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Business Standard
15-05-2025
- Politics
- Business Standard
Best of BS Opinion: Tracking shifts in judiciary, trade, and policy
On some winter mornings, the fog hangs low, heavy, and indifferent, so thick it swallows outlines and makes familiar paths feel eerily new. You know the road is there, the gate, the turn, the waiting tea vendor, but they disappear into the blur. So, what do you do? You light a lantern. Not to banish the fog, but to move through it. Slowly. Deliberately. That's what today's stories feel like, each one a small but stubborn light in the haze of complexity, delay, or transition. Let's dive in. Take the elevation of Justice Bhushan Ramkrishna Gavai as the 52nd Chief Justice of India. He becomes only the second Dalit to reach this post, a milestone of representation in a system often criticised for its opacity and imbalance, notes our first editorial. His six-month term probably won't clear the backlog of over 80,000 cases or instantly fix the judiciary's trust deficit but his vow to steer clear of post-retirement rewards is a moral lantern, lighting up a path where judges stand apart, not beholden. In climate policy too, the fog is thick. The government's plan to add a 'sustainable transport' mission to its climate change agenda sounds promising, highlights our second editorial. But scratch the surface, and you're lost in contradictions, charging stations powered by coal, EV adoption stalling, and road freight refusing to yield. Still, setting stricter norms like Bharat VII and planning millions of clean-energy charging stations signal direction. Not a revolution, but something nonetheless. Meanwhile, M S Sahoo's column dissects the Bhushan Power case, where a long-settled resolution was undone six years later, without consequence to those responsible. It's not just a legal curiosity, it exposes a system where decisions are made in fog and reversed with no warning. His call for finality, speed, and economic coherence in the insolvency process is not a cry into the void, but a call for justice to be visible and reliable. In a shifting world economy, Amrit Amirapu and Arvind Subramanian argue that even as old models of industrial growth fade, manufacturing still offers the clearest light for the world's poorest. It's not a floodlight, but a torch — scalable, inclusive, imperfect that shows enough of the road ahead to keep moving. And in his review of India-Africa: Building Synergies In Peace, Security And Development by Ruchita Beri, Dammu Ravi reflects on India's evolving partnership with Africa. The continent is no longer just a recipient of help, it's a force finding its own way. India's role? Not to lead with certainty, but to walk alongside, lighting lanterns of health, education, energy, and trade across a vast and often invisible terrain.
Business Standard
14-05-2025
- Business
- Business Standard
Finality of biz transactions: How delays undermined the Bhushan resolution
Court ordered the liquidation of BPS, which had been successfully rescued under the IBC in 2019 with the approval of relevant market participants and layers of state agencies M S Sahoo Mumbai Listen to This Article On May 2, the Supreme Court disposed of an appeal filed five years earlier concerning the resolution of Bhushan Power and Steel (BPS) under the Insolvency and Bankruptcy Code, 2016 (IBC). It delivered a detailed, fact-intensive judgment marked by clinical precision. The judgment exposes a series of illegalities and lapses — some deliberate and collusive — including those that occurred after the appeal was admitted, during the approval and implementation of the company's resolution plan. The judgment documents serious failings on the part of the resolution professional (RP), the successful resolution applicant (RA), the committee of creditors (CoC), the National
Zawya
09-05-2025
- Business
- Zawya
Shock ruling raises India risk: IFR
India's Supreme Court exposed the legal risks of doing business in the country with a stunning decision to strike down the Rs193.5bn (US$2.3bn) acquisition of Bhushan Power and Steel out of insolvency proceedings by JSW Steel more than four years after the buyout was completed. Instead, the court on May 2 ordered Bhushan to be liquidated, arguing that JSW Steel's resolution plan was not in compliance with the law. JSW Steel had pledged to inject Rs85.5bn of equity into the struggling steelmaker, making it the top bidder, but it only contributed Rs1bn in share capital after winning the bid and issued Rs84.5bn of compulsory convertible bonds to the entity that merged with Bhushan Steel to make up the difference, the Supreme Court said. JSW Steel also missed the deadlines for upfront payments to financial and operational creditors by 540 and 900 days beyond the agreed 30 days, according to the court. Stressed asset experts said the ruling was a huge setback for dealmaking in India. "This is a decision of the apex court. Although