The Supreme Court of India recently upheld JSW Steel Ltd’s acquisition of Bhushan Power and Steel Ltd (BPSL) through the Corporate Insolvency Resolution Process (CIRP). This decision reversed an earlier order directing BPSL’s liquidation. The ruling reinforces the integrity of the Insolvency and Bankruptcy Code (IBC) and its objective to revive distressed companies as going concerns.
Background of the Case
Bhushan Power and Steel, once a loss-making company, entered insolvency proceedings. JSW Steel emerged as the successful resolution applicant by bidding over Rs 19,000 crore. The National Company Law Appellate Tribunal (NCLAT) approved this resolution plan in February 2020. However, a later Supreme Court bench in May 2025 set aside the NCLAT order and ordered liquidation of BPSL. This created uncertainty over the fate of the company and the IBC process.
Supreme Court Review and Judgment
Upon review, the Supreme Court bench led by Chief Justice B R Gavai reinstated the NCLAT’s approval of JSW’s resolution plan. The court noted that JSW had invested in modernising and expanding BPSL. The company was transformed from loss-making to profit-making. Thousands of employees retained their jobs due to the continuation of business operations.
Significance of Upholding the Resolution Plan
The court emphasised the fundamental purpose of the IBC – to ensure revival of corporate debtors as going concerns. It rejected arguments against the resolution plan, stating that penalising JSW for converting losses into profits would defeat the IBC’s intent. Allowing belated challenges to approved plans would undermine the finality and sanctity of the insolvency process.
Impact on Insolvency and Bankruptcy Code (IBC) Framework
This verdict strengthens confidence in the IBC framework. It marks the importance of respecting the resolution plan approved by the Committee of Creditors (CoC) and the National Company Law Tribunal (NCLT). The decision discourages frivolous or delayed challenges that could stall revival efforts and harm creditors, employees, and the economy.
Role of Judiciary in Corporate Insolvency
The Supreme Court’s intervention demonstrates judicial balance between legal scrutiny and commercial realities. It ensures that insolvency laws serve their purpose without being misused to delay or derail restructuring. The court’s suo motu powers under Article 142 were exercised judiciously to maintain systemic stability.
Economic and Social Implications
Reviving BPSL has safeguarded thousands of jobs and contributed to industrial growth. It sets a precedent for handling large insolvency cases efficiently. The ruling encourages investment in distressed assets and supports India’s broader economic reforms aimed at ease of doing business and financial discipline.
Questions for UPSC:
- Critically analyse the role of the Insolvency and Bankruptcy Code in promoting corporate revival and protecting stakeholder interests in India.
- Explain the significance of judicial intervention in insolvency cases and its impact on the balance between legal oversight and commercial pragmatism.
- With suitable examples, comment on how insolvency resolution processes affect employment and economic stability in India.
- What are the challenges of maintaining finality in resolution plans under the Insolvency and Bankruptcy Code? How can these challenges be mitigated?
