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Informist, Thursday, Jul. 31, 2025

 

--SC recalls its order to liquidate Bhushan Power & Steel in IBC case 

--CONTEXT: SC on JSW Steel, Bhushan Power lenders' review plea in IBC case 

--CONTEXT: In May, SC had rejected JSW Steel's IBC plan for Bhushan Power 

--SC says Bhushan Power insolvency case to be heard afresh on Aug 7

 

NEW DELHI – The Supreme Court on Thursday recalled its May 2 verdict rejecting JSW Steel Ltd.'s INR 193.50-billion resolution plan for Bhushan Power & Steel Ltd. and directing the latter's liquidation. The bench led by Chief Justice of India B.R. Gavai allowed the review pleas filed by JSW Steel and Bhushan Powers' lenders, including State Bank of India and Punjab National Bank.

 

"Prima facie we are of the view that the impugned judgment(May 2) does not correctly consider the legal position as has been laid down in the catena of judgments. Apart from that it is submitted (by petitioners) that various incorrect factual aspects have been taken into consideration," said the bench, also comprising Justice Satish Chandra Sharma. The apex court noted that the arguments which were not advanced were also considered while delivering the judgement in May.

 

"This is a fit case wherein judgment under review needs to be recalled and the matter is to be considered afresh," said the top court. The court will now hear the case on Aug. 7. "We also have to take into account the ground realities. 25,000 people (employed in Bhushan Power) cannot be thrown onto the road. Article 142 (of the Indian Constitution) power is used to do complete justice. Here complete injustice has been done," said Chief Justice Gavai.

 

JSW Steel argued that its INR-193.50-billion resolution plan was implemented in 2021 for the benefit of all stakeholders and that the liquidation of Bhushan Power will have adverse ramifications on the debt-ridden company that had been operating as a viable and a going concern since its acquisition. 

 

It has transformed Bhushan Power's financial health and now its operational capacity has almost doubled, sales have increased almost three times to INR 259.73 billion in 2024-25 (Apr-Mar) from INR 87.01 billion in FY17 and exports have resumed with an annual average of INR 29.76 billion in the last four years, said JSW Steel. In addition, Bhushan Power has contributed INR 169.00 billion in taxes to the exchequer and a capital investment of INR 57.88 billion has been made by the petitioner in the debt-ridden company since 2021, said JSW Steel.

 

Solicitor General of India Tushar Mehta, appearing for the banks, argued that Bhushan Power went into a serious financial crisis because of various defaults and now, it was a "healthy company" because of the acquisition by JSW Steel. However, the Supreme Court, exercising Article 142 powers, ordered the liquidation for certain minor violations, said Mehta.

 

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. 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. Terming JSW Steel's resolution plan as illegal, the top court said it should not have been accepted by the committee of creditors of the debt-ridden company and had directed its liquidation.

 

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, the top court had said in May. 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, the court had said. 

 

On Thursday, shares of JSW Steel closed 1.0% higher at INR 1,048.30 on the National Stock Exchange, while those of State Bank of India ended 0.6% lower at INR 796.55 and Punjab National Bank ended 2.5% lower at INR 105.38.  End

 

Reported by Surya Tripathi

Edited by Tanima Banerjee

 

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