Supreme Court recalls judgment rejecting JSW Steel’s ₹19,700 crore resolution plan for Bhushan Power and Steel

The Supreme Court said on Thursday that it is recalling its previously issued judgment that rejected JSW Steel’s ₹19,700 crore resolution plan for Bhushan Power and Steel and ordered its liquidation. It said that the previous judgment did not consider the precedents and the correct consideration of the legal position.

A bench consisting of Justice BR Gavai, the chief justice of India, and Justice Satish Chandra Sharma—who had passed the original judgement—said that India’s apex court will now relook into the matter. “Prima facie, we are of the view that the impugned judgment does not correctly consider the legal position as has been laid down in the catena of judgments,” the court said. The court will now hear the case afresh on August 7. “This is a fit case wherein the judgment under review needs to be recalled, and the matter is to be considered afresh,” the bench added.

In May, India’s apex court rejected JSW Steel’s plan to take over the debt-ridden Bhushan Power and Steel, four years after the takeover was completed. In its judgement, a bench of Justice Bela Trivedi and Justice Sharma said that the Committee of Creditors had faltered in approving JSW Steel’s plan. The court was also of the view that the approval of JSW Steel’s plan was a contravention of the Insolvency and Bankruptcy Code (IBC). In their judgment, the bench also added that there was an “entire spectrum of lacunae and flaws” in the takeover process. Banks were also asked to return the funds they had recovered from the resolution plan.

Subsequently, JSW Steel moved the apex court to review the judgment. Bhushan Power owed banks close to ₹47,000 crore when the Reserve Bank of India included the company under the IBC in 2017. Two years later, the Punjab National Bank had initiated criminal proceedings against the board of Bhushan Power and Steel after they unearthed a fraud close to ₹3,800 crore in the books of the company. 

The resolution plan of JSW Steel to pay creditors ₹19,700 crore was approved by the National Company Law Tribunal in September 2019. The National Company Law Appellate Tribunal (NCLAT) subsequently upheld the resolution plan. However, the matter was presented before the Supreme Court, as the concerns of JSW Steel not implementing the resolution plan spiralled. 

Earlier this month, JSW Steel said its first-quarter consolidated net profit more than doubled to ₹2,209 crore. While revenue remained flat at ₹43,147 crore, lower costs and better realisations from international subsidiaries boosted the company’s bottom line. Its domestic steel sales grew 12% year-over-year, outpacing industry growth of around 8%, according to the Sajjan Jindal-led steelmaker.