Case Analysis - Kalyani Transco V. Bhushan Power And Steel Ltd & Ors., 2025 SCC Online SC 1010

Author: LawSphereX

Category: Technology, Cyber & Privacy

Published: 2026-08-23T18:40:30.301Z

Updated: 2026-08-30T07:12:12.095Z

CASE

ANALYSIS

KALYANI TRANSCO V. BHUSHAN POWER AND STEEL LTD & ORS., 2025 SCC ONLINE SC Gurkaran Singh, Symbiosis Law School Pune Tejaswini Nair, Symbiosis Law School Pune

ABSTRACT

The Supreme Court’s judgment in Kalyani Transco v. Bhushan Power and Steel Ltd. & Ors. , 2025 SCC OnLine SC 1010, serves as a landmark recalibration of India’s insolvency framework under the Insolvency and Bankruptcy Code, 2016 (1BC). By overturning the resolution plan approved for Jindal South West Steel {JSW Steel) and ordering liquidation, the Court exposed deep procedural lapses, regulatory failures, and misuse of the insolvency process. This case analysis explores how the verdict reasserts judicial oversight, affirms the binding nature of statutory timelines and eligibility conditions, and redefines stakeholder accountability, particularly of Resolution Professionals (RP), Committees of Creditors (COC), and Successful Resolution Applicants (SRAs).

The paper critically examines the roles, failures, and legal contentions presented in the case, contextualises the Court’s reasoning within prior precedents, and highlights its implications for post-approval regulation. Ultimately, it argues that the decision reinforces a maturing insolvency regime where legal integrity must prevail over commercial expediency.

INTRODUCTION – REWRITING THE RULES OF RESOLUTION

In Kalyani Transco v. Bhushan Power and Steel Ltd & Ors. 1, the Supreme Court of India delivered a watershed ruling that overturned the approved resolution plan submitted by JSW Steel and directed the liquidation of Bhushan Power and Steel Limited (BPSL) under the Insolvency and Bankruptcy Code, 2016 (IBC)2. By rejecting approvals granted by both the National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT), the Court laid bare a troubling pattern of procedural violations, regulatory negligence, and strategic misuse of the insolvency framework. This case does more than nullify a high-stakes corporate acquisition, it reasserts the foundational principle that compliance with statutory safeguards is indispensable, regardless of commercial magnitude.

This article examines the legal and procedural issues the Court scrutinized, the roles and failures of key stakeholders, the precedents that shaped the verdict, and the broader implications for the evolution of India’s insolvency regime.

BACKGROUND – FROM RBI’S DIRTY DOZEN TO JUDICIAL REVIEW

The motivation for this case is triggered by the Reserve Bank of India’s direction of 20173 under the revised Banking Regulation Act4 to take in insolvency proceedings against twelve high profile defaulters collectively known as the “Dirty Dozen”. BPSL which is burdened with over ₹47,000 crore of debt faced alongside eleven other defaulters. In the umbrella of Corporate Insolvency Resolution Process (CIRP), the CoC approved several revised resolution plans identifying JSW Steel as the first choice to undertake the application. NCLT approved JSW’s plan in September 2019, subject to conditions, followed by modified affirmation by the NCLAT in February 2020. Meanwhile, the Directorate of Enforcement provisionally attached BPSL’s assets under the Prevention of Money Laundering Act (PMLA)5, sparking parallel legal battles.

JSW challenged the attachment, and the CoC also moved the Supreme Court. During this period, JSW delayed implementation, citing pending appeals, despite the absence of a stay. Ex-promoters, operational creditors, and state authorities—some having accepted partial payments—approached the Supreme Court, alleging procedural violations, legal ineligibility

1 Kalyani Transco v. Bhushan Power and Steel Ltd & Ors, 2025 SCC OnLine SC 1010

2 Insolvency and Bankruptcy Code, No. 31 of 2016, India Code (2016).

3 Reserve Bank of India, Circular No. DBR.No.BP.BC.101/21.04.048/2016-17, Resolution of Stressed Assets – Revised Framework (June 13, 2017).

4 Banking Regulation Act, No. 10 of 1949, India Code (1949).

5 Prevention of Money Laundering Act, No. 15 of 2003, India Code (2003).

of the applicant, improper adjudication, and encroachment into public law domains by NCLT and NCLAT.

LEGAL ISSUES AND SUPREME COURT’S

ANALYSIS

The Supreme Court in the judgement untangled a web of procedural irregularities, jurisdictional overreach, and statutory violations, each of which reshapes how insolvency resolution is interpreted and enforced under the IBC. Expanding Access to Justice – Who Can Be an Aggrieved Person? A preliminary issue was whether ex-promoters, operational creditors, and state authorities had locus standi under Section 62 of the IBC6 to file appeals. JSW and the CoC claimed they were not “persons aggrieved. ” The Court, rejecting this exclusionary view, relied on Glas Trust Company LLC v. Byju Raveendran (2024)7 to reaffirm the IBC’s collective, in rem nature. It held that any stakeholder adversely affected by an NCLAT decision—financial or otherwise— could challenge it.

