Supreme Court Orders Status Quo In JSW Steel-Bhushan Power Case

The Supreme Court on Monday ordered a status quo on Bhushan Power & Steel's liquidation proceedings, halting the National Company Law Tribunal's earlier liquidation order until review petitions are heard in the case.

During the proceedings, the bench directed that no effective orders be passed by the NCLT until the apex court disposes of the review. The court also acknowledged the complexity and financial entanglements involved in the matter, expressed concerns over daily applications filed by the ex-promoters before NCLT and emphasised fairness and due process before allowing liquidation of a running company.

Advocate Neeraj Kishan Kaul appeared on behalf of JSW Steel, submissions were made by the Solicitor General of India Tushar Mehta for Committee of Creditors, while Senior Advocate Dhruv Mehta argued for Sanjay Singhal, former promoter of BPCSL. Each presented their submissions in front of bench of Justices BV Nagarathna and Sanjay Sharma.

Liquidation, if done hastily, could severely impact banks, creditors, and JSW Steel, the bench reiterated. The court also said that the time window for doing so remains open for JSW Steel and the matter could be taken up after court reopens post-vacation. The hearing is likely to resume after June 10.

The fresh developments in the JSW Steel case comes after the apex court's earlier hearing on May 2, which ruled that JSW Steel's 2019 acquisition of Bhushan Power was not in conformity with the law and ordered the transaction to be reversed, along with 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.

NDTV Profit had reported on May 6 that both JSW Steel and the Committee of Creditors were preparing to file separate review petitions, likely highlighting certain inaccuracies in the earlier judgment, according to people familiar with the matter. The CoC is led by the State Bank of India and Punjab National Bank.

The development came after the Supreme Court, on May 2, ruled that JSW Steel's 2019 acquisition of Bhushan Power was not in conformity with the law and ordered the transaction to be reversed, along with 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.

NDTV Profit had reported on May 6 that both JSW Steel and the Committee of Creditors were preparing to file separate review petitions, likely highlighting certain inaccuracies in the earlier judgment, according to people familiar with the matter. The CoC is led by the State Bank of India and Punjab National Bank.