SC recalls its verdict on Bhushan Steel liquidation

The Supreme Court on Thursday recalled its recent order that set aside a Rs 19,700 crore resolution plan submitted by JSW Steel Limited for Bhushan Power and Steel Limited (BPSL) and ordered liquidation of the beleaguered company.

“Prima facie we are of the view that the impugned judgment does not correctly consider the legal position as has been laid down in catena of judgments,” a Bench of Chief Justice of India BR Gavai and Justice Satish Chandra Sharma said about the May 2 judgment authored by Justice Bela M Trivedi (since retired).

“We, therefore, think that this is a fit case wherein the judgment under review needs to be recalled and the matter needs to be considered afresh. So, needless to say that while we are allowing the review, we keep all the questions available to both parties open to be argued at the stage of hearing,” the Bench said, posting the matter for fresh hearing next Thursday.

Earlier, a Bench of Justice Trivedi and Justice Satish Chandra Sharma had on May 2 set aside the resolution plan of applicant JSW Steel Limited for the BPSL, holding it illegal and in violation of the Insolvency and Bankruptcy Code (IBC). During an open court hearing, the CJI expressed shock after being told that there were 25,000 workers in the BPSL, which had been revived by JSW Steel by infusing Rs 30,000 crore. “We should also look at the larger picture—25,000 people cannot be thrown on the road,” the Bench noted.

Solicitor General Tushar Mehta submitted that the May 2 judgment interfered with the commercial wisdom of the Committee of Creditors (CoC), something courts were generally barred from doing under the IBC.

“Liquidation is not part of the preamble of the IBC... the main aim of the IBC is to ensure that the company gets revived. No question of law arises in this case. Findings were rendered merely on the basis of doubt,” Mehta said, pointing out that JSW Steel had been running the company since 2021 and had taken loans to revitalise its operations. “This company was once part of the RBI-identified ‘dirty dozen’. It is now a healthy, operational entity employing 25,000 people,” Mehta submitted.

On behalf of JSW Steel, senior advocate Neeraj Kishan Kaul argued that 97.75 per cent of creditors had approved the resolution plan and that it had been upheld by both the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT).

“The plan has been fully implemented. Fresh capital expenditure has been infused and all creditors have been paid. The turnover has increased,” Kaul said. He said the May 2 verdict set a “dangerous precedent”. Kaul said the Enforcement Directorate’s provisional attachment came only after the plan was approved, leading to prolonged litigation.

BPSL, one of the first major insolvency cases initiated under the 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.