The Supreme Court on May 2 rejected the resolution plan submitted by JSW Steel for Bhushan Steel and Power Ltd (BSPL) on May 2 and ordered the liquidation of BSPL under the IBC.
A bench comprising Justice Bela M Trivedi and Justice Satish Chandra Sharma criticised the conduct of all key stakeholders in the resolution process — the resolution professional, the Committee of Creditors (CoC), and the National Company Law Tribunal (NCLT) — for enabling what it termed a “flagrant violation” of the IBC.
Justice Bela Trivedi, pronouncing the verdict, said the resolution professional failed to perform his statutory duties during the corporate insolvency resolution process, as mandated under the IBC and its associated regulations. The bench said the CoC was found to have approved JSW’s resolution plan without proper application of its commercial wisdom.
The plan contravened mandatory IBC provisions and did not protect creditors’ interests and notably, the CoC accepted payments from JSW without objection, despite the plan’s shortcomings, it added.
The verdict declared the orders of September 5, 2019, of the NCLT and the NCLAT judgement of February 17, 2022 as “perverse” and lacking jurisdiction, and consequently set them aside.
The bench rejected the resolution plan of JSW, as approved by the CoC, for being non-compliant with the IBC. The NCLT was subsequently directed to initiate liquidation proceedings against BSPL under Section 33(1) of the IBC, exercising the Court’s powers under Article 142 of the Constitution.
“We learnt that the Hon’ble Supreme Court pronounced Judgment today i.e 02-05-2025 rejecting the Resolution plan submitted by the Company and approved by NCLAT, on certain grounds. We are yet to receive the formal copy of the Order to understand the grounds for rejection in detail and its implications. Once we receive the Order and are able to review the same along with our legal advisors, we will decide on our further course of action. We shall keep the Exchanges informed of further developments as required under applicable laws,” JSW Steel said in a filing to the exchanges.
JSW Steel acquired a 49 per cent stake in BPSL through the Insolvency and Bankruptcy Code (IBC) route in 2021, beginning its acquisition journey. The acquisition had added 2.75 million tonnes per annum (mtpa) of steelmaking capacity to JSW’s portfolio in Odisha. Later that year, JSW raised its stake to 83.3% effective October 1, 2021.
Although JSW Steel was declared the successful resolution applicant, the deal was entangled in legal hurdles from the outset. Especially after the Enforcement Directorate in 2020 named BPSL and its former chairman and managing director in a Rs 47,204 crore bank fraud and money laundering case.
Earlier this year, the Delhi High Court quashed the money laundering proceedings against BPSL, offering some relief to the company.
(With inputs from PTI)
