Supreme Court to hear JSW Steel’s plea on Bhushan Power liquidation on Monday

New Delhi: The Supreme Court will on Monday hear a plea filed by JSW Steel Ltd, seeking a stay on the liquidation proceedings of Bhushan Power and Steel Ltd (BPSL). The move follows the apex court’s 2 May verdict, which quashed the company's ₹19,300 crore resolution plan for BPSL and directed the company's liquidation.

The petition names former BPSL promoter Sanjay Singhal, whose earlier plea led to the Supreme Court's ruling invalidating the resolution plan.

The matter is listed for 26 May before a bench comprising Justices B.V. Nagarathna and Satish Chandra Sharma. Justice Nagarathna replaces Justice Bela M. Trivedi, who was part of the original bench with Justice Sharma but has since retired.

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JSW Steel has reportedly asked the court to defer the liquidation process by 60 days. The company has also issued demand notices to banks, seeking refunds of payments made under the now-quashed resolution plan.

Separately, the National Company Law Tribunal (NCLT) is also set to hear on Monday a plea by Sanjay Singhal seeking enforcement of the Supreme Court’s liquidation order. Singhal has urged the tribunal to initiate immediate liquidation to safeguard BPSL’s assets and prevent potential misuse or diversion.

The latest plea before the Supreme Court is significant for JSW Steel, which acquired BPSL through the insolvency resolution process over five years ago and has since invested heavily in reviving and operating the company. The apex court’s decision has disrupted JSW’s long-term plans to scale up capacity to 50 million tonnes by 2030.

As of 31 March 2024, JSW Steel carried net assets worth ₹14,091 crore related to BPSL on its consolidated balance sheet. The Odisha-based BPSL plant, with a capacity of 4.5 million tonnes per annum (MTPA), is a key part of JSW Steel’s domestic operations, which total 34.2 MTPA, the highest in India.

“We have implemented the resolution plan of BPSL in compliance with the law and taken steps to successfully revive the company to its present state today,” JSW Steel’s joint managing director Jayant Acharya said during a post-earnings call last week. He added that the company expects its compensation rights to be upheld.

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BPSL was among the first 12 large defaulters identified by the Reserve Bank of India in 2017 under the Insolvency and Bankruptcy Code (IBC), with outstanding dues of over ₹47,200 crore.

At the time of its insolvency admission, BPSL owed more than ₹45,000 crore. JSW Steel’s plan was the highest offer received by creditors. Despite ongoing litigation, including the challenge by Singhal, payments under the plan were made and the resolution was substantially implemented.

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JSW Steel’s resolution plan was approved by the NCLT on 5 September 2019 and upheld by the National Company Law Appellate Tribunal (NCLAT) on 17 February 2020.

However, the Supreme Court struck it down on 2 May, citing violations of IBC provisions, particularly the failure to strictly adhere to the plan’s timeline.