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Informist, Friday, May 23, 2025

 

--JSW Steel moves SC to stay liquidation proceedings against Bhushan Power 

--CONTEXT: SC had rejected JSW Steel's resolution plan for Bhushan Power 

--JSW Steel: Strong ground for legal remedies in Bhushan Steel case

--JSW Steel: Production, sales continuing from Bhushan Steel

 

By Surya Tripathi

 

NEW DELHI – JSW Steel Ltd. moved the Supreme Court Friday to stay proceedings to liquidate Bhushan Power & Steel Ltd. till the petitioner company exhausts all its legal remedies. An application to liquidate the debt-ridden Bhushan Power is pending with the Delhi bench of the National Company Law Tribunal.

 

JSW Steel's counsel mentioned the matter before a bench headed by Chief Justice of India B.R. Gavai for urgent listing. The court agreed and placed the case for hearing Monday.

 

On May 2, the Supreme Court had set aside JSW Steel's resolution plan for Bhushan Power on a petition by operational creditor Kalyani Transco. Ruling JSW Steel's resolution plan illegal and saying it should not have been accepted by the committee of creditors of the debt-ridden company, the top court had directed the liquidation of Bhushan Power.

 

JSW Steel has urged the court to keep in abeyance the proceedings initiated before the tribunal by the erstwhile promoters of Bhushan Power to appoint a liquidator for the company. The petitioner said that in 2021, it had implemented the resolution plan and necessary payments of INR 193.50 billion to financial creditors and INR 3.50 billion to operational creditors were made as per the timelines.

 

The petitioner company said it was working on its legal recourse of review under Article 137 of the Constitution. JSW Steel said the Supreme Court's judgment directing refund of the amounts it had paid was "yet to be worked out". Among all this, the erstwhile promoters of Bhushan Power had, in unnecessary haste and without any standing, filed an application before the tribunal to appoint a liquidator, it said.

 

Any precipitative step by the tribunal to appoint a liquidator would be prejudicial in a matter that needs careful consideration of a variety of legal and factual issues, JSW Steel said. In any event, no step that could be prejudicial to the petitioner or other stakeholders like the erstwhile creditors of Bhushan Power ought to be taken by the tribunal in view of the fact that JSW Steel is well within the statutory timelines to avail statutory and constitutional remedies available to it, including the right to seek a review of the Supreme Court's verdict, it said.

 

"Any order passed by the Honourable NCLT initiating liquidation proceedings of BPSL (Bhushan Power & Steel) would cause irreversible and irreparable harm to the petitioner," JSW Steel's counsel told the court. Bhushan Power's current assets are significantly different from the assets of the company as they stood prior to the date of implementation of the resolution plan due to value accretion by the petitioner, the counsel further said. Any order to initiate liquidation of Bhushan Power must be passed in respect of the debt-ridden company as it stood prior to the date of implementation of the resolution plan, the counsel said.

 

"The petitioner is apprehensive of and under serious threat of initiation of liquidation proceedings which shall cause irreparable damage not just to the petitioner but to the stakeholders at large, which includes public sector banks being the new lenders, new operational creditors, and around 20,000 workers/employees," said JSW Steel. 

 

Earlier, JSW Steel management told analysts and investors in a post-earnings conference call Friday that it has strong grounds to avail all legal remedies in the Bhushan Power case. The management said the resolution plan for Bhushan Power was in full compliance with applicable laws. Production and sales are continuing from Bhushan Power, it added.

 

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 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 were set aside by the Delhi High Court in February.

 

When the case reached the apex court, it said "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 the Insolvency and Bankruptcy Code, 2016, It added that it had 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 committee of creditors had failed to exercise its commercial wisdom by approving the resolution plan presented by JSW Steel, which was in contravention of mandatory provisions of the 2016 code, it had ruled.

 

On Friday, shares of JSW Steel ended slightly higher at INR 1,008.50 on the National Stock Exchange.  End

 

Edited by Rajeev Pai

 

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