rendered in the context of an insolvency proceeding, its ramifications extend across the insolvency framework and beyond," said M S Sahoo, former chairman of the Insolvency and Bankruptcy Board of India. India's bankruptcy courts, long notorious for prolonged delays in resolutions, have come under pressure in recent years to expedite payment deadlines in favour of creditors, but the latest ruling now throws this trend into question. "The Insolvency and Bankruptcy Code, as originally conceived [in 2016], was meant to resolve distress and preserve value in a time-bound manner, based on commercial wisdom of the Committee of Creditors. Unfortunately, for various reasons, today IBC is losing its value even as a stick," said Bharat Gupta, India strategy and transactions partner at Ernst and Young. The Supreme Court said it wanted to set an example that payment deadlines should be adhered to. While noting that the IBC is "silent" on the subject, the judges wrote that "neither the tribunal nor the courts should give excessive leeway to the successful resolution applicant to act in flagrant violation of the terms of the resolution plan," which "has frustrated the very object and purpose of the code". The ruling sets a precedent for all buyers of distressed assets that have been flouting National Company Law Tribunal rules by not making timely payments. While drastic, the decision was justified, according to some bankruptcy professionals. "I think there should be some sanctity on the process, which was getting neglected," said a stressed asset expert. Blow to India risk More broadly, however, the order raises uncertainty about the legal standing of deals in India. "It implies that any commercial transaction, even if approved by a competent state authority, could be unravelled years or even decades later if another authority subsequently detects an irregularity in the transaction process or its approval," said Sahoo, the former IBBI chairman. "This introduces a deep sense of uncertainty, unsettling both business operations and economic stability." "This is a big blow on India risk and definitely puts the country on the back foot in respect to future bankruptcy cases, " the stressed asset expert concurred. Deals will need even more due diligence and expert opinions in order to mitigate legal risks, said a director at a foreign financial services firm. On the other hand, the legal uncertainty could benefit private capital funds, which target the sweet spot before assets get assigned to the NCLT. "Interestingly, it is the fear of NCLT precisely that has served as a deterrent and led to the sophistication of the private credit market with bespoke, out-of-court solutions moving at deal speed," the same director said. JSW Steel said in a statement that it was yet to receive a formal copy of the order to understand its implications. "Once we receive the order and are able to review the same along with our legal advisors, we will decide on our further course of action," the company said. The government is finalising its response to the Supreme Court's order, Reuters reported on May 5, citing government officials. Painful process If the liquidation order stands, it will be a painful process, analysts said. "The court has ordered the liquidation of Bhushan as it stands today, not the entity that originally entered insolvency proceedings, nor the one acquired under an approved resolution plan," said Sahoo. "The company has since changed ownership, attracted new stakeholders, and ramped up operations to twice its original capacity. Reversing this transformation is neither feasible nor painless." JSW Steel paid Rs50.9bn in cash and the balance from a mix of equity and fresh debt to acquire 83% of Bhushan, according to a Citigroup research note on May 5. Moreover, JSW Steel has also funded capex at Bhushan. In March 2021, JSW Group through West Waves Maritime & Allied Services raised Rs25bn from three-year bonds paying 9%. The proceeds were used to give a loan to Piombino Steel, a holding company set up to acquire Bhushan. Analysts said that there is a high likelihood that JSW Steel and the CoC may contest the order through a review petition, or the creditors may try to find a new buyer for Bhushan, using the route of "sale as a going concern," where the business is sold as whole in the current operational format. Bhushan contributed close to 10% to JSW Steel's consolidated Ebitda of Rs226bn in the year ended in March. Since the acquisition, Bhushan's capacity has been increased to 4.5 million tonnes per annum from 2.75 mtpa in March 2022, according to a PL Capital note. Some experts have called for amendments to the IBC once an approval is granted by the top authority for acquiring an asset, for it to attain finality. "Any subsequent discovery of irregularity or illegality should be addressed swiftly and decisively, with exemplary penalties imposed on the wrongdoers, without disturbing the sanctity of the resolved transaction," Sahoo said.
