In a landmark ruling, the Supreme Court of India on Thursday rejected JSW Steel’s ₹20,000 crore resolution plan for Bhushan Power and Steel Ltd (BPSL) and directed liquidation of the debt-ridden company, stating that the plan was illegal and should not have been accepted by the Committee of Creditors (CoC).
The apex court’s decision comes nearly four years after JSW Steel’s bid was approved, marking the end of a protracted legal tussle involving multiple government agencies and questions around clean slate immunity under the Insolvency and Bankruptcy Code (IBC).
In March 2020, JSW Steel’s ₹20,000 crore bid for BPSL was cleared by the National Company Law Tribunal (NCLT) and later by the NCLAT. However, the Enforcement Directorate (ED) opposed the plan, alleging that JSW Steel was a “related party” to BPSL and therefore ineligible to benefit from Section 32A of the IBC, which grants immunity from prior offences once a resolution plan is approved.
Senior advocate Neeraj Kishan Kaul, representing JSW Steel, argued before the court that all other government agencies—including the Ministry of Corporate Affairs, the Serious Fraud Investigation Office (SFIO), the CoC, and the resolution professional—supported the plan. He questioned the contradiction in the Centre’s stance, with only the ED opposing the resolution.
Despite these arguments and approvals from adjudicating authorities, the Supreme Court sided with the ED’s objections, effectively blocking the implementation of JSW’s takeover and directing liquidation of BPSL instead.
The decision deals a major blow to JSW Steel and the lenders of BPSL, who were expecting resolution proceeds. It also sets a significant precedent regarding the applicability of Section 32A and the independence of enforcement agencies in insolvency cases.
The liquidation process will now commence, marking a dramatic end to one of the most high-profile insolvency cases in India under the IBC framework.
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