Latest news with #IBC
Hindustan Times
4 hours ago
- Business
- Hindustan Times
SC to revisit order on JSW's Bhushan deal
The Supreme Court on Thursday recalled its order scrapping JSW Steel's ₹19,700 crore deal in 2021 to acquire Bhushan Power and Steel Limited, noting serious 'error apparent' in the judgment which was decided contrary to settled decisions of the top court. The apex court's Thursday decision also comes as a relief to lenders, including State Bank of India and Punjab National Bank, which filed separate review petitions supporting JSW Steel's position. The May ruling ordered the banks to return ₹ 19,350 crore paid by JSW Steel (HT File) A bench of Chief Justice of India (CJI) Bhushan R Gavai and justice SC Sharma said, 'Prima facie we are of the view that the impugned judgment [of May 2] does not correctly consider the legal position as laid down by this court. Apart from that, it is pointed out [by CoC and JSW] various incorrect factual submissions have been taken on record, and arguments which were not advanced were considered by the court. We find it a fit case for the judgment under review to be recalled and the matter needs to be heard afresh.' The erstwhile promoters of Bhushan Steel disputed this position. The order was passed on a review petition filed by JSW Steel. Posting the matter for further hearing on August 7, the top court agreed to hear all sides, including the erstwhile promoters of Bhushan Steel, on all issues. The May 2 decision — it said he acquisition violated provisions of the Insolvency and Bankruptcy Code (IBC), especially those on timelines — shocked corporate and banking circles; the JSW deal was often cited as a success of IBC, allowing companies that had been run to the ground by their promoters, usually at a great cost to banks that had loaned them money, to be revived under new owners. The apex court's Thursday decision also comes as a relief to lenders, including State Bank of India and Punjab National Bank, which filed separate review petitions supporting JSW Steel's position. The May ruling ordered the banks to return ₹19,350 crore paid by JSW Steel. JSW's acquisition was approved by the committee of creditors (CoC), the national company law tribunal (NCLT) and national company law appellate tribunal (NCLAT). Review petitions are taken up by the court in chambers and only when the court feels satisfied that the case needs to be re-heard, the matter is placed for hearing in open court. On Wednesday, the petition was taken up in chambers and a decision was taken to list it in open court. Appearing for CoC, solicitor general Tushar Mehta, assisted by a team of lawyers from Cyril Amarchand Mangaldas led by advocate Raunak Dhillon, pointed out that the plan of JSW Steel was approved with a 99% majority. He said that the CoC had presented elaborate minutes of meeting before the court showing detailed discussion on the pros and cons of accepting JSW's plan. He referred to earlier decisions by the top court on IBC which lay down the law that the courts will not sit in judgment over the commercial wisdom of CoC. For JSW, senior advocate Neeraj Kishan Kaul, assisted by a team of lawyers from Karanjawala & Co, pointed out that since 2021, the company has been running Bhushan Steel . In the process, it has infused over ₹20,000 crore, cleared all dues incurred by the previous management, and doubled the production of steel. From 18,000 employees, the company's workforce has swelled to 25,000. He added that the judgment of May 2 also has had a debilitating effect on IBC and needs to be set aside. Mehta told the court that the top court 's May ruling on timelines not being observed were not even argued. The May 2 judgment was pronounced by a bench of justices Bela M Trivedi (since retired) and SC Sharma, who is the other member on the bench with CJI hearing the review plea. CJI Gavai said, 'My brother (justice Sharma) has been kind enough to be candid. He has told me that the points argued have not been considered by the judgment. I am grateful to my brother. How could the court go into the issue that was not argued and suggest this is suppressed, that is suppressed.' The erstwhile promoters of Bhushan Steel represented by senior advocate Dhruv Mehta objected to the submissions made by CoC and JSW. But the SG pointed out that the erstwhile promoters of the company, who landed it in serious serious financial trouble cannot be allowed to raise a finger on the correctness of a plan by which the company stands revived. 'They were part of the dirty dozen that left the company in financial doldrums and now want to drag a successful company into liquidation,' he said. Shares of JSW rose 1.93% apiece to close the day at ₹1057.90, on a day when BSE's benchmark Sensex closed 0.36% down.
