This Supreme Court judgment reinforces the finality and binding nature of an approved resolution plan under the IBC. It held that claims not part of the Request for Resolution Plan (RfRP) or the final plan are extinguished, preventing “hydra-headed” post-approval claims. The commercial wisdom of the Committee of Creditors (CoC) in approving the plan is paramount and not open to judicial review on merits.
Facts Of The Case:
The case originated from the Corporate Insolvency Resolution Process (CIRP) of Bhushan Power and Steel Limited (BPSL), initiated in 2017. JSW Steel Limited was selected as the Successful Resolution Applicant (SRA), and its resolution plan was approved by the Committee of Creditors (CoC) and later by the National Company Law Tribunal (NCLT) in September 2019. However, the plan’s implementation faced significant delays due to multiple legal challenges. Erstwhile promoters of BPSL and several Operational Creditors appealed against the NCLT’s approval order. Concurrently, the Enforcement Directorate (ED) attached BPSL’s assets under the Prevention of Money Laundering Act (PMLA), and JSW itself appealed certain conditions imposed by the NCLT. The National Company Law Appellate Tribunal (NCLAT) modified the NCLT’s order in February 2020. The Supreme Court initially, in May 2025, rejected the JSW plan and ordered liquidation, but this judgment was recalled in July 2025 after a review. The present batch of appeals, involving the erstwhile promoters, JSW, the CoC, and Operational Creditors, was then heard on merits, culminating in this final judgment.
Procedural History:
The corporate insolvency of Bhushan Power and Steel Limited (BPSL) was initiated by the National Company Law Tribunal (NCLT) in July 2017. The NCLT approved the resolution plan of JSW Steel Limited in September 2019. This order was challenged by various parties, including the erstwhile promoters and operational creditors, before the National Company Law Appellate Tribunal (NCLAT). The NCLAT, in February 2020, modified the NCLT’s order. Subsequently, a batch of appeals was filed before the Supreme Court. In a surprising turn, the Supreme Court initially quashed the resolution plan and ordered liquidation in May 2025. However, upon review petitions, this judgment was recalled in July 2025. The Supreme Court then reheard the appeals on merits and delivered the present judgment in September 2025, upholding the NCLAT’s 2020 order and finally approving JSW’s resolution plan.
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Court Observation:
The Supreme Court made several critical observations, firmly upholding the core principles of the Insolvency and Bankruptcy Code (IBC). It ruled that the Committee of Creditors (CoC) does not become functus officio upon the NCLT’s approval of a resolution plan and continues to exist to oversee its implementation until the plan is fully executed or liquidation is ordered. The Court heavily emphasized the sanctity and finality of an approved resolution plan, stating that any claims not part of the Request for Resolution Plan (RfRP) or the final plan are extinguished, preventing “hydra-headed” claims from emerging later. It reiterated that the commercial wisdom of the CoC is paramount and not subject to judicial review, thereby protecting the CoC’s decision to classify certain operational creditors as contingent. Furthermore, the Court held that erstwhile promoters, while having limited locus standi as guarantors, cannot be permitted to derail the resolution process through frivolous litigation, especially given their conduct of causing deliberate delays.
Final Decision & Judgement:
The Supreme Court, in its final judgment, dismissed all appeals and upheld the validity of JSW Steel’s resolution plan for Bhushan Power and Steel Limited. The Court affirmed the National Company Law Appellate Tribunal’s (NCLAT) 2020 order, thereby providing finality to the corporate insolvency resolution process. It rejected all challenges raised by the erstwhile promoters and operational creditors, including those related to the delay in implementation, the classification of creditors, and the distribution of EBITDA generated during the insolvency period. The ruling solidifies JSW Steel’s acquisition and the successful revival of the corporate debtor, emphasizing that the approved resolution plan is binding and cannot be unsettled by claims not contemplated within it.
Case Details:
Case Title: Kalyani Transco Versus M/s Bhushan Power and Steel Limited and Others Citation: 2025 INSC 1165 Civil Appeal No.: Civil Appeal No. 1808 of 2020 Date of Judgement: September 26, 2025. Judges/Justice Name: Justice B.R. Gavai, Justice Satish Chandra Sharma, and Justice K. Vinod Chandran.
Download The Judgement Here