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Informist, Friday, May. 2, 2025

 

--SC rejects JSW Steel's resolution plan for Bhushan Power and Steel 

--SC says JSW Steel's IBC plan for Bhushan Power was illegal

--SC directs liquidation of Bhushan Power and Steel 

 

NEW DELHI – The Supreme Court on Friday set aside JSW Steel Ltd's resolution plan for Bhushan Power & Steel Ltd. on a petition by operationl creditor Kalyani Transco. Directing the liquidation of Bhushan Power, the apex court said JSW Steel's resolution plan was illegal and should not have been accepted by the committee of creditors of the debt-ridden company.

 

"The respondents JSW Steel, committee of creditors and the resolution professional sought to sweep many seminal issues under the carpet" to cover up gross violations of the provisions of Insolvency and Bankruptcy Code, 2016, the apex court said. It added that it has examined the non-compliance and violations of mandatory provisions of the 2016 code at the instance of JSW Steel, the committee of creditors, and resolution professionals at the pre-approval and post-approval stages of resolution.

 

The court said that nobody should be allowed to misuse the process of law or take undue advantage of the pendency of any proceedings in the court or tribunal. It said there was malafide and dishonest intention on the part of JSW Steel in securing the highest score for its plan, making misrepresentation before court and then not implementing the same under the garb of the Enforcement Directorate proceedings against Bhushan Steel. The resolution professional had utterly failed to discharge his statutory duties contemplated in the Insolvency and Bankruptcy Code, 2016, the court said.

 

The committee of creditors had failed to exercise its commercial wisdom by approving the resolution plan of JSW Steel, which was in contravention of the mandatory provisions of the 2016 code, it said. The committee of creditors had also failed to protect the interest of creditors by taking contradictory stands before the court and accepting the payment from JSW Steel without any measure and supporting the latter to implement its motivated plan against the interest of creditors, it said. 

 

JSW Steel had secured the highest score in the evaluation matrix at the 18th meeting of the committee of creditors, the court said. JSW submitted the revised plan with addendum under the garb of complying with the amendments made in the Securities and Exchange Board of India's regulations and got approval for the same from the committee of creditors, the court said. However, even after the approval of its plan, JSW Steel willfully contravened and did not comply with the terms of the approved resolution plan for a period of over two years, the court said, adding that this was against the purpose and objective of the Insolvency and Bankruptcy Code, which provides for a swift resolution. 

 

The National Company Law Tribunal had started insolvency proceedings against Bhushan Power on a petition by Punjab National Bank in 2017. In 2019, it approved the resolution plan submitted by JSW Steel for the debt-ridden company. The same year, the Enforcement Directorate registered a case against Bhushan Power and its officers for money-laundering offences on charges of defrauding banks to the tune of INR 472.04 billion. The money laundering proceedings against Bhushan Power were set aside by the Delhi High Court in February. 

 

Kalyani Transco had challenged JSW Steel's resolution plan for Bhushan Power before the National Company Law Appellate Tribunal. Kalyani Transco had said that Bhushan Power owed a sum of INR 52.16 million to them on account of transportation of solid waste. Kalyani Transco had alleged that meaningful participation was denied to operational creditors since complete copies of relevant documents and resolution plans were never shared with them.

 

However, the appellate tribunal, in 2020 said there was nothing on record to suggest that Kalyani Transco, in its individual capacity as operational creditor, had more than 10% of the dues of the 'operational creditors' to remain present during the meeting of the committee of creditors. Therefore, the question of supplying the complete copy of the relevant documents and resolution plan did not arise, the appellate tribunal had said. 

 

Kalyani Transo had also alleged that JSW Steel was a related party of Bhushan Power and it was barred by section 29A of the Insolvency and Bankruptcy Code, 2016, from submitting a resolution plan. The appellate tribunal rejected this allegation too, noting that it did not find "any merit" in it. Challenging this, Kalyani Transo moved the Supreme Court.

 

At 1203 IST, shares of JSW Steel Ltd. were down 6.0% at INR 968.10 on the National Stock Exchange.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Surya Tripathi

Edited by Avishek Dutta

 

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