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Kalyani Transco v. M/S Bhushan Power and Steel Ltd. and Others

Civil Appeal · 2025 INSC 621Decided 2 May 2025
Civil Appeal No. 1808 of 2020 (with connected appeals: C.A. Nos. 2192-2193/2020, 3784/2020, 2225/2020, 3020/2020, 668/2021 and 6390/2021)
Justice Bela M. Trivedi · Justice Satish Chandra Sharma

Background

This was a batch of appeals arising from a common NCLAT (National Company Law Appellate Tribunal) judgment concerning the insolvency resolution of Bhushan Power and Steel Limited (BPSL), one of India's largest corporate insolvency cases. Various stakeholders (including operational creditor Kalyani Transco, BPSL's erstwhile promoters, the Government/State of Odisha, and other operational creditors) separately challenged the NCLAT's approval of the resolution plan submitted by JSW Steel, which had been approved by BPSL's Committee of Creditors (CoC) and cleared by the NCLT and NCLAT.

Decision Breakdown

The Supreme Court quashed and set aside both the NCLT's (2019) and NCLAT's (2020) judgments approving the JSW resolution plan, holding that the plan as approved did not comply with the mandatory requirements of Section 30(2) read with Section 31(2) of the IBC. Exercising its extraordinary power under Article 142 of the Constitution, the Court directed the NCLT (the Adjudicating Authority) to initiate liquidation proceedings against Bhushan Power and Steel Ltd. under the IBC's liquidation chapter, rather than allowing the resolution plan to stand. It left open the question of how payments and equity contributions already made by JSW under the (now-rejected) plan should be treated, to be worked out per an earlier recorded statement of counsel, and expressly declined to rule on a related technical accounting dispute (treatment of EBITDA), keeping that question open for another day. Appeals relating to the State of Odisha's tax and electricity dues claims were disposed of without a decision on their merits, since the resolution plan itself was being rejected.

Lesson Learnt

Approval of a corporate insolvency resolution plan is not a rubber stamp, even after a plan clears the Committee of Creditors and two tribunal levels, the Supreme Court can strike it down for non-compliance with the IBC's mandatory approval requirements and order liquidation instead, showing that procedural compliance in insolvency resolutions is taken seriously all the way up.

Official source (sci.gov.in)View Judgment (PDF)

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