Liquidation of Bhushan Steel: SC orders status quo on NCLT proceedings

The Supreme Court on Monday ordered status quo on the liquidation proceedings against Bhushan Steel and Power Limited (BPSL) before the National Company Law Tribunal (NCLT) until filing of a review petition against its May 2 order rejecting a resolution plan.

A Bench led by Justice BV Nagarathna said liquidation of the BPSL might jeopardise the review petition to be filed by JSW Steel Limited.

"Without observing anything on the merits, we find that the interests of justice would be sub-served, and in order to avoid future complications in the matter, if there is a status quo on the proceedings pending before the NCLT. We also record the submission of the learned senior counsel for the appellant that the review petition shall be filed prior to the expiry of the limitation period and in accordance with the law," the Bench said.

JSW said the review petition would be filed within the limitation period.

On May 2, the top court had set aside a Rs 19,700 crore resolution plan submitted by JSW Steel Limited for BSPL, holding it illegal and in violation of the Insolvency and Bankruptcy Code.

On behalf of the Committee of Creditors (CoC), Solicitor General Tushar Mehta proposed deferring the NCLT proceedings to June 10.

BPSL, one of the first major insolvency cases initiated under the Insolvency and Bankruptcy Code (IBC) in 2017, had defaulted on dues exceeding Rs 45,000 crore. JSW Steel acquired BPSL through the IBC process in 2019. The NCLT had approved the resolution plan on September 5, 2019.

However, five years later, on May 2, the Supreme Court held that the CoC erred in approving JSW Steel's plan as it was in violation of the Insolvency and Bankruptcy Code.

It had directed creditors to return the funds already disbursed under the now-invalidated plan, including equity contributions.