The Supreme Court on Friday quashed JSW Steel Ltd.'s resolution plan for Bhushan Power & Steel Ltd., calling it illegal, and ordered the debt-laden company’s liquidation. The ruling came in response to a petition by operational creditor Kalyani Transco.

The top court said JSW Steel, the resolution professional, and Bhushan Power’s committee of creditors “sought to sweep many seminal issues under the carpet” to cover up violations under the Insolvency and Bankruptcy Code, 2016. It found significant non-compliance at both the pre- and post-approval stages of the resolution process.

The bench said JSW Steel had acted with “malafide and dishonest intention” to secure top score in the bidding process, misrepresented facts before courts, and then failed to implement the approved plan for over two years; citing pending Enforcement Directorate proceedings against Bhushan Power.

It also criticised the committee of creditors for not protecting creditor interests and for taking contradictory stances in court, including accepting payments from JSW Steel without safeguards. The resolution professional was pulled up for failing to meet statutory obligations under the IBC.

JSW Steel's revised plan, approved in 2019 after tweaks tied to SEBI regulations, was never implemented. This went against the core principle of the IBC which is time-bound resolution, the court said.

Bhushan Power had entered insolvency in 2017 on a Punjab National Bank petition. Later, the ED filed a money laundering case, accusing the company of defrauding banks of ₹472.04 billion. These proceedings were quashed by the Delhi High Court earlier this year.

Kalyani Transco, owed ₹ 52.16 million for transporting waste, had challenged the resolution plan at NCLAT, saying operational creditors weren’t given proper access to documents or meaningful participation. The appellate tribunal had rejected the plea, saying Kalyani didn’t meet the 10% threshold for access to full documents.

The firm had also claimed JSW Steel was a related party and thus ineligible under section 29A of the IBC; an argument NCLAT dismissed, but which the Supreme Court ultimately accepted, leading to the resolution plan being set aside.