Time of India
5 hours ago
- Business
- Time of India
Well Judged
Times of India's Edit Page team comprises senior journalists with wide-ranging interests who debate and opine on the news and issues of the day. LESS ... MORE SC right in withdrawing own order on Bhushan Steel. But GOI must finetune aspects of insolvency law SC's recall of its order from May that reversed JSW Steel's $2.3bn acquisition of the bankrupt Bhushan Power & Steel Ltd in 2021, is wholly welcome. The May order had considered two technical grounds: one, the eight-year timeline and two, fact that JSW completed the takeover with a mix of equity and optionally convertible debentures, when it should have used equity alone. SC had also found adjudicatory bodies NCLT and NCLAT lacked jurisdiction and set aside their approvals – IBC's Section 32A that says that on approval of a plan, new investors would not inherit criminal liabilities of previous promoters & directors was a key sticking point. But SC's position was that such immunity could not override statutes like PMLA. SC's focus was entirely on statutory compliance of the takeover process. As TOI and our columnists wrote, SC's reversing the revival of a mismanaged corporate entity was a big blow to India's insolvency framework. Not only would it hurt JSW lenders and workers, but it would also affect investor sentiment and prospects of finding buyers for other insolvent companies. Investors would run scared. On Thursday, SC said the May order had not correctly considered precedents. IBC, introduced in 2016, is one of India's most significant reforms – enacted to revive distressed assets, protect employment and maximise stakeholder value. SC reversing its own order is an opportunity to also finetune jurisdictions and boundaries. As the case proceeds, GOI should also explore legislative or institutional redress for a clarity of roles for NCLT and NCLAT, especially in light of SC's questions on application of Section 32A. Finality of insolvency proceedings is IBC's fundamental base. Facebook Twitter Linkedin Email This piece appeared as an editorial opinion in the print edition of The Times of India.
Time of India
7 hours ago
- Business
- Time of India
SC recalls own order directing liquidation of Bhushan Steel
NEW DELHI: In a dramatic yet decisive reversal, Supreme Court Thursday annulled its May 2 judgment ordering liquidation of Bhushan Power and Steel Ltd, which had been revived in 2021 by the Sajjan Jindal-led JSW through a Rs 20,000 crore plan concurrently upheld by NCLT and NCLAT under Insolvency and Bankruptcy Code process. Unabashedly admitting that its earlier decision militated against the settled law on inviolability of the decision of Committee of Creditors, a bench of CJI B R Gavai and Justice Satish Chandra Sharma recalled the verdict and posted the matter for fresh hearing next Thursday. The bench also frowned upon the use of Article 142 by the earlier bench led by Justice Bela M Trivedi, who has since retired, to order liquidation of the revived company despite it being in the pink of health. "Powers of Article 142 are meant to do complete justice and not cause injustice to 25,000 employees," the apex court said Thursday. SC's role in IBC proceedings limited, says CJI In an open court hearing on the review petitions filed by Punjab National Bank, the lead creditor for bankrupt Bhushan Power and Steel Ltd, and JSW, solicitor general Tushar Mehta and senior advocate Neeraj Kishan Kaul told a bench of CJI BR Gavai and Justice Satish Chandra Sharma that IBC proceedings aim to revive sick companies and liquidation is only the last resort. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Mini House for 60 sqm for Seniors with Toilet and Bath (Price May Surprise You) Pre Fabricated Homes | Search Ads Search Now Undo The CJI said he has, as an SC judge, authored many judgments crystallising disparate rulings on IBC proceedings to lay down the cardinal principle that concurrent approval by NCLT and NCLAT of a revival plan accepted by the CoC cannot be interfered with by SC unless the petitioner challlenging it establishes a perversity. The verdict in the Bhushan Steel and Power Ltd case appears to be in the teeth of SC rulings. Mehta said IBC proceedings were followed to the T and it was the decision of the CoC to approve the revival plan of successful resolution professional, which was concurrently upheld by National Company Law Tribunal (NCLT) and the appellate tribunal (NCLAT) leaving little scope for SC interference. "Liquidating a viable and profit-making entity will be in the interest of none and would create many difficulties for the creditors as well as the successful resolution applicant," he argued. Kaul said JSW has infused an additional Rs 8,000 crore apart from the Rs 20,000 crore, and the company is now in robust health nearly tripling its productions. It now employs 25,000 people in the revived plant. On May 26, a bench of Justices B V Nagarathna and Sharma had stayed the liquidation process and ordered status quo after learning that petitions seeking review of the May 2 judgment are pending consideration.
