Last Updated:May 26, 2025, 19:23 IST
The Supreme Court orders a status quo on the liquidation of Bhushan Power & Steel Ltd, halting NCLT proceedings, thus providing relief to JSW Steel.
The Supreme Court says JSW Steel’s plan to acquire Bhushan Power was “illegal” and should not have been accepted by the latter’s committee of creditors, CNBC-TV18 has reported.
In a major development that impacts India’s corporate and insolvency landscape, the Supreme Court on May 26, 2025, ordered a status quo on the liquidation of Bhushan Power & Steel Ltd (BPSL), halting all further proceedings in the National Company Law Tribunal (NCLT). This case, involving JSW Steel, one of India’s leading steelmakers, has been under the spotlight due to its size, legal complexity, and implications for the Insolvency and Bankruptcy Code (IBC).
Here’s is everything what this case is about and why it’s important:
What Is the JSW Steel-Bhushan Power Case?
Bhushan Power & Steel Ltd, a major player in India’s steel sector, defaulted on large bank loans. In 2017, Punjab National Bank initiated insolvency proceedings under the IBC. JSW Steel, one of India’s leading steel companies, submitted a Rs 19,700 crore resolution plan in 2019, which was approved by the Committee of Creditors (CoC) and the National Company Law Tribunal (NCLT).
JSW Steel completed the acquisition in March 2021 and began operating BPSL.
What Did the Supreme Court Say on May 2?
Four years after the acquisition, the Supreme Court on May 2, 2025, had scrapped JSW Steel’s acquisition of BPSL, on the grounds that the resolution plan violated the Insolvency and Bankruptcy Code (IBC). This become a major issue within the industry as it indicated uncertainty in the IBC system despite after years of acquisition.
A bench of Justice Bela M Trivedi and Justice Satish Chandra Sharma ruled JSW Steel’s resolution plan illegal and a “flagrant violation” of the IBC, criticising the Resolution Professional, the Committee of Creditors (CoC), and the NCLT.
The apex 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.
What Happened on May 26?
A separate Supreme Court bench comprising Justice BV Nagarathna and Justice Satish Chandra Sharma on May 26 ordered a status quo on all liquidation proceedings, following a petition by JSW Steel, thus giving respite to JSW Steel that faced uncertainty after the previous SC order.
JSW argued it still has time till June 2 to file a review petition. It 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.
The Court agreed that no irreversible steps should be taken during the review period.
Why It Matters?
The case is one of the landmark cases in the IBC proceedings. This case has become a major issue within the industry as it indicated uncertainty in Insolvency and Bankruptcy Code (IBC), even years after a resolution plan has been fully implemented. JSW Steel had acquired Bhushan Power & Steel following all necessary approvals, yet the Supreme Court’s decision on May 2 to reject the resolution plan and order liquidation shook industry confidence. It raised concerns about the finality and enforceability of approved resolution plans, potentially discouraging future bidders and investors from participating in distressed asset deals under the IBC framework.
However, the latest May 26 Supreme Court judgment to maintain the status quo has boosted industry confidence.
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