This interpretation is significant as it reinforces participatory rights under the IBC, ensuring that the resolution process remains inclusive, not confined to a narrow creditor-applicant axis. Misuse of Process – When the SRA Becomes the Appellant JSW’s appeal against the very resolution plan it had proposed—and which was approved by NCLT—was deemed an abuse of appellate jurisdiction. The Court held that none of the limited grounds available under Section 61(3) IBC8 were invoked or satisfied. Citing K. Sashidhar v. Indian Overseas Bank (2019)9, the Court warned that permitting SRAs to reopen approved plans would erode finality and destabilize the resolution framework. JSW’s appeal was viewed not as a bona fide legal recourse, but as a delay tactic to avoid immediate financial commitments, further undermining confidence in the CIRP.

Procedural Lapses and Regulatory Non-Compliance – RP, Timelines, and Creditor Rights

6 Insolvency and Bankruptcy Code, No. 31 of 2016, § 62, India Code (2016).

7 Glas Trust Co. LLC v. Byju Raveendran, 2024 SCC OnLine SC 3032.

8 Insolvency and Bankruptcy Code, No. 31 of 2016, § 61(3), India Code (2016).

9 K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150.

The Court identified serious violations of Section 12 IBC10: the CIRP exceeded the 270-day timeline without valid extension. Referring to ArcelorMittal India Pvt. Ltd. v. Satish Kumar Gupta (2019)11 and Essar Steel (2020)12, the Court held that timelines are not aspirational— they are binding. The RP also failed to discharge his duties under Sections 29A13and 30(1)14 IBC, and CIRP Regulation 3915. Not only was JSW’s eligibility not verified, but no affidavit or compliance certificate (Form H) was submitted. Citing Swiss Ribbons v. Union of India (2019)16, the Court emphasized that the RP must be a vigilant invigilator, not a passive facilitator. Compounding this, the plan did not prioritize operational creditors as required under Section 30(2) IBC17 and CIRP Regulation 3818. The Court relied on State Tax Officer v. Rainbow Papers Ltd.

(2023)19 to affirm that statutory dues, especially those secured by law, cannot be diluted merely by CoC’s commercial judgment. Jurisdictional Overreach and Plan Manipulation – Limits and Integrity of Process The NCLAT’s decision to stay the Enforcement Directorate’s PMLA attachment was quashed. Citing Embassy Property Developments v. State of Karnataka (2020)20, the Court reiterated that insolvency tribunals cannot exercise judicial review over matters arising under public law statutes like the PMLA. NCLT and NCLAT derive their authority from the Companies Act21 and the IBC, not from constitutional or administrative law. Further, during the appeal pendency, JSW unilaterally altered the capital infusion mechanism—replacing equity with compulsorily convertible debentures (CCDs). Relying on Ebix Singapore Pvt. Ltd. v.

CoC of Educomp (2022)22, the Court held such post-approval modifications to be impermissible. This deviation, it concluded, was not only unauthorized but aimed at reshaping the deal terms to JSW’s financial advantage, thereby violating the sanctity of the approved resolution plan.

10 Insolvency and Bankruptcy Code, No. 31 of 2016, § 12, India Code (2016).

11 ArcelorMittal India (P) Ltd. v. Satish Kumar Gupta, (2019) 2 SCC 1.

12 Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta, (2020) 8 SCC 531.

13 Insolvency and Bankruptcy Code, No. 31 of 2016, § 29A, India Code (2016).

14 Insolvency and Bankruptcy Code, No. 31 of 2016, § 30(1), India Code (2016).

15 Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, reg. 39.

16 Swiss Ribbons (P) Ltd. v. Union of India, (2019) 4 SCC 17.

17 Insolvency and Bankruptcy Code, No. 31 of 2016, § 30(2), India Code (2016).

18 Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, reg. 38.

19 State Tax Officer v. Rainbow Papers Ltd., (2023) 9 SCC 545.

20 Embassy Property Developments (P) Ltd. v. State of Karnataka, (2020) 13 SCC 308.

21 Companies Act, No. 18 of 2013, India Code (2013).

22 Ebix Singapore (P) Ltd. v. Committee of Creditors of Educomp Solutions Ltd., (2022) 2 SCC 401

ACCOUNTABILITY ACROSS THE ECOSYSTEM The Kalyani Transco23 decision by the Supreme Court emphasized the dire failure on part of the main players in Corporate Insolvency Resolution Process (CIRP) to commit to the institutions. Instead of maintaining the system as it was meant to be, the Resolution Professional (RP), Committee of Creditors (CoC), and the Successful Resolution Applicant (SRA) committed joint misconduct by undermining the statutory arrangement by failure to exercise responsibility, coupled with joint and manipulative actions. Resolution Professional (RP) & Committee of Creditors (CoC): Dereliction of Duty The RP performed poorly in all statutory duties he was mandated to fulfil.