The Hindu
13 hours ago
- Business
- The Hindu
SC to hear JSW-Bhushan Steel case afresh, recalls May 2 judgment for liquidation
A Special Bench of the Supreme Court headed by Chief Justice of India B.R. Gavai on Thursday recalled a May 2 verdict of the court which rejected a resolution plan submitted by JSW Steel for Bhushan Power and Steel Ltd. (BPSL). The apex court judgment had further ordered the liquidation of BPSL to commence. However, on Thursday, the Bench decided to hear the case afresh. It was of the prime facie view that the judgment in May, authored by Justice Bela Trivedi (now retired), had not clearly appreciated the legal position in the case. 'Prima facie, we are of the view that the judgment did not correctly consider the legal position laid down in a catena of judgments,' the Bench noted. It said various factual aspects had to be taken into consideration in the case. 'This is a fit case wherein judgment under review need to be recalled and the matter is to be considered afresh,' the court concluded. It listed the review petitions for detailed hearing on August 7. On May 26, the apex court had ordered status quo in the liquidation proceedings before the National Company Law Tribunal. The court had passed the order of status quo on liquidation to give JSW time to file a review petition. The court had, at the time, said status quo ought to prevail for BPSL in the interest of justice and to avoid future complications. JSW had argued that the case was complicated, and must not be rushed into liquidation. Senior advocate Neeraj Kishan Kaul, for JSW, had informed the court that BPSL had an annual turnover of ₹28,000 crore in one year. Its production had increased from 2.5 metric tonnes to 4.5 metric tonnes. The firm employed 25,000 people. On May 2, the Supreme Court had found JSW's Resolution Plan for BPSL in 'flagrant violation and contravention' of the law. 'The Resolution Professional had utterly failed to discharge his statutory duties contemplated under the Insolvency and Bankruptcy Code (IBC) and the Corporate Insolvency Resolution Process (CIRP) Regulations during the course of entire CIR proceedings of the corporate debtor, BPSL,' the Supreme Court had concluded. The court had invoked its inherent powers under Article 142 of the Constitution to direct the NCLT to initiate liquidation proceedings against the BPSL under the IBC. The court had faulted the Committee of Creditors (CoC) for accepting the Resolution Plan. 'The CoC had failed to exercise its commercial wisdom while approving the Resolution Plan of the JSW… The CoC had failed to protect the interest of the creditors by taking contradictory stands before this court, and accepting the payments from JSW without any demurrer, and supporting JSW to implement its ill-motivated plan against the interest of the creditors,' the May 2 verdict had observed. The CoC, represented by Solicitor General Tushar Mehta, too submitted his reservations about the May 2 judgment.
&w=3840&q=100)
Business Standard
14 hours ago
- Business
- Business Standard
SC withdraws Bhushan Power liquidation order, review hearing on Aug 7
In a significant reversal, the Supreme Court on Thursday recalled its May 2 judgment that had declared JSW Steel's resolution plan for Bhushan Power & Steel Limited (BPSL) 'illegal' and had ordered the company's liquidation. The decision comes four years after BPSL was acquired under the Insolvency and Bankruptcy Code (IBC). A bench comprising Chief Justice of India (CJI) BR Gavai and Justice Satish Chandra Sharma allowed review petitions and announced that it would hear the matter afresh on August 7. The court observed that the earlier judgment may not have correctly applied existing legal precedents. 'Prima facie, we are of the view that the impugned judgment does not correctly consider the legal position as has been laid down by a catena of judgements,' the bench said. CJI cites ground realities, worker impact The CJI noted the need to consider ground realities, including the Rs 20,000 crore investment made by JSW and the livelihood of 25,000 workers. 'Article 142 has to be utilised to do complete justice, not to do injustice to 25,000 workers,' the CJI remarked. He added that as per settled law, the commercial wisdom of the Committee of Creditors (CoC) cannot be lightly interfered with—especially when endorsed by both the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT). Justice Satish Chandra Sharma, who was part of the May 2 bench, also agreed to the review. 'Yesterday I had a discussion with my learned brother, who was gracious enough to admit that it requires reconsideration,' CJI Gavai said in court. Solicitor General, JSW and CoC back review Solicitor General Tushar Mehta, representing the CoC, supported the review, noting that the IBC's intent is to revive debt-laden companies, not liquidate them when they are performing. JSW counsel Neeraj Kishan Kaul warned the earlier verdict sent 'dangerous signals' by invalidating a resolution plan approved by the CoC, NCLT, and NCLAT after five years of implementation. He questioned the locus standi of BPSL's promoter in filing the challenge, arguing that only creditors, not defaulting promoters, should be permitted to contest resolution plans. Senior advocate Dhruv Mehta, appearing for the BPSL promoter, opposed the review. JSW to retain control of BPSL during review Legal experts said that JSW will continue operating BPSL until further orders. 'The recall effectively means that there is no contrary order at the moment, and the position as on the date on which the SLP was filed, will prevail,' said Parth Contractor of Chambers of Parth Contractor. Alay Razvi, Managing Partner of Accord Juris, added, 'BPSL is presently managed by JSW Steel, not the Resolution Professional, and will continue this way until the Supreme Court issues its final decision after the review hearing.' On May 2, the Supreme Court had rejected JSW Steel's ₹19,700 crore resolution plan for BPSL, ruling it violated provisions of the IBC. However, on May 26, a separate bench stayed liquidation proceedings after JSW expressed intent to file a review. Following review petitions by JSW, Punjab National Bank, and other creditors, the Supreme Court on July 29 agreed to hear the matter in open court. Notices were issued on all review petitions, culminating in Thursday's decision to recall the earlier judgment. The August 7 hearing will revisit all questions related to the legality of JSW's acquisition of BPSL, with the earlier judgment now set aside.
