For years, Bhushan Power & Steel was caught in a web of debt, lawsuits, and money-laundering investigations as it tried to navigate India’s insolvency proceedings. On 26 September, the Supreme Court cut through the uncertainty, affirming JSW Steel’s takeover of the bankrupt company and sending a clear message: India’s bankruptcy process works—and works decisively.
The ruling is more than a closure of a prolonged corporate rescue. In a judgment closely watched by lenders and investors, the court reaffirmed the finality of approved insolvency plans, clarified the interplay between the Insolvency and Bankruptcy Code (IBC) and the Prevention of Money Laundering Act (PMLA) once a plan is cleared, and shut the door on late claims over interim profits.
The decision strengthens confidence that India’s bankruptcy process can deliver a clean transfer of distressed assets despite parallel criminal investigations.
Mint takes a closer look at the implications of the Supreme Court judgment.
Why this judgement matters
Bhushan Power & Steel Ltd was one of the 12 large defaulters flagged by the Reserve Bank of India (RBI) for lenders to initiate bankruptcy proceedings. Known as the “dirty dozen" due to outstanding debts exceeding ?5,000 crore each and their potential impact on the banking system, these cases were closely watched.
While the bankruptcy resolution plan was being finalized, the Directorate of Enforcement (ED) registered a case against the company, its directors, and some related parties for alleged money laundering, following a CBI investigation.
In September 2019, the National Company Law Tribunal (NCLT) approved JSW Steel’s ?19,000 crore resolution plan, which was upheld by the appellate tribunal in February 2020, even as ED made provisional asset attachments under the Prevention of Money
Laundering Act. As litigation dragged on, in May 2025, the Supreme Court ordered the liquidation of Bhushan Power & Steel, citing non-compliance with IBC provisions and certain jurisdictional issues, highlighting the need to safeguard the integrity of the debt resolution process.
Finally, on 26 September, the apex court upheld NCLAT’s February 2020 decision endorsing JSW’s acquisition. The case underscores how asset attachment for money-laundering offences, prolonged litigation, and ambiguity in resolution plans can stall the rescue of bankrupt businesses.
According to Sandeep Sehgal, Partner–Tax at AKM Global, the Supreme Court’s decision is a landmark affirmation of the IBC’s purpose—ensuring stressed companies continue as going concerns rather than being liquidated.
“This ruling sends a strong signal to investors and resolution applicants that efforts to revive and modernize stressed assets will be supported by the legal framework, boosting confidence in India’s insolvency resolution process and promoting sustainable economic growth. It also sets a robust precedent: reopening settled and successful resolution plans is unlikely to succeed, and attempts that undermine the objectives of IBC are unlikely to be entertained by courts," said Sehgal.
The biggest takeaway
A government official noted that the Supreme Court never questioned the IBC itself; the case focused on the debt resolution process and claims between parties. Ultimately, the apex court upheld the resolution plan cleared under IBC, sending a clear signal to lenders and investors about the certainty of bankruptcy resolutions under the law.
The Supreme Court’s judgment upholding JSW Steel’s resolution plan for Bhushan Power and Steel reinforces the underlying principles behind the enactment of IBC, that is, ensuring the corporate debtor continues as a going concern which is important for the stability of the other stakeholders and the economy as a whole, said Shruti Kanodia, managing partner at law firm Sagus Legal.
“This judgement should bolster investor confidence and speed up insolvency proceedings as the Supreme Court has given a clear message that delayed objections and attempts to derail the resolution will not be entertained. At the same time, the successful resolution applicants are incentivised to implement the approved resolution plans as soon as possible," said Kanodia.
Other insights from the ruling
The apex court rejected claims that operational profits earned by a distressed company during bankruptcy proceedings should be distributed among creditors or promoters, rather than being handed over to the acquirer under the resolution plan. Creditors had argued that such profits—earnings before interest, tax, depreciation, and amortization (Ebitda)—reflected value created from pre-bankruptcy assets and creditor funding.
The court noted that late-stage claims of this kind, after approval of a resolution plan and in the absence of explicit provisions in the plan itself, would frustrate the very purpose of the IBC, which is to ensure the timely rescue of distressed companies. Finality of the resolution plan is paramount, the court emphasized.
At the same time, the apex court clarified that the committee of creditors (CoC), which makes crucial decisions about the company’s future, remains in place until the corporate turnaround plan is implemented or the company is liquidated. This affirms the ongoing responsibility of the creditors’ panel beyond the approval of the resolution plan, until the plan is fully executed.
Overlap between PMLA and IBC
The apex court upheld NCLAT’s endorsement of Bhushan Power & Steel’s resolution plan, citing IBC provisions that provide a clean slate to the new investor acquiring a distressed company.
The court clarified that once a resolution plan is approved, the company’s assets are protected from any liability arising from offences committed before the bankruptcy proceedings began, subject to IBC conditions. In other words, after tribunal approval, the company’s assets cannot be attached under the PMLA, although individuals accused of irregularities or money laundering will continue to face investigations and prosecution.
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