Supreme Court Orders Status Quo On Liquidation Of Bhushan Power & Steel Ltd To Allow JSW To File Review Petition

The Supreme Court today ordered status quo on the liquidation proceedings for Bhushan Power & Steel Ltd (BPSL) before the National Company Law Tribunal (NCLT), after hearing a petition filed by JSW Steel, whose resolution plan for BPSL was rejected by the Supreme Court on May 2.

A bench of Justice BV Nagarathna and Justice Satish Sharma passed the order considering the fact that JSW's limitation period for filing a review against the Supreme Court's judgment is not yet over.

The bench observed that the liquidation of the company might jeopardise the review petition to be filed by the JSW and ordered status quo in the interest of justice.

Senior Advocate Neeraj Kishan Kaul, for JSW, said that even before the time for filing a review against the Supreme Court's judgment(which quashed JSW's resolution plan for Bhushan Steel) is over, the NCLT is proceeding to appoint a liquidator. Kaul said that JSW has time till June 2 to file the review and added that it was a complex matter which will take some time. Kaul informed that the matter is listed tomorrow before the NCLT. "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," he said.

The bench however pointed out that the NCLT proceedings are in pursuance of the Supreme Court's directions.

Solicitor General of India Tushar Mehta, for the CoC, "as a way out", suggested that the matter be deferred till the 10th of June. "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 10th of June. Everybody's interests is taken care of," SG said.

Justice Nagarathna however said that review petitions are not generally listed during vacations. SG said that it was a difficulty. "We will have to return the money. This was a resolution plan implemented five years back. 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," SG Mehta added.

Kaul said that Sanjay Singhal has no locus standi in the matter as an ex-promoter and that he was under investigation of the ED for malpractices.

Senior Advocate Dhruv Mehta, for Sanjay Singhal, said that the findings today are against JSW and opposed the plea. He contended that JSW's petition filed against the NCLT's order was not maintainable as the appeal remedy was not availed. Kaul and SG refuted this submission, saying that any order can be directly challenged under Article 136. Regarding Singhal, SG said, "the less they speak, it is better for them. They are already under a chargesheet. Having left the company years ago, they are now pressuring the NCLT. You are the creator of the problem."

Dhruv Mehta said that the judgment has acknowledged the locus standi of Singhal and said that various faults of the CoC have been outlined there.

Justice Nagarathna said that JSW has the right to file a review and the status quo has to be preserved.

The bench disposed of JSW's petition with the status quo order, clarifying that it has not expressed anything on the merits of the matter. The bench said that it was granting the relief only in the interest of justice and to avoid future complications of the matter. JSW undertook that the review petition would be filed within the limitation period.

"Without observing anything on the merits, we find that the interests of justice would be subserved,  and in order to avoid future complications in the matter, if there is a status quo of the proceedings pending before the NCLT. We also record the submission of the ld 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 observed in the order.

On May 2, the Supreme Court rejected the ₹19,700 crore Resolution Plan submitted by JSW Steel for BPSL, holding that it failed to comply with Sections 30(2) and 31(2) of the Insolvency and Bankruptcy Code (IBC).

Holding that the Resolution Plan of JSW was illegal and contrary to the provisions of the IBC, a bench comprising Justice Bela M Trivedi and Justice Satish Chandra Sharma stated that the Committee of Creditors(CoC) should not have accepted it. The bench also faulted the National Company Law Tribunal for approving the Resolution Plan.

Since JSW's resolution plan was rejected, the Court ordered the liquidation of BPSL under Section 33 of the IBC.

It should also be noted that Sanjay Singal, the former promoter of BPSL, has approached the NCLT, Delhi, urging it to enforce the Supreme Court's recent order, which directed the liquidation of BPSL. In his petition, Singal asked the NCLT to give full effect to the order of the Supreme Court and initiate the liquidation process as per the IBC.

Case Details: JSW STEEL LIMITED v SANJAY SINGHAL AND ORS|Diary No. 29406-2025

Appearance: For committee of creditors - Mr Tushar Mehta, Solicitor General assisted by Advocates Mr Raunak Dhillon, Ms Aishwarya Gupta, and Ms Isha Malik.

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