Just over three months after nearly losing control of its ₹19,700 crore acquisition of Bhushan Power and Steel Ltd (BPSL), JSW Steel has staged a dramatic comeback. In a landmark ruling on 26 September, the Supreme Court restored JSW’s rights, upheld its five-year-old resolution plan, and reversed its own May 2 verdict that had directed liquidation. This reversal not only secures one of JSW’s most prized assets but also restores confidence in India’s Insolvency and Bankruptcy Code (IBC), which was shaken by the earlier judgment.
How the Case Unfolded
On 2 May, a bench of Justices Satish Chandra and Bela Trivedi had quashed JSW Steel’s resolution plan. Dissenting creditors—including Kalyani Torson, the state of Odisha, and former promoter Sanjay Singhal—successfully argued that procedural lapses such as delayed payments, questionable CoC (committee of creditors) eligibility, and suppression of facts violated the IBC’s time-bound framework.
Following Justice Trivedi’s retirement in June, JSW filed for review. A new three-judge bench led by Chief Justice B.R. Gavai re-heard the matter in late July. After marathon hearings, the court reinstated JSW’s plan on 26 September, emphasizing that judicial interference in CoC’s commercial wisdom would erode the foundation of the IBC.
The Time-Bound Question
The dispute largely centered around whether JSW’s delays in payments fatally undermined the IBC’s strict timelines.
- May ruling: Found JSW guilty of breaching deadlines—payments to financial creditors came after 540 days and to operational creditors after nearly 900 days, against the promised 30 days.
- September ruling: Acknowledged the delays but held they were caused by external factors, including steel price volatility and Enforcement Directorate orders. The court stressed that intent and bona fides should outweigh rigid adherence to timelines.
Commercial Wisdom of Creditors
The treatment of the CoC marked another turning point.
- May ruling: Called creditor extensions illegal collusion.
- September ruling: Reaffirmed the sanctity of CoC decisions, holding that courts must not second-guess commercial judgment unless malice is proven. The CoC had acted in good faith, approving extensions after careful deliberation.
Role of Dissenting Creditors
The earlier judgment had sided with dissenters, highlighting statutory breaches. The September bench, however, cautioned that endless litigation by minority creditors could derail resolutions. It found that objections from former promoter Singhal and others themselves delayed closure and risked destroying value.
The Fight Over ₹6,155 Crore Ebitda
A key flashpoint was the ₹6,155 crore Ebitda generated by BPSL during its insolvency.
- Dissenting creditors’ stance: Claimed it should be distributed among lenders.
- September ruling: Declared the sum belongs to JSW Steel, since reopening settled terms would undermine finality. The bench credited JSW with reviving BPSL, restoring profitability, and protecting thousands of jobs.
What This Means for JSW Steel
The verdict is a major reprieve for JSW:
- BPSL, acquired in 2021, has become central to JSW’s consolidated performance, with recent quarters showing both profits and losses but clear operational integration.
- Analysts warned liquidation could shave off 8–10% of JSW’s FY26 Ebitda and revenue while forcing a clawback of ₹19,350 crore already paid.
- With ownership secure, JSW can now expand BPSL’s 5 mtpa capacity, integrate its assets across eastern India, and scale future projects with renewed investor confidence.
Implications for India’s Insolvency Framework
Had the May verdict stood, BPSL’s liquidation would have been India’s largest by debt size, threatening systemic confidence. The September ruling is therefore a reaffirmation of the IBC’s credibility.
Raheel Patel of Gandhi Law Associates summarized the impact: insolvency is designed to resolve stress, not prolong litigation. The judgment sharpens the line between insolvency law and regulatory interventions, ensuring that once a plan is approved, it must be respected barring rare exceptions.
Conclusion
The Supreme Court’s September 26 judgment marks a turning point not just for JSW Steel but also for India’s entire insolvency ecosystem. By restoring the sanctity of CoC’s commercial wisdom and underscoring the finality of resolution plans, the court has stabilized confidence in the IBC framework. For JSW, the ruling brings certainty to one of its most ambitious acquisitions and strengthens its hand in future expansions. For India, it safeguards the credibility of a system designed to resolve corporate stress and protect economic value.
Feel free to share your experiences and insights in the comments below. Let’s continue the conversation and grow together as a community of traders and analysts.
By sharing this experience and insights, I hope to contribute to the collective knowledge of our professional community, encouraging a culture of strategic thinking and informed decision-making.
As always, thorough research and risk management are crucial. The dynamic nature of financial markets demands vigilance, agility, and a deep understanding of the tools at your disposal. Here’s to profitable trading and navigating the election season with confidence!
Ready to stay ahead of market trends and make informed investment decisions? Follow our page for more insights and updates on the latest in the financial world!
For a free online stock market training by Yogeshwar Vashishtha (M.Tech IIT) this Saturday from 11 am – 1 pm, please sign up with https://pathfinderstrainings.in/training/freetrainings.aspx
Experience profits with my winning algo strategies – get a free one-month trial with ₹15 lakh capital! – https://terminal.algofinders.com/algo-terminal
Disclaimer
This article should not be interpreted as investment advice. For any investment decisions, consult a reputable financial advisor. The author and publisher are not responsible for any losses incurred by investors or traders based on the information provided.