Daijiworld Media Network - New Delhi
New Delhi, May 26: The Supreme Court on Monday directed all parties to maintain status quo on the liquidation process of Bhushan Power and Steel Ltd (BPSL), following a plea by JSW Steel seeking a pause in the National Company Law Tribunal (NCLT) proceedings.
A bench comprising justices B V Nagarathna and Satish Chandra Sharma observed that any move towards liquidation could jeopardise the review petition JSW plans to file against the apex court’s May 2 verdict, which had scrapped JSW’s 2019 acquisition of BPSL and ordered liquidation of the unit.
“Without expressing any opinion at this stage, we are of the view that it would be in the interest of justice if status quo is maintained on the proceedings pending in NCLT,” the court said.
JSW Steel’s counsel N K Kaul argued that hasty liquidation could cause irreversible damage to stakeholders, including public sector banks, foreign lenders, 20,000 employees, and new operational creditors. He urged the court to defer the NCLT proceedings, noting, “If a liquidator is appointed, then where will I go? We still have time to file a review.”
The controversy stems from the Supreme Court’s earlier ruling that declared the resolution plan “illegal” and in violation of the Insolvency and Bankruptcy Code (IBC). The court also directed refunds of payments made by JSW Steel and the firm’s equity contributions within two months.
JSW has contended that the promoters of BPSL, including Sanjay Singhal, are acting in undue haste to initiate liquidation despite lacking proper legal standing. “They have siphoned off Rs 25,000 cr,” Kaul claimed, pointing to frequent applications being filed in NCLT.
Senior advocate Dhruv Mehta, representing former promoter Singhal, countered by stating that the Supreme Court had already recognised Singhal’s locus standi in the matter.
Solicitor General Tushar Mehta, appearing for the Committee of Creditors (CoC), acknowledged the complexities involved and said a workable solution must be explored. He also raised concerns about the return of funds, especially to foreign banks, stating, “To reverse everything, they (JSW) have to give security.”
The apex court’s temporary halt offers a window for JSW Steel to pursue a review petition under Article 137 of the Constitution. Experts note that this move could also be viewed as an attempt to reopen the case, though it remains to be seen how the matter unfolds in the coming weeks.