INDIA Trends and Developments Contributed by: Vijayendra Pratap Singh, Priyank Ladoia, Arjun Narang and Puneet Dhanoa, AZB & Partners
as it exposed the ongoing friction between the anti- money laundering mechanisms and CIRP efforts. BPSL was one of the “dirty dozen” – ie, the 12 major corporate defaulters identified by the Reserve Bank of India (RBI) for immediate resolution. The CIRP commenced in July 2017. After extensive bidding and negotiations, JSW Steel Limited (JSW) emerged as the successful resolution applicant (SRA) with a resolution plan of INR19,350 crores, which the NCLT approved on 5 September 2019. However, in parallel with this, in April 2019 the Central Bureau of Investigation (CBI) filed a First Information Report (FIR) alleging large-scale siphoning and diver - sion of funds by BPSL’s erstwhile promoters. There - after, the ED registered an Enforcement Case Infor - mation Report (ECIR) and started proceedings under the PMLA. The ED issued a provisional attachment order under Section 5 of the PMLA on 14 October 2019, attaching BPSL’s assets worth over INR4,000 crores. The issue arose when the assets that JSW was attempting to acquire and revive were suddenly fro - zen and completely inaccessible, stalling a recovery for the financial creditors. Faced with the prospect of the entire resolution collapsing, JSW challenged the ED’s attachment before the NCLAT, which stayed the attachment in October 2019. In the meantime, a major legislative shift occurred. The government introduced the Insolvency and Bank - ruptcy Code (Amendment) Ordinance, 2019, insert - ing Section 32A into the IBC, which acts as a “clean slate” mechanism and grants immunity to the corpo - rate debtor and its property from prior offences once a resolution plan is approved. Relying heavily on this new Section 32A, the NCLAT delivered its judgment in February 2020. The NCLAT declared that the ED lacked the power to attach the assets once the resolution plan was approved, ruling the ED’s attachment to be illegal and without jurisdic - tion. This was also challenged before the Supreme Court, and the core issue was whether the NCLAT had the authority to quash an order passed by the ED. In its May 2025 judgment, the Supreme Court drew a firm
line in the sand. It clarified that the NCLT and NCLAT are products of company law, whose jurisdictions are strictly circumscribed by the IBC. They do not pos - sess the power of judicial review over decisions made by statutory authorities operating in the realm of pub - lic law such as the ED under the PMLA. The Court held that the NCLAT’s decision to declare the ED’s attachment illegal was beyond its authority. While the Supreme Court protected the jurisdictional integrity of the PMLA, it acknowledged the financial reality. If the attached assets were not released, JSW could not implement the resolution plan, and the recovery of INR19,350 crores of public money would fail. Furthermore, the newly enacted Section 32A could not be applied retrospectively to automatically make the ED’s 2019 attachment void. To bridge this deadlock, the ED filed an affidavit sug - gesting that, under the peculiar circumstances of the case, JSW be permitted to take control of the attached properties by treating the handover as resti - tution under Section 8 (8) of the PMLA, read with Rule 3A of the Prevention of Money Laundering (Restora - tion of Property) Rules. The Supreme Court accepted this mechanism, directing the ED to immediately hand over control of the unencumbered assets to JSW, thereby unlocking the stalled resolution plan. However, subsequently in May 2025, the Supreme Court set aside the resolution plan, taking into con - sideration certain technical aspects. Being aggrieved by the May 2025 judgment, review petitions were filed before the Supreme Court by JSW (being the suc - cessful resolution applicant) and others. The Supreme Court took into consideration that the corporate debtor was running into substantial loss - es which had become profitable, and thousands of employees had been earning their livelihood on account of the corporate debtor running as an ongo - ing concern due to the resolution plan. Therefore, the Supreme Court ultimately allowed the resolution plan to continue while upholding the objectives of the IBC. The trajectory of the BPSL litigation is crucial for asset-tracing as it maps the evolution of the legal framework. The Supreme Court confirmed that, while
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