JSW Steel Friday asked the Supreme Court to keep the liquidation of Bhushan Power and Steel Ltd (BPSL) in “abeyance” as this will be “fatal” to the company and other stakeholders, including lenders and workers.
Sajjan Jindal-led JSW said it was deciding on its legal recourse of review under Article 137. The company asked that any move by the National Company Law Tribunal (NCLT) to start liquidation proceedings be paused until it had exhausted all legal remedies.
ET reported in its Friday edition that JSW Steel was seeking a 60-day pause on BPSL’s liquidation.
The SC move comes after BPSL’s former promoter Sanjay Singhal asked the NCLT to start liquidation proceedings and appoint a liquidator. But if the NCLT initiates the process, it will lead to “complicated litigation to reverse the damage”, JSW told the Supreme Court Friday.
The erstwhile promoters of BPSL have acted in unnecessary haste and without having any locus standi, JSW said.
The apex court had on May 2 rejected JSW’s 2019 resolution plan for BPSL citing non-compliance with rules and ordered the unit’s liquidation. It also ordered that money be refunded to JSW. The company said the amount to be refunded was “yet to be worked out.”
JSW told the Supreme Court that BPSL’s assets are significantly different from what they were before the resolution plan took effect due to value accretion.
“Any order for initiation of liquidation of BPSL must be passed in respect of BPSL as it stood prior to the date of implementation of the resolution plan,” JSW said in its plea to the Supreme Court.
“Consequently, the actions undertaken by JSW upon and after the implementation of the resolution plan need to be reversed and the position of BPSL and its stakeholders ought to be restored to the position they were in immediately prior to the date of implementation of the resolution plan for any liquidation proceedings to commence.”
The court is likely to hear the appeal on Monday as JSW’s counsel sought an urgent listing, saying the NCLT is moving “ahead fast with the liquidation process”. To be sure, the NCLT is also scheduled to hear the Singhal plea on Monday.
The May 2 ruling scrapped JSW Steel’s acquisition of BPSL four years after it took place on the grounds that the resolution plan was “illegal” and “in gross violation” of the Insolvency and Bankruptcy Code (IBC). While directing the NCLT to initiate liquidation proceedings against BPSL, the court had directed that payments made to financial and operational creditors and the equity contribution by JSW be refunded within two months, as undertaken by the lenders to the bankrupt firm.
JSW told the apex court in its fresh appeal the initiation of liquidation will cause irreparable damage to it and stakeholders at large--public sector banks being the new lenders, new operational creditors and around 20,000 employees.
Therefore, the continuation of NCLT proceedings without addressing and appreciating the legal remedies available to JSW and various other stakeholders would “frustrate the rights” of JSW, the appeal stated. However, this could be an attempt at reopening the case, experts told ET.
JSW's appeal assumes importance as the Committee of Creditors had also asked the tribunal to grant more time to assess the impact of the Supreme Court judgment and assist it on the way forward.
Solicitor general Tushar Mehta had last week told the tribunal that the plan had been implemented, payments had been made to stakeholders and new parties had taken interest in the resolved company, so many issues need to be addressed on the legal implications under the changed circumstances.
Further, other options are under consideration including a fresh corporate insolvency resolution process (CIRP) process, Mehta had said, adding that the interest of various CoC members will have to be assessed and resolved under the IBC framework.
“Independently CoC and other stakeholders are also contemplating to seek clarification/review, if so advised,” NCLT had noted in a May 13 order. The director general, Ministry of Corporate Affairs, had also sought impleading the Union of India as a party.
Bhushan Power owed over Rs 47,000 crore to lenders when the Reserve Bank of India put it on a bankruptcy resolution list in 2017. The NCLT began the resolution process in July that year, based on the filing of lead lender Punjab National Bank, which initiated criminal proceedings in 2019 against former directors of the company after unearthing a Rs 3,800 crore fraud on its books. PNB and State Bank of India led the CoC. JSW acquired Bhushan Power in March 2021 after its proposal was approved by the CoC and the NCLAT.
