Supreme Court Rejects JSW Steel’s Bid for Bhushan Power, Orders Liquidation

In a major blow to one of India’s largest insolvency resolutions, the Supreme Court on Friday rejected JSW Steel’s ₹19,350 crore acquisition bid for Bhushan Power and Steel Ltd (BPSL) and directed that the company be liquidated instead.

The apex court's decision marks one of the largest liquidations in Indian corporate history, and its sharp observations have reignited debates over delays, judicial intervention, and the credibility of India’s Insolvency and Bankruptcy Code (IBC) process.

What Was the Case About?

Bhushan Power and Steel Ltd, once a key player in India’s steel industry, slipped into debt and was admitted to the Corporate Insolvency Resolution Process (CIRP) in 2017 under the IBC. In 2019, JSW Steel — led by Sajjan Jindal — won the bid to acquire the stressed company with an offer of ₹19,350 crore.

However, several delays, litigations, and complications — including allegations of fraud against BPSL’s former promoters and pending ED (Enforcement Directorate) probes — slowed down the implementation of the resolution plan.

What Did the Supreme Court Say?

A bench led by Justice Bela Trivedi and Justice Satish Chandra Sharma strongly criticized the undue delay by JSW Steel and the Committee of Creditors (CoC) in implementing the plan.

Key observations included:

• JSW Steel "sat over the plan" despite it being approved years ago.

• The CoC "failed to exercise commercial wisdom" in continuing support for a bid that was not implemented in time.

• The court expressed concern that vital assets of the company had been eroded due to administrative delays and non-serious execution of the resolution plan.

As a result, the court rejected the implementation of the existing resolution plan and ordered liquidation of BPSL under the provisions of the IBC.

Why Is This Verdict Significant?

1. Unprecedented Liquidation Scale: If implemented, this will be the largest-ever liquidation of a company under IBC, with an enterprise value of over ₹40,000 crore at its peak.

2. Accountability in CIRP: The verdict sets a precedent holding Resolution Applicants and CoCs accountable for delays in executing approved plans.

3. Investor Sentiment: The decision may have chilling effects on future bidders, who might fear judicial reversal or delay despite CoC approval.

Immediate Reactions

• JSW Steel is likely to appeal the judgment, given its prolonged commitment and financial stake in the resolution.

• Lenders to BPSL, including top public sector banks, face a major hit, as liquidation typically yields far lower recoveries than resolution.

• Industry experts warn this could lead to a loss of confidence in the insolvency ecosystem.

“We are studying the judgment carefully and will explore appropriate legal remedies,” a JSW Steel spokesperson said.

What Happens If BPSL Is Liquidated?

• Assets will be sold off piecemeal, likely resulting in significant value erosion.

• Thousands of jobs and existing vendor and customer relationships will be disrupted.

• Banks may recover only a fraction of their outstanding loans, leading to potential increases in NPAs (non-performing assets).

Timeline of the Bhushan Power Case

Industry Experts React

• Legal experts say this case reinforces the need for strict timelines and enforcement mechanisms in CIRP.

• Banking professionals warn of serious consequences for lenders and stress the need for CoC reforms.

• Corporate lawyers say bidders might now insist on stronger protections and faster execution clauses before committing to future resolutions.

Conclusion

The Bhushan Power saga, once seen as a marquee insolvency resolution, has taken a dramatic and disappointing turn. As the country’s highest court orders liquidation after years of stalled resolution, the ruling sends a clear message: delays, indecision, and half-hearted compliance will not be tolerated in India’s insolvency regime.

Now, all eyes are on whether JSW Steel and the banks mount an urgent legal counter to salvage the deal — and the legacy of one of the IBC’s most high-profile cases.