Did the Supreme Court Just Halt Bhushan Steel's Liquidation and Allow JSW to File a Review Petition?
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Synopsis
In a pivotal ruling, the Supreme Court has paused the liquidation of Bhushan Power and Steel Ltd, providing critical temporary relief to JSW Steel. This decision allows JSW to contest the previous verdict that dismissed their substantial resolution plan, potentially altering the landscape of corporate insolvency in India.
Key Takeaways
- Supreme Court has paused liquidation proceedings for BPSL.
- JSW Steel can file a review petition against a prior ruling.
- The earlier judgment invalidated a Rs 19,300 crore resolution plan.
- Compliance with Insolvency and Bankruptcy Code is critical.
- BPSL's steel plant in Odisha plays a significant role in JSW's capacity.
New Delhi, May 26 (NationPress) The Supreme Court has issued a directive on Monday to maintain the current state of affairs concerning the liquidation of Bhushan Power and Steel Ltd (BPSL), granting provisional relief to JSW Steel.
This ruling follows a request from JSW Steel for a suspension of the liquidation process that was initiated by the previous promoter of BPSL, Sanjay Singhal.
JSW Steel has been permitted to submit a review petition against the Supreme Court's ruling from May 2, which invalidated its resolution plan valued at Rs 19,300 crore, marking a significant challenge for the company led by Sajjan Jindal.
A bench of the Supreme Court directed the National Company Law Tribunal (NCLT) to halt further proceedings until a decision on the review petition is rendered by the apex court.
Instructing JSW Steel to file the petition within the designated 30-day timeframe, the Supreme Court emphasized that the “status quo needs to be maintained in the interest of justice,” thereby ensuring that no additional steps toward liquidation will take place until the review petition is addressed.
Sanjay Singhal, the former promoter of BPSL, had filed for liquidation with the NCLT based on a prior judgment from the Supreme Court.
The ruling on May 2 represented a notable setback for JSW Steel, which managed to acquire BPSL through the corporate insolvency resolution process over five years ago and has invested heavily in the company.
The apex court annulled the resolution plan due to non-compliance with critical aspects of the Insolvency and Bankruptcy Code (IBC), including a failure to adhere to the established timeline of the plan.
The BPSL steel plant located in Odisha has a production capacity of 4.5 million tonnes per annum (MTPA), contributing significantly to JSW Steel’s overall domestic capacity of 34.2 MTPA.
JSW Steel’s Joint Managing Director, Jayant Acharya, stated last week that the company has “implemented the resolution plan of the BPSL in compliance with the law” and has taken significant measures to successfully revive the company to its current status. He expressed optimism that JSW Steel’s compensation rights will be acknowledged in this matter.
Point of View
I believe the Supreme Court's decision to pause the liquidation proceedings of Bhushan Power and Steel Ltd reflects a commitment to justice and thorough review in complex corporate matters. It underscores the importance of due process and the need to balance corporate recovery with legal compliance. This case will be pivotal in shaping the future of insolvency practices in India.
NationPress
17/06/2025
Frequently Asked Questions
What was the Supreme Court's ruling regarding Bhushan Steel?
The Supreme Court ordered a status quo on the liquidation proceedings of Bhushan Power and Steel Ltd, allowing JSW Steel to file a review petition.
Why did JSW Steel seek a stay on the liquidation process?
JSW Steel sought a stay after the Supreme Court quashed its Rs 19,300 crore resolution plan, which was a considerable setback for the company.
What was the basis for the Supreme Court's earlier judgment?
The Supreme Court's earlier judgment set aside the resolution plan due to non-compliance with key provisions of the Insolvency and Bankruptcy Code.
How long does JSW Steel have to file the review petition?
JSW Steel has a 30-day period to file the review petition as instructed by the Supreme Court.
What impact does this ruling have on JSW Steel's operations?
The ruling halts any further action on liquidation, allowing JSW Steel to potentially recover its investments and pursue its corporate recovery strategy.
