New Delhi, May 5 (KNN) In a landmark ruling, the Supreme Court has ordered the liquidation of Bhushan Power and Steel Ltd (BPSL) and rejected the 2019 resolution plan submitted by JSW Steel.
The Court, comprising Justices Bela M. Trivedi and Satish Chandra Sharma, found the plan to be “illegal” and contrary to the provisions of the Insolvency and Bankruptcy Code (IBC).
In its order, the Supreme Court said, “The Resolution Plan of JSW as approved by the CoC (Committee of Creditors) stands rejected, being not in conformity with the provisions contained in sub-section (2) of Section 30, read with sub-section (2) of Section 31 of the Insolvency and Bankruptcy Code (IBC).”
Section 30 (2) deals with the Resolution Professional’s duty to examine the resolution plans. Section 31(2) empowers the Adjudicating Authority (NCLT) to reject a resolution plan if it does not meet the requirements under IBC.
This verdict has raised serious concerns about the future of the IBC and could impact the approval process for future resolution plans.
Shares of JSW Steel fell 5 per cent following the ruling, signaling investor concerns over the implications of the decision.
The Ministry of Corporate Affairs (MCA) and the Insolvency and Bankruptcy Board of India (IBBI) are now examining the order to understand its potential impact on the IBC.
A senior government official confirmed that the authorities are reviewing the verdict to draw lessons for improving the regulations and processes under the IBC.
In 2021, JSW Steel had won the bid for BPSL, one of the ‘Big 12’ non-performing assets (NPAs) identified by the Reserve Bank of India, with a bid of Rs 19,350 crore.
However, the Court ruled that the Committee of Creditors (CoC) had failed to properly exercise its commercial wisdom when approving JSW’s resolution plan, which violated key provisions of the IBC and the Corporate Insolvency Resolution Process (CIRP) regulations.
IBC experts have warned that the ruling may discourage potential resolution applicants, as they could fear that their plans might be overturned in the future.
(KNN Bureau)
