Supreme Court halts liquidation process against BPSL, orders status quo

Decision comes after hearing petition filed by JSW Steel

The Supreme Court on Monday halted the liquidation proceedings for Bhushan Steel and Power Ltd (BPSL) after hearing a petition filed by JSW Steel, whose resolution plan for BPSL was rejected by the Supreme Court on May 2.

 

The proceedings were going on before the National Company Law Tribunal (NCLT).

 

A Bench of Justice B V Nagarathna and Justice Satish Sharma ordered the status quo, considering that JSW’s “limitation period” for filing a review of the Supreme Court’s judgment was not over.

 

A “status quo order” is a legal directive issued by a court to maintain what exists in a matter until a final decision or resolution is reached.

 

 

The Bench observed liquidation might jeopardise the review petition to be filed by JSW. The general time limit in India for filing a review petition is 30 days from the date of the judgment or order. 

 

Senior Advocate Neeraj Kishan Kaul, appearing for JSW, said even before the time of filing a review petition against the Supreme Court’s judgment (which quashed JSW’s resolution plan for Bhushan Steel) was over, the NCLT was proceeding to appoint a liquidator. JSW, Kaul told the apex court, had time till June 2 to file the review.  “If a liquidator is appointed, we will be in great difficulty. It is a profit-making company and this resolution plan was given four years ago,” he said. 

 

The Bench, however, pointed out that the NCLT proceedings were in pursuance of the Supreme Court’s directions.

 

Solicitor General of India Tushar Mehta, appearing for the lenders, suggested the matter be deferred till June 10.

 

The Bench disposed of JSW’s petition with the status quo order, clarifying that it had not said anything on the merits of the matter.

 

JSW undertook the review petition would be filed within the limitation period.

 

“We record the submission of the learned senior counsel for the appellant (JSW) that the review petition shall be filed prior to the expiry of the limitation period and in accordance with the law,” the Bench observed.

 

On May 2, the Supreme Court rejected the ₹19,700 crore resolution plan submitted by JSW Steel for BPSL, holding the plan “illegal” and ordered the latter’s liquidation, four years after the company was acquired under the Insolvency and Bankruptcy Code (IBC). 

 

After the Supreme Court judgment, former BPSL promoter Sanjay Singal approached the NCLT, Delhi, urging it to enforce the liquidation order.

 

Commenting on the order, Alay Razvi, managing partner of law firm Accord Juris, said the Supreme Court’s decision to halt liquidation proceedings without a formal review petition filed was atypical. 

 

“Such stays are granted after filing a review petition and almost never in commercial matters where timelines and finality are critical,” he said. 

 

Amit Tungare, managing partner of law firm Asahi Legal, said the Supreme Court, by proactively staying the liquidation proceedings, acknowledged the substantial economic implications in corporate insolvency resolutions.

 

“Such anticipatory interventions, though uncommon, demonstrate judicial pragmatism aimed at safeguarding broader stakeholder interests,” he said.

 

Nitin Jain, partner at law firm Agama Law Associates, said: “The impact would be that parties would not act upon the earlier passed order by the apex court, which quashed JSW’s Resolution Plan for Bhushan steels in the meantime. The fate of this order may impact the large insolvency which are underway and reached at advanced stages of the Insolvency resolution.” 

Bench’s observations

  *  JSW's limitation period for filing a review against apex court judgment not yet over

  *  NCLT proceeding to appoint liquidator in line with SC directives

  *  Clarified it has not expressed anything on the merits of the matter while disposing of JSW’s petition along with status quo order

  *  Said it was granting relief only in the interest of justice and ‘to avoid future complications’