IBC | No Post-Approval Surprises – Resolution Plan Is a Binding Contract: Supreme Court Slams Attempts to Reopen Settled Claims in Bhushan Power Case

“A Successful Resolution Applicant Cannot Be Faced With 'Undecided' Claims After The Resolution Plan Has Been Accepted” – Supreme Court Declares Finality as the Soul of IBC. Supreme Court of India delivered a momentous verdict in Sanjay Singal & Ors. v. JSW Steel Limited & Ors., conclusively shutting down a range of challenges filed by erstwhile promoters and operational creditors against the approved resolution plan of Bhushan Power and Steel Ltd (BPSL). The apex court, led by Chief Justice B.R. Gavai with Justices Satish Chandra Sharma and K. Vinod Chandran, decisively held that once a resolution plan is approved under Section 31 of the Insolvency and Bankruptcy Code (IBC), it is final and binding—not just on the corporate debtor and creditors, but also on other stakeholders including government authorities.

The Court emphasized, “Permitting the claim not to be part of the Resolution Plan to be raised at such a belated stage could open a Pandora’s Box. The very purpose of the IBC would be defeated.”

This judgment reinforces the legal architecture of the IBC by preserving the sanctity of resolution plans, protecting successful resolution applicants from post-approval liabilities, and restating that no new financial burdens can be imposed retrospectively once a plan is sealed.

“Once CoC Approves a Plan, It Can’t Raise a Hydra Head Later”: Apex Court Reins in Creditors’ Post-Hoc Claims

In a firm affirmation of commercial finality, the Supreme Court rejected a series of appeals arising out of the resolution of BPSL, where the approved plan by JSW Steel had already been implemented following significant delay due to ED attachments and litigation. The appeals included grievances by former promoters like Sanjay Singal, operational creditors such as Jaldhi Overseas, Medi and Darcl Logistics, and even the Committee of Creditors (CoC) itself—some of whom tried to revisit profit entitlements and legal classifications years after plan approval.

The Court reiterated that “The object and purpose of the IBC is to revive the Corporate Debtor. The same has been achieved with flying colours in the present case. Any interference at this stage would unsettle the entire applecart.”

The judgment has national significance, as it sends a strong signal against judicial tolerance for belated claims and backdoor litigation in the insolvency framework.

From Corporate Collapse to Revival—The BPSL Resolution

The insolvency of BPSL was admitted in 2017. After a competitive bidding process, JSW Steel’s resolution plan worth ₹19,700 crores was approved by the CoC on 15 October 2018 and received the NCLT’s final nod on 5 September 2019. However, implementation was delayed due to ongoing litigation and multiple provisional attachment orders issued by the Directorate of Enforcement under the Prevention of Money Laundering Act (PMLA).

It was only after the Supreme Court’s landmark ruling on 11 December 2024, upholding the protection offered under Section 32A of the IBC, that the plan was finally implemented in March 2021. Yet, even after implementation, disputes continued over issues such as delayed execution, reclassification of certain debts, and claims of profit distribution (EBITDA) generated during CIRP.

“Appeals Must Raise Legal Errors, Not Commercial Discontent”: Court Dismisses All Challenges Under Section 62 IBC

The Court first drew a firm jurisdictional boundary by declaring that appeals under Section 62 of the IBC can only lie on substantial questions of law. The Court noted that the concurrent findings of the NCLT and NCLAT—which had both approved the resolution plan—were neither perverse nor arbitrary.

The judgment reads: “We are of the considered view that no question of law arises for consideration in the present case. The concurrent findings recorded by the NCLT and the NCLAT do not require any interference.”

This observation effectively eliminated all non-legal grievances and preserved the expertise-based decisions of the insolvency forums.

“CoC Can Extend Timelines, Not Rewrite the Plan”: Supreme Court Distinguishes Ebix Doctrine

The promoters had contended that Clause 3 of the resolution plan, which empowered the CoC to extend the Effective Date, was illegal in light of Ebix Singapore v. Educomp, where the Court had held that once a plan is approved, it cannot be modified or withdrawn.

However, the Bench clarified that the clause in BPSL’s case merely enabled extension of time to meet implementation obligations and did not permit withdrawal or renegotiation. It held: “Clause 3 neither provides modification nor withdrawal of the Resolution Plan... There are no negotiations envisaged. Hence, not an open-ended plan.”

The judgment decisively ruled that such pragmatic procedural clauses do not fall afoul of Ebix and are valid within the scheme of IBC.

“CCDs Are Not Debt—They're Equity”: Court Upholds JSW Steel’s Mode of Capital Infusion

The appellants accused JSW Steel of violating the plan by using Compulsorily Convertible Debentures (CCDs) instead of cash for the ₹8,550 crore equity infusion. The Court rejected the claim, holding that CCDs are treated as equity instruments under both jurisprudence and accounting standards.

Quoting from IFCI Ltd. v. Sutanu Behuria, the Court said: “CDs which are compulsorily convertible into equity... must be treated as Equity Instruments.”

More importantly, the infusion mode was accepted by the CoC, which had certified full compliance by the Successful Resolution Applicant.

“Foreign Award Is Not a Decree Until Enforced”: Jaldhi Overseas Held to Be Contingent Creditor

Jaldhi Overseas had secured foreign arbitral awards but was classified as a contingent creditor in the resolution plan, receiving only 10% instead of the 50% claimed. The Court clarified that under Section 49 of the Arbitration and Conciliation Act, a foreign award is enforceable only after recognition by a domestic court.

The Bench noted that “The appellant itself claimed to be a contingent creditor before the NCLT, and then took a contrary stand.” The classification, therefore, was held to be based on valid commercial considerations of the CoC and beyond judicial review.

“Claims Not in Resolution Plan Are Extinguished”: Operational Creditors Denied Pre-CIRP Dues

Two creditors, Medi and Darcl Logistics, alleged that they were promised full payments for pre-CIRP dues as a condition for continuing services during the insolvency period. The Court flatly rejected the argument, holding: “There is no material on record to show that the CoC had approved any such assurance. Any obligation not included in the approved Resolution Plan cannot be enforced.”

A clerical mistake by an accounts officer to release payments was termed irrelevant. The Court made it clear that only those claims which form part of the approved Resolution Plan, and are duly vetted by the CoC, can be honored.

“IBC Was Meant to Revive, Not to Relitigate”: Supreme Court Praises BPSL Revival and Closes Chapter

In its concluding remarks, the Court praised the success of the resolution process in reviving BPSL, noting its transformation from a loss-making entity to a profitable enterprise employing thousands.

The Court declared: “The Corporate Debtor has been transformed... Thousands of employees earn their livelihood... The purpose of IBC has not only been achieved but surpassed.”

The judgment reiterated the core principle that judicial interference in commercial decisions must be minimal. It emphasized that litigation should not continue endlessly after plan approval, especially where a resolution applicant has committed huge funds in good faith.

The Supreme Court’s verdict in Sanjay Singal v. JSW Steel marks a decisive reaffirmation of the IBC’s legislative intent—resolution, revival, and finality. By refusing to entertain belated claims or to disturb the commercial wisdom of the CoC, the judgment upholds the sanctity of the resolution framework and reinforces investor confidence in India’s insolvency regime.

It sends a clear message: once a plan is approved and implemented, the door to disputes is closed. The law does not permit any stakeholder to reopen settled claims “like hydra heads” and unsettle the delicate balance of corporate revival.

Date of Decision: 26 September 2025