New Indian Express
06-05-2025
- Business
- New Indian Express
Bhushan Power verdict: A triumph of rule of law; a setback for insolvency resolution
By MS Sahoo In a landmark judgment dated 2nd May 2025, the Supreme Court of India disposed of an appeal filed in 2020 concerning the resolution of Bhushan Power and Steel Ltd. (BPSL). The judgment is detailed, incisive, and beyond reproach by any legal standard. It lays bare a series of grave illegalities and lapses, some deliberate and collusive, in the approval and implementation of the company's resolution plan. Considering the illegalities, the Court set aside the resolution plan approved by the Committee of Creditors (CoC) and the National Company Law Tribunal (NCLT) in 2019, subsequently affirmed by the National Company Law Appellate Tribunal (NCLAT). Invoking its extraordinary powers under Article 142 of the Constitution, the Court directed the liquidation of BPSL. The message is unambiguous and emphatic: India is governed by the rule of law, and no illegality in the sacrosanct insolvency process will be tolerated. The resolution plan, under implementation since 2019, had envisaged a payment of approximately ₹20,000 crore to creditors and had successfully revived operations, with production levels reaching almost twice that of the pre-resolution period. The liquidation now ordered operates, in effect, as a penalty, not on the wrongdoers (the resolution professional, successful resolution applicant, CoC, NCLT, and NCLAT), but on the company and the broader economy. Further, BPSL today is a different entity from the one that entered the insolvency proceedings in July 2017. Its liquidation will impact a new ecosystem of stakeholders (employees, creditors, suppliers, and investors), many of whom joined the company post-resolution. Rewinding the clock is neither easy nor painless. It raises a compelling counterfactual: had the company gone into liquidation and the Supreme Court, years later, found that liquidation to be illegal, could it have reversed the liquidation? While the judgment reinforces the primacy of law, it undermines the very objective of the IBC. Once a resolution plan is approved by the competent authority and implemented, undoing it years later carries significant economic and institutional costs. No prudent resolution applicant would be willing to invest if there remains a lingering risk that a state authority, no matter how well-intentioned, might overturn the transaction decades later. Had this judgment been delivered in 2020, as it ideally should have, the damage to the IBC would have been considerably less. Compare this with the timelines in earlier landmark cases. In Binani Cements, the NCLAT approved the revised plan on 14th November 2018, and the Supreme Court upheld it, within five days, on 19th November 2018. In Essar Steel, the NCLT approved the plan on 8th March 2019; the NCLAT modified it on 4th July; Parliament amended the IBC on 6th August; and the Supreme Court finally upheld the amendment and set aside the NCLAT order on 15th November, all within eight months. That time discipline allowed the IBC to emerge as a credible mechanism for stress resolution. The Supreme Court itself has often reiterated that time is of the essence under the IBC. But timely resolution is possible only when all institutions- stakeholders, regulators, the executive, and the judiciary- act with urgency and discipline. It is now imperative for the Court not only to demand this discipline of others but also to hold itself to the same standard. Notably, in Essar Steel, the Supreme Court had found both resolution applicants ineligible on the relevant date. Yet, it invoked Article 142 to allow them time to regularise their position. One did so, submitted a resolution plan, and rescued the company. A similar approach could have been adopted in the present case: to preserve the company, rather than liquidate it, while bringing those responsible for the illegalities to account. Post-facto discovery of illegalities must lead to swift and exemplary penalties for wrongdoers. But it should not invalidate the transaction itself. A useful parallel can be drawn from the securities market: if irregularities are discovered after a public issue, the persons responsible are punished, but the issue is not reversed. The same principle should govern insolvency resolution. Robust oversight must be accompanied by proportionate and targeted consequences, but the resolution, whether by way of a resolution plan or liquidation, must not be undone once it is approved by the competent authority and implemented. Judicial intervention in commercial transactions should be rare and, when unavoidable, must carefully consider the economic realities. The author is former chairman of Insolvency and Bankruptcy Board of India (IBBI)
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Business Standard
04-05-2025
- Business
- Business Standard
SC ruling on BPSL resolution may reset IBC process as JSW plans review plea
"No prudent resolution applicant would submit a plan if there remains a lingering fear that some state authority might overturn it decades later", says Former IBBI chairperson M S Sahoo Ishita Ayan Dutt Ruchika Chitravanshi Manojit Saha Dev Chatterjee Kolkata\New Delhi\Mumbai Listen to This Article Flash back to March 26, 2021. JSW Steel had just completed its largest acquisition—Bhushan Power and Steel (BPSL)— under the Insolvency and Bankruptcy Code (IBC). 'This acquisition not only aligns with our core business and purpose but also establishes our presence and accelerates our growth vision in eastern India,' Sajjan Jindal, chairman of JSW Steel, had written to BPSL employees after paying financial creditors ₹19,350 crore. Four years later, on May 2, 2025, that vision took a severe blow when the Supreme Court rejected JSW Steel's resolution plan for BPSL and ordered its liquidation. The big jolt The apex court
