Supreme Court Recalls Order to Liquidate Bhushan Power & Steel
The Supreme Court has recalled its May 2 judgment that ordered the liquidation of Bhushan Power and Steel Limited (BPSL). A bench led by the Chief Justice noted that the earlier verdict did not correctly consider the legal position and that the larger picture, including the fate of 25,000 workers, must be considered. JSW Steel had acquired the debt-ridden BPSL in 2019 for ₹19,700 crore. The court will now hear the matter afresh, keeping all questions open.
Unpacked:
The Supreme Court ordered BPSL’s liquidation because it found JSW Steel’s 2019 acquisition to be non-compliant with the Insolvency and Bankruptcy Code, 2016, and related legal directives. The resolution plan was rejected for failing to meet legal requirements, prompting the order to liquidate and refund JSW Steel's payments.
JSW Steel’s share price dropped by 5.5% in a single day, eroding its market capitalization by Rs. 13,731 crore. The company’s investments in BPSL (over Rs. 4,000 crore) and the Rs. 19,350 crore paid to banks are at risk, with uncertainty about recovering these funds.
The fate of 25,000 workers is significant because liquidation could lead to widespread job losses and social impact. The Supreme Court highlighted the need to consider these workers’ livelihoods in its new deliberations, reflecting the broader economic and human consequences beyond legal technicalities.
JSW Steel’s acquisition of BPSL was challenged due to alleged non-compliance with insolvency regulations and ongoing investigations into BPSL’s prior financial irregularities, including bank fraud. Legal disputes also arose over asset attachments by enforcement agencies during the bankruptcy process.