsteel, the state of Odisha, and former stakeholders—citing delays in implementing the resolution plan and alleged irregularities.

The background

On 31 July, the Supreme Court recalled its 2 May ruling delivered by Justices Bela M. Trivedi and Satish Chandra Sharma, which had set aside the resolution plan and directed liquidation under Article 142 of the Constitution.

The recall was based on concerns about misapplication of IBC principles, reliance on factual inaccuracies, and consideration of arguments not raised during original hearings.

BPSL’s insolvency process began in July 2017 following petitions by Punjab National Bank and other lenders over unpaid dues exceeding ₹47,000 crore. BPSL was among 12 large defaulters identified by the Reserve Bank of India for resolution under the IBC.

JSW Steel, which offered over ₹19,000 crore, beat Tata Steel to emerge as the successful bidder for BPSL. The plan was approved by BPSL’s committee of creditors in October 2018, by the National Company Law Tribunal in 2019, and by the National Company Law Appellate Tribunal in 2020.

However, multiple challenges, including from dissenting creditors and the former promoter, delayed the implementation of JSW Steel’s resolution plan until March 2021.

Since the acquisition, JSW Steel says it has nearly doubled BPSL’s production capacity from 2.3 million tonnes per annum in 2017 to 4.5 mtpa in 2025.