The Supreme Court on Monday ordered a status quo on the liquidation proceedings of Bhushan Power and Steel Ltd (BPSL), granting relief to JSW Steel Ltd and allowing the company to file a review petition against the court’s 2 May verdict that quashed its ₹19,300 crore resolution plan.
A bench comprising Justices B.V. Nagarathna and Satish Chandra Sharma directed the National Company Law Tribunal (NCLT) to keep the matter pending until the apex court decides on the review plea.
The court asked JSW Steel to file the petition within the prescribed limitation period.
The time limit to file a review petition in the Supreme Court is 30 days and governed by Article 137 of the Constitution of India, along with Order XLVII Rule 1 of the Supreme Court Rules, 2013, and Limitation Act, 1963.
This came in response to a plea filed by JSW Steel seeking a stay on the liquidation process initiated by BPSL’s former promoter Sanjay Singhal.
Following the 2 May judgment, which cancelled JSW Steel’s resolution plan and directed BPSL’s liquidation, Singhal approached the NCLT urging immediate commencement of liquidation proceedings.
JSW Steel, in its application, had requested the Supreme Court to defer the liquidation process for 60 days to give it time to file a review petition.
The top court’s interim relief now enables the steelmaker to approach the court with a review plea without parallel liquidation proceedings continuing before the NCLT.
A legal setback
The Supreme Court’s 2 May ruling was a major setback for JSW, which acquired BPSL through the corporate insolvency resolution process (CIRP) more than five years ago and has since made substantial investments in the company.
The apex court had set aside the resolution plan on grounds of non-compliance with key provisions of the Insolvency and Bankruptcy Code (IBC), particularly the failure to adhere strictly to the plan’s approved timeline.
The review petition is significant for JSW Steel, not just from a legal standpoint but also due to the financial and strategic importance of BPSL to its domestic operations.
As of 31 March 2024, JSW Steel carried net assets worth ₹14,091 crore related to BPSL on its consolidated balance sheet. BPSL’s Odisha-based plant has a capacity of 4.5 million tonnes per annum (MTPA), forming a key part of JSW Steel’s total domestic capacity of 34.2 MTPA—the highest in India.
In a post-earnings call last week, JSW Steel’s joint managing director Jayant Acharya said the company had “implemented the resolution plan of BPSL in compliance with the law and taken steps to successfully revive the company to its present state today.” He added that JSW Steel expected its compensation rights to be upheld following the Supreme Court decision.
JSW Steel has also issued demand notices to a group of banks, seeking refunds of the funds disbursed as part of the now-invalidated resolution plan.
BPSL was among the first 12 large defaulters identified by the Reserve Bank of India in 2017 for resolution under the Insolvency and Bankruptcy Code, with total dues of over ₹47,200 crore. At the time of its insolvency admission, the company owed more than ₹45,000 crore.
JSW Steel’s ₹19,300 crore resolution plan was the highest bid received and was approved by the NCLT in September 2019, and later upheld by the National Company Law Appellate Tribunal (NCLAT) in February 2020.
Despite ongoing litigation, including legal challenges mounted by Sanjay Singhal, JSW Steel went ahead with the resolution plan, made substantial payments, and took operational control of the BPSL plant.
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