The Supreme Court directed the maintenance of status quo in the liquidation proceedings concerning Bhushan Power and Steel Limited (BPSL), in light of a pending review period sought by JSW Steel against the rejection of its resolution plan. The Court intervened to prevent any action that might prejudice the forthcoming review petition and observed that the continuation of liquidation proceedings may undermine the adjudicatory process.
The issue arose following the Supreme Court’s decision dated May 2, whereby it set aside the ₹19,700 crore resolution plan submitted by JSW Steel for the revival of BPSL. The Court had concluded that the plan failed to comply with the mandatory requirements under Sections 30(2) and 31(2) of the Insolvency and Bankruptcy Code, 2016 (IBC), and directed liquidation under Section 33. Following this judgment, proceedings for the appointment of a liquidator were initiated before the National Company Law Tribunal (NCLT), Delhi. Meanwhile, JSW Steel approached the Supreme Court with an application seeking a stay on further liquidation steps, highlighting that the limitation period for filing a review petition was still running.
Senior Advocate Neeraj Kishan Kaul, appearing on behalf of JSW Steel, submitted that the NCLT had begun the process of appointing a liquidator even before the expiry of the period available to JSW for seeking a review of the Supreme Court's May 2 judgment. He asserted that the statutory deadline for filing such a review extended until June 2 and stressed that due to the complex nature of the matter, additional time would be required to prepare the review. He argued that allowing the liquidation to proceed during this interim phase could render the review petition futile.
Solicitor General Tushar Mehta, representing the Committee of Creditors (CoC), proposed a pragmatic approach by suggesting that the matter could be deferred until June 10 to accommodate the concerns raised by JSW. On the other hand, Senior Advocate Dhruv Mehta, representing a former promoter of BPSL, maintained that the observations and orders issued thus far operate adversely against JSW, implying that the review may lack merit.
The bench comprising Justice B.V. Nagarathna and Justice Satish Chandra Sharma observed that continuing with the liquidation proceedings during the pendency of the review period may adversely affect the petitioner’s legal remedy. The Court remarked,
"We are of the view that in the interest of justice and to preserve the sanctity of the adjudicatory process, it is necessary to maintain status quo until the limitation period for filing the review expires." The Court further acknowledged that the NCLT proceedings were being undertaken in compliance with the apex court’s prior judgment but deemed it appropriate to temporarily halt further steps to prevent any irretrievable consequences.
In view of the submissions and considering the legal right to file a review petition within the statutory timeframe, the Top Court directed that status quo be maintained in the liquidation proceedings before the NCLT until further orders. The matter stands deferred to allow JSW Steel sufficient time to file its review petition, with the Court reserving liberty to modify the order based on subsequent developments.
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