SC rejects JSW Steel’s takeover plan for Bhushan Steel, orders liquidation
The Supreme Court on Friday set aside the resolution plan submitted by JSW Steel Ltd for the Bhushan Steel and Power Ltd (BSPL), 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 ordered the liquidation of BSPL under the IBC.
The top court criticised the conduct of all key stakeholders in the resolution process — the resolution professional, the Committee of Creditors (CoC), and the National Company Law Tribunal (NCLT) — for enabling what it termed a “flagrant violation” of the IBC.
JSW Steel Ltd, in a regulatory filing to National Stock Exchange and the BSE Ltd, said, “We learnt that the Supreme Court pronounced judgment today, ie, May 2 rejecting the resolution plan submitted by the company and approved by NCLAT, on certain grounds.”
It added, “We are yet to receive the formal copy of the order to understand the grounds for rejection in detail and its implications. Once we receive the order and are able to review the same along with our legal advisors, we will decide on our further course of action. We shall keep the Exchanges informed of further developments as required under applicable laws…” Justice Bela Trivedi, pronouncing the verdict, said the resolution professional failed to perform his statutory duties during the corporate insolvency resolution process, as mandated under the IBC and its associated regulations.
The Bench said the CoC was found to have approved JSW’s resolution plan without proper application of its commercial wisdom.
The plan contravened mandatory IBC provisions and did not protect creditors’ interests and notably, the CoC accepted payments from JSW without objection, despite the plan’s shortcomings, it added.
The verdict declared the orders of September 5, 2019 of the NCLT and the NCLAT judgement of February 17, 2022 as “perverse” and lacking jurisdiction, and consequently set them aside.
The Bench rejected the resolution plan of JSW, as approved by the CoC, for being non-compliant with the IBC.
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