Sajjan Jindal-led JSW said it was deciding on its legal recourse of review under Article 137. The company asked that any move by the National Company Law Tribunal (NCLT) to start liquidation proceedings be paused until it had exhausted all legal remedies.
ET reported in its Friday edition that JSW Steel was seeking a 60-day pause on BPSL’s liquidation.
The SC move comes after BPSL’s former promoter Sanjay Singhal asked the NCLT to start liquidation proceedings and appoint a liquidator. But if the NCLT initiates the process, it will lead to “complicated litigation to reverse the damage”, JSW told the Supreme Court Friday.
The erstwhile promoters of BPSL have acted in unnecessary haste and without having any locus standi, JSW said.
The apex court had on May 2 rejected JSW’s 2019 resolution plan for BPSL citing non-compliance with rules and ordered the unit’s liquidation. It also ordered that money be refunded to JSW. The company said the amount to be refunded was “yet to be worked out.”
JSW told the Supreme Court that BPSL’s assets are significantly different from what they were before the resolution plan took effect due to value accretion.
“Any order for initiation of liquidation of BPSL must be passed in respect of BPSL as it stood prior to the date of implementation of the resolution plan,” JSW said in its plea to the Supreme Court.
“Consequently, the actions undertaken by JSW upon and after the implementation of the resolution plan need to be reversed and the position of BPSL and its stakeholders ought to be restored to the position they were in immediately prior to the date of implementation of the resolution plan for any liquidation proceedings to commence.”
The court is likely to hear the appeal on Monday as JSW’s counsel sought an urgent listing, saying the NCLT is moving “ahead fast with the liquidation process”. To be sure, the NCLT is also scheduled to hear the Singhal plea on Monday.
The May 2 ruling scrapped JSW Steel’s acquisition of BPSL four years after it took place on the grounds that the resolution plan was “illegal” and “in gross violation” of the Insolvency and Bankruptcy Code (IBC). While directing the NCLT to initiate liquidation proceedings against BPSL, the court had directed that payments made to financial and operational creditors and the equity contribution by JSW be refunded within two months, as undertaken by the lenders to the bankrupt firm.
JSW told the apex court in its fresh appeal the initiation of liquidation will cause irreparable damage to it and stakeholders at large--public sector banks being the new lenders, new operational creditors and around 20,000 employees.
Therefore, the continuation of NCLT proceedings without addressing and appreciating the legal remedies available to JSW and various other stakeholders would “frustrate the rights” of JSW, the appeal stated. However, this could be an attempt at reopening the case, experts told ET.
JSW's appeal assumes importance as the Committee of Creditors had also asked the tribunal to grant more time to assess the impact of the Supreme Court judgment and assist it on the way forward.
Solicitor general Tushar Mehta had last week told the tribunal that the plan had been implemented, payments had been made to stakeholders and new parties had taken interest in the resolved company, so many issues need to be addressed on the legal implications under the changed circumstances.
Further, other options are under consideration including a fresh corporate insolvency resolution process (CIRP) process, Mehta had said, adding that the interest of various CoC members will have to be assessed and resolved under the IBC framework.
“Independently CoC and other stakeholders are also contemplating to seek clarification/review, if so advised,” NCLT had noted in a May 13 order. The director general, Ministry of Corporate Affairs, had also sought impleading the Union of India as a party.
Bhushan Power owed over Rs 47,000 crore to lenders when the Reserve Bank of India put it on a bankruptcy resolution list in 2017. The NCLT began the resolution process in July that year, based on the filing of lead lender Punjab National Bank, which initiated criminal proceedings in 2019 against former directors of the company after unearthing a Rs 3,800 crore fraud on its books. PNB and State Bank of India led the CoC. JSW acquired Bhushan Power in March 2021 after its proposal was approved by the CoC and the NCLAT.