He failed to seek an extension after the 270-day deadline expired under section 12 IBC24; also, he did not confirm JSW’s compliance to section 29A IBC25 or provide the required Form H under regulation CIRP 39(4)26. He also failed however to initiate avoidance transaction proceedings which later became unavoidable with BPSL’s listing in the “Dirty Dozen” of the RBI. This is indicative of lack of active involvement, disengagement from his core functions as administrator and enforcer of Section 2527 and 3028 of the IBC. At the same time, the CoC, exercising commercial judgment, did not come up to the mark for carrying out fiduciary and statutory responsibilities. It approved a plan riddled with legal loopholes, ignored the regulation of making creditors priority operationally, and changed positions on JSW without explanation.

The Court characterized this reversal as “dubious,” implying that the CoC’s conduct may have been influenced by extraneous considerations, thus eroding the principle of transparency in creditor decision-making. Successful Resolution Applicant (JSW Steel): Strategic Misuse of Process JSW’s strategy was not an oversight, but was well intended. JSW as objected against the plan that it had effectively submitted and this appeal was indeed illegal under Section 6129. For over

23 supra note 1.

24 supra note 10.

25 supra note 13.

26 Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, reg. 39(4).

27 Insolvency and Bankruptcy Code, No. 31 of 2016, § 25, India Code (2016).

28 Insolvency and Bankruptcy Code, No. 31 of 2016, § 30, India Code (2016).

29 Insolvency and Bankruptcy Code, No. 31 of 2016, § 61, India Code (2016).

two years, it blocked the implementation process without a court order; and broke its obligation to be honest and faithful. While the appeals were pending, JSW instead substituted its equity infusion with Compulsorily Convertible Debentures (CCDs) for defying the agreed financial architecture on its own. This action was described by the Court as a conscious attempt to create a fait accompli, which weakened the judicial warrant, and working for the interest of JSW at the expense of creditors’ recovery. Through such actions, JSW stepped out of exploiting opportunities to direct a definite abuse of the court processes. IMPLICATIONS FOR THE FUTURE OF IBC The Supreme Court’s verdict in Kalyani Transco30 heralds a recalibration of India’s insolvency framework placing legal compliance on par with commercial outcomes.

Judicial Oversight: A Constitutional Corrective to Commercial Lapses In the judgement the Supreme Court makes a sharp divide between proper class deference and blind eye to breach. Although Essar Steel underscored of the merit of business savvy, this case is itself capable of demonstrating that commercial considerations cannot override compulsive legal provisions. Statements in sections 1231, 29A32 and 30(2)33 of the IBC are not aspirational statements; they contain binding obligations. When these provisions are in violation, the courts are compelled to intervene. The highest court changes judicial oversight from an optional step to a critical constitutional protection against abuses in the system. The ruling shows that insolvency law is meant to protect all rules among the concerned parties, not just to the beneficiaries who offer money.

Accountability Recast: From Passive Compliance to Proactive Enforcement This ruling clearly alters the expectations of Resolution Professionals and Committees of Creditors. RPs do not do mere paperwork; they manage the CIRP for compliance with legal standards. Now, adjudicating ineligible applications or missing critical timelines or ignoring legal mandates has led to actual reputational and procedural risks for CIRP professionals. Similarly, CoCs are to justify their actions more than just commercial judgment. Judicial

30 supra note 1.

31 supra note 10.

32 supra note 13.

33 supra note 17.

scrutiny savagely condemned their acceptance of a plan lacking supporting documentation for validity. Going forward, all approvals, negotiations, and compromises should be anchored on legality bearing in mind the convenience. The ruling changes the role of stakeholders to require that the workings be open and accountable, not just transactional. Plan Implementation: From Grey Zone to Guardrails The Kalyani Transco ruling affirms that the judiciary will not stop monitoring after a plan is given approval from the authority. JSW’s efforts to stall implementation, tweak financial terms, declare fait accompli exposed lack of established regulatory controls. Currently, there is a large span of leeway available with regards to post approval behaviour until execution, a situation the court’s ruling has, to an indirect extent, reneged in favour of change.

It seems that it is now inevitable that such a formal structure for post–approval procedures will be institutionalized, directly by legislative measures or even by regulatory directives. This case sets the precedent: The Court’s ruling now requires faithful, comprehensive and unaltered implementation of approved plans.

CONCLUSION – INTEGRITY BEFORE EXPEDIENCY

The Supreme Court’s decision in Kalyani Transco34 is more than a corrective, it is a doctrinal reset. By nullifying a high-value resolution and ordering liquidation, the Court underscored that procedural shortcuts, regulatory apathy, and commercial expediency cannot override statutory fidelity. Every stakeholder from RP to CoC to the SRA is now on notice: legal compliance is not negotiable. The judgment reinvigorates the original vision of the IBC that is swift, lawful, and transparent resolution. If India’s insolvency regime is to mature into IBC 2.0, it must be grounded in one uncompromising principle: integrity above all.

34 supra note 1.