SC Orders Status Quo On Bhushan Power Liquidation As JSW Steel Moves To Stall Proceedings

Last Updated:May 26, 2025, 13:58 IST

JSW Steel argued that initiating liquidation would be “fatal” to the company and would adversely impact various stakeholders

The Supreme Court on Monday ordered parties to maintain status quo on the liquidation of Bhushan Power and Steel Ltd (BPSL), following a plea by JSW Steel seeking to put the liquidation proceedings in “abeyance,” Economic Times reported.

JSW Steel argued that initiating liquidation would be “fatal” to the company and would adversely impact various stakeholders, including lenders and employees.

A bench comprising Justices B V Nagarathna and Satish Chandra Sharma observed that liquidation of BPSL could jeopardise JSW Steel’s pending review petition. “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 bench said.

This comes after the apex court, on May 2, had rejected JSW Steel’s 2019 resolution plan for BPSL, citing non-compliance with rules, and ordered liquidation of the company. JSW Steel approached the Supreme Court after BPSL’s former promoter Sanjay Singhal petitioned the NCLT to commence liquidation proceedings and appoint a liquidator. JSW warned the court that initiating liquidation would trigger “complicated litigation to reverse the damage.”

JSW Steel also informed the Supreme Court that it was considering filing a review under Article 137 and requested a pause on any NCLT move to start liquidation until all legal remedies were exhausted. JSW contended that the erstwhile promoters acted in haste and lacked locus standi.

Senior counsel N K Kaul, representing JSW Steel, told the court that all parties had requested the NCLT for a delay given the complexity of the matter. He expressed concern that if a liquidator were appointed, it would severely impact JSW’s position, emphasizing that there was still time to file a review petition.

During the hearing, Solicitor General Tushar Mehta noted, “This was a resolution plan implemented five years back…now we have to recover, they will have to return money.” He added that reversing the situation would require security, pointing out that some lenders were foreign banks, highlighting the need for a viable solution.

Kaul accused the promoters of filing daily applications before the NCLT and alleged that they had siphoned off Rs 25,00 crore, while JSW Steel had two months to repay creditors. He said, “This promoter is pressurising the NCLT to take up the matter every day.”

Senior counsel Dhruv Mehta, representing promoter Singhal, said, “My locus has been accepted by the SC,” and confirmed steps were underway to file a review petition.

The Supreme Court’s May 2 judgment had scrapped JSW Steel’s acquisition of BPSL, four years after it took place, on the grounds that the resolution plan violated the Insolvency and Bankruptcy Code (IBC). The court directed the NCLT to initiate liquidation proceedings while ensuring refunds of payments made to financial and operational creditors, along with JSW’s equity contributions, within two months.

JSW Steel’s latest appeal stresses that liquidation will cause irreparable harm to the company and its stakeholders, including public sector banks, new operational creditors, and roughly 20,000 employees. It argued that continuing NCLT proceedings without considering JSW’s legal remedies would “frustrate the rights” of JSW.

The appeal is significant, as the Committee of Creditors has also requested the tribunal for additional time to evaluate the Supreme Court’s judgment and determine the future course of action, Economic Times reported.

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