Supreme Court orders status quo on liquidation of Bhushan Power & Steel Ltd

New Delhi: The Supreme Court on Monday ordered status quo in the liquidation proceedings of Bhushan Power & Steel Ltd (BPSL) pending before the National Company Law Tribunal (NCLT), in a decision to avoid future legal complications as the time to seek of the previous judgment of May 2 in this regard has yet not expired.

A bench of Justices B V Nagarathna and Justice Satish Chandra Sharma issued the direction in a petition filed by JSW Steel Ltd, seeking abeyance of any further hearing in applications filed be the erstwhile promoters of BPSL to expedite liquidation proceedings pending before the NCLT.

The court took note of the fact that the time to file review petition against May 2 judgment allowing liquidation proceedings was still not over for the aggrieved party.

"It would be expedient in the interest of justice if the status quo is maintained in connection with the liquidation proceedings against Bhushan Steel and Power Ltd (BPSL) before the National Company Law Tribunal," the bench said.

Senior advocate Neeraj Kishan Kaul, appearing on behalf of JSW Steel Ltd, contended that even before the time for filing a review against the court’s May 2 judgment is over, the NCLT is proceeding to appoint a liquidator. He argued before the bench that JSW has time till June 2, to file the review.

He said Sanjay Singhal, the first respondent and ex- promoters are seeking an expeditious implementation of the directions issued by this court. The counsel also said any implementation of those directions, at this stage, would only jeopardise the consideration of the review petition to be filed by the appellant.

In the circumstances, he urged that a practical solution be reached pending consideration and disposal of the review oetition by this court.

Upon hearing the counsel, the bench said, "Without expressing any opinion on the merits of the matter, at this juncture we find that the interest of justice would be served and in order to avoid future legal complications in the matter, an order of status quo of the proceedings pending before the National Company Law Tribunal is issued by this Court."

The court also clarified that this order in this appeal has been made by way of an interim arrangement pending consideration and disposal of the review petition to be filed by the appellant.

"We also record the submission that the review petition would be filed before this court prior to the expiry of the limitation period and in accordance with law," the bench said.

Solicitor General Tushar Mehta also appeared in the matter.

In a major judgment, the Supreme Court had on May 2 set aside JSW Steel Ltd's Rs 19,700-crore resolution plan for Bhushan Power & Steel, by calling it illegal.

The apex court directed liquidation of the bankrupt firm.

A bench headed by Justice Bela M Trivedi (since retired) declared that JSW Steel's resolution plan was illegal and should not have been accepted by the committee of creditors of the debt-ridden company.

The judgment came as a big setback for JSW Steel.

In its decision, the court had found 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 bench found non-compliance and violations of mandatory provisions of the 2016 Code at the instance of JSW Steel, committee of creditors and resolution professionals at pre-approval and post-approval stages of resolution.

"Nobody should be permitted to misuse the process of law or should be permitted to take undue advantage of the pendency of any proceedings in the court or tribunal," the bench had said.

In strong observations, the bench found 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.

JSW Steel had secured the highest score, but even after the approval of its plan, it willfully contravened and did not comply with the terms of the said resolution plan for a period of over two years, defeating the very object and purpose of the IBC, the bench said.

In 2017, the National Company Law Tribunal began insolvency proceedings against Bhushan Power & Steel 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 Enforcement Directorate also registered a case against Bhushan Power and its officers for money-laundering offences on charges of defrauding banks to the tune of Rs 47,204 crore, which was subsequently set aside by the Delhi High Court.