JSW Steel files review petition against Supreme Court verdict directing liquidation of Bhushan Power

JSW Steel Limited has moved the Supreme Court seeking a review of the top court's verdict rejecting its resolution plan for debt-ridden Bhushan Power and Steel (BPSL)..The Supreme Court had on May 2 set aside the resolution plan submitted by JSW Steel for Bhushan Steel and Power Ltd, holding it illegal and in violation of the Insolvency and Bankruptcy Code (IBC).A bench comprising Justice Bela M Trivedi and Justice Satish Chandra Sharma had also ordered the liquidation of BSPL under the IBC..In a scathing judgment, the apex court had quashed JSW Steel's ₹19,700 crore resolution plan for BPSL calling it a "flagrant violation of the IBC's mandatory provisions" and a dishonest and fraudulent attempt made by JSW..The Court had also criticised JSW Steel's conduct, stating that the company had "played smart" and demonstrated mala fide and dishonest intention throughout the insolvency process.Later on May 26, another Bench ordered status quo on the liquidation proceedings related to BPSL pending before the National Company Law Tribunal (NCLT).A Bench of Justices Nagarathna and Satish Chandra Sharma directed the same in order to allow JSW to file a review petition against the Court's May 2 judgment..JSW has now filed a review petition through Karanjawala & co arguing that if BPSL is liquidated, it would result in severe loss of financial and economic value created by JSW, disrupt the livelihoods of thousands of workers, and damage the broader steel industry and rural economies dependent on it. The plea warns of cascading effects on the national economy and India’s global market perception..According to the plea, the May 2 judgment overlooked critical facts and legal errors apparent on record. The decision undermines the commercial wisdom of the creditors and the objectives of the Insolvency and Bankruptcy Code, the plea argues..The petition alleges that the Supreme Court’s earlier judgment misread the facts and has resulted in findings contrary to law and precedent. .The Court erred in holding its resolution plan as non-compliant with Sections 30(2) and 31(2) of the Insolvency and Bankruptcy Code, leading to an erroneous rejection of the plan, it has been stated. The company has also alleged that there was a violation of principles of natural justice. According to the petition, JSW was not afforded an effective hearing on multiple key issues during the original proceedings.One of the central grounds of challenge is that the Court invoked Article 142 of the Constitution to direct the liquidation of a solvent and profitable company. JSW has contended that this was contrary to settled law which holds that resolution must be preferred over liquidation when feasible.The petition further argues that the judgment undermines the commercial wisdom of the Committee of Creditors (CoC), which had approved the resolution plan by a 100 percent vote. JSW submits that such primacy of the CoC is a core objective of the Code and has been compromised by the ruling.JSW has also submitted that the judgment failed to consider earlier binding decisions of the Supreme Court on identical issues, resulting in inconsistent application of legal principles..JSW Steel had emerged as the successful resolution applicant for BPSL in 2019 after offering to pay over ₹19,000 crore to financial creditors. The plan was approved by the National Company Law Tribunal (NCLT) in September 2019. It was later upheld by the NCLAT as well despite legal challenges, including concerns raised by the Enforcement Directorate (ED) regarding the attachment of BPSL’s assets.The matter reached the Supreme Court amid growing concern that JSW Steel had not implemented the plan for the years since approval. The Court noted that the resolution applicant failed to fulfill essential post-approval obligations, undermining the very objectives of the IBC, which includes time-bound resolution of insolvency and maximization of asset value.Notably, in December 2024, the ED decided not to pursue its appeal before the Supreme Court against JSW Steel's takeover of BPSL under the IBC..Follow Bar and Bench channel on WhatsAppDownload the Bar and Bench Mobile app for instant access to the latest legal news.