Liquidation of BPSL: Supreme Court orders status quo on proceedings pending before NCLT
A bench of Justices B V Nagarathna and Satish Chandra Sharma said liquidation of the BPSL might jeopardise the review petition, which was to be filed by JSW Steel Limited
New Delhi: The Supreme Court on Monday ordered status quo on the liquidation proceedings of Bhushan Steel and Power Ltd (BPSL) before the National Company Law Tribunal.
A bench of Justices B V Nagarathna and Satish Chandra Sharma said liquidation of the BPSL might jeopardise the review petition, which was to be filed by JSW Steel Limited.
“Without expressing any opinion at this stage, we are of the view that it would be in the interest of justice if the status quo is maintained on the proceedings pending in NCLT.
“We also record the submission of the senior counsel for the appellant that the review petition shall be filed prior to the expiry of the limitation period and in accordance with the law,” the bench said.
During the hearing, senior advocate Neeraj Kishan Kaul, appearing for JSW, submitted that NCLT was proceeding to appoint a liquidator even before the time for filing review petition had not over.
“If a liquidator is appointed, we will be in great difficulty. It is a profit-making company and this resolution plan was given four years ago,” Kaul said. Solicitor General Tushar Mehta, appointed for the Committee of Creditors, suggested that the matter be deferred till June 10.
“I am not opposing. NCLT will have to hear the matter. The question is on which date. Kindly ask them to take up this matter on June 10. Everybody’s interests are taken care of,” he said.
When the bench pointed out that review petitions are not generally listed during summer vacations, Mehta told the court that CoC will have to return the money.
“This was a resolution plan implemented five years ago. We have taken the money. Now, to reverse everything…they have taken money from other banks. “Some of them are foreign banks. It will be difficult for them to deal with foreign banks. So, some way will have to be found out,” Mehta said.
Senior advocate Dhruv Mehta, appearing for former promoter Sanjay Singhal, argued that JSW’s petition filed against the NCLT’s order was not maintainable. The top court passed the order after hearing a plea filed by JSW Steel Ltd seeking to keep liquidation of BPSL in abeyance.
JSW moved the apex court to halt the liquidation of BPSL, contending that it would be detrimental to the company, lenders, and employees. The petition follows May 2 order of the apex court to liquidate BPSL and refund JSW’s payments, with the NCLT scheduled to hear a plea to initiate liquidation proceedings.
On May 2, the top court had set aside a resolution plan submitted by JSW Steel Limited for BSPL, holding it illegal and in violation of the Insolvency and Bankruptcy Code (IBC) and ordered the liquidation of BSPL under the IBC. It had 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.
The apex court had criticised multiple stakeholders, including successful resolution applicant (SRA) JSW Steel Limited, for procedural lapses and failure to uphold the objectives of the IBC. Having thoroughly examined the entire matter factually and legally, we arrive at the following conclusions: the resolution professional had utterly failed to discharge his statutory duties contemplated under the IBC and the CIRP regulations during the course of the entire CIR proceedings of the corporate debtor, BPSL, the verdict had said.
The court held that the CoC failed to exercise its commercial wisdom while approving JSW’s resolution plan, which was in absolute contravention of the mandatory provisions of the IBC and CIRP regulations.
The verdict declared the NCLT orders of September 5, 2019 and the NCLAT judgment of February 17, 2022 as “perverse” and lacking jurisdiction, and consequently, set those aside.
The bench rejected the resolution plan of JSW, as approved by the CoC, for being non-compliant with the IBC. The NCLT was subsequently directed to initiate liquidation proceedings against BSPL under section 33(1) of the IBC, exercising the court’s powers under Article 142 of the Constitution.
The top court said the CoC should not have accepted the resolution plan. In exercise of the powers under section 33(1) of the IBC and Article 142 of the Constitution, the bench directed the NCLT to initiate liquidation proceedings against corporate debtor BPCL.
The verdict declared the NCLT orders of September 5, 2019 and the NCLAT judgment of February 17, 2022 as “perverse” and lacking jurisdiction, and consequently, set those aside.
The bench rejected the resolution plan of JSW, as approved by the CoC, for being non-compliant with the IBC. The NCLT was subsequently directed to initiate liquidation proceedings against BSPL under section 33(1) of the IBC, exercising the court’s powers under Article 142 of the Constitution.
The top court said the CoC should not have accepted the resolution plan. In exercise of the powers under section 33(1) of the IBC and Article 142 of the Constitution, the bench directed the NCLT to initiate liquidation proceedings against corporate debtor BPCL.
