Bhushan Steel and Power: SC rejects the JSW Steel resolution plan, orders the liquidation
On May 2, the Supreme Court rejected the resolution plan submitted by JSW Steel for Bhushan Steel and Power Ltd (BSPL) on May 2 and ordered the liquidation of the BSPL under the IBC.
A bench including judge Bela M Trivedi and Judge SAFTUH CHANDRA SHARMA criticized the conduct of all key stakeholders in the resolution process – the resolution professional, the creditors’ committee (COC) and the National Companies Law Court (NCLT) – for allowing what he called a “flagrant violation” of the IBC.
Judge Bela Trivedi, pronouncing the verdict, said that the resolution professional had not exercised his statutory functions during the company’s insolvency resolution process, as provided for in IBC and associated regulations. The bench said the COC had approved JSW’s resolution plan without appropriate application of its commercial wisdom.
The plan has compulsory provisions of the IBC and has not protected the interests of creditors and, in particular, COC accepted JSW’s payments without objection, despite the gaps of the plan, he added.
The verdict declared the orders of September 5, 2019 of the NCLT and the NCLAT judgment of February 17, 2022 as “pervert” and lacking competence, and therefore put them aside.
The bench rejected JSW’s resolution plan, as approved by the COC, not to comply with the IBC. The NCLT was then responsible for organizing liquidation procedures against the BSPL under article 33 (1) of the IBC, exercising the powers of the Court under article 142 of the Constitution.
“We have learned that the Honorable Supreme Court has pronounced a judgment today, that is to say 02-05-2025 The informed exchanges of new developments required under applicable laws,” said JSW Steel in a file with exchanges.
JSW Steel acquired a 49% stake in BPSL through the Insolvency and bankruptcy (IBC) road in 2021, starting its acquisition route. The acquisition had added 2.75 million tonnes per year (MTPA) of steel capacity to the JSW portfolio in Odisha. Later that year, JSW increased its participation to 83.3% from October 1, 2021.
Although JSW Steel was declared a successful resolution seeker, the agreement was entangled in legal obstacles from the start. Especially after the Directorate of the Application of the Act in 2020, the BPSL and its former President and Managing Director in a case of bank fraud and money laundering of RS 47 204 crores.
Earlier this year, the High Court of Delhi canceled the money laundering procedure against BPSL, offering repair to the company.
(With PTI entries)
