Bhushan Power Insolvency: Supreme Court Accepts JSW Steel's Order Review, Upholds Acquisition

The Supreme Court on Friday accepted JSW Steel Ltd.'s review of order on Bhushan Power & Steel Ltd. A bench comprising Chief Justice of India BR Gavai, Justices SC Sharma and K Vinod Chandran junked a previous order by a two-judge bench reversing JSW's acquisition of the bankrupt firm for Rs 19,700 crore.

The apex court also rejected the objections raised by the ex-promoters and certain creditors of BPSL. "Permitting the erstwhile promoters or the CoC to raise an argument in that regard at such a belated stage would amount to doing violence to the very intention with which the IBC was enacted," the order said.

The Supreme Court order acknowledged that BPSL has been transformed from a lossmaking to a profit-making entity. "If, after the implementation of the Resolution Plan, the SRA – JSW has converted a lossmaking entity into the one making profits, can it be penalised for that?" the order said.

JSW Steel in June filed a review petition in the Supreme Court regarding its earlier judgment. In May, the apex court ruled that the company's 2019 acquisition of Bhushan Power was not in conformity with the law and ordered the transaction to be reversed, along with the liquidation of the company.

Under the 2019 resolution plan, JSW Steel had agreed to pay Rs 19,700 crore, of which Rs 19,350 crore was allocated to financial creditors and Rs 350 crore to operational creditors.

A bench later ordered a status quo on BPSL's liquidation proceedings, halting the National Company Law Tribunal’s earlier liquidation order until review petitions are heard in the case.

Shares of JSW Steel jumped as much as 1.7% after the news. Aditya Welekar, analyst at Axis Securities, said the judgement relieves the overhang of the case on the stock. He noted that BPSL had significant contribution to the JSW company's total production.