Bhushan Power Acquisition Cancelled: JSW Steel Seeks ₹19,300 Crore Refund

JSW Steel emerged as the highest bidder in 2019 to acquire Bhushan Power and Steel Limited (BPSL) under the insolvency resolution process. At that time, BPSL owed over ₹45,000 crore to various creditors. The deal was approved by the National Company Law Tribunal (NCLT) in September 2019 and later upheld by the National Company Law Appellate Tribunal (NCLAT) in February 2020. The resolution plan was expected to be fully implemented by March 2021.

Supreme Court’s Intervention and Cancellation

In a significant judgment delivered earlier this month, the Supreme Court of India cancelled the acquisition, citing serious procedural non-compliances in the resolution process. The court directed that BPSL be liquidated instead of being revived through JSW Steel’s proposal. This decision came despite earlier approvals and ongoing payments under the resolution plan.

Demand for Refund and Delay in Liquidation

Following the apex court's ruling, JSW Steel issued demand notices to lenders for the return of ₹19,300 crore it had paid under the resolution plan, according to report by Economic Times. The company has also sought a 60-day delay in initiating the liquidation process, indicating that it is exploring legal avenues, including the possibility of filing a review petition.

Legal Basis for Refund Request

The Supreme Court explicitly stated in its judgment that the upfront payment made by JSW Steel should be refunded by the committee of creditors. It referred to its earlier order dated March 6, 2020, as the guiding basis for this refund. Moreover, the court instructed that ownership and control of BPSL should revert to the financial creditors.

Role of NCLT and CoC in the Liquidation Process

While the NCLT is responsible for overseeing the liquidation, the actual appointment of a liquidator and the conduct of the process rest with the committee of creditors. This committee plays a critical role in ensuring that the court’s directions are implemented and that the resolution applicant’s refund is processed as ordered.

Complications from Ongoing Legal Disputes

JSW Steel’s acquisition of BPSL was marred by multiple legal challenges, including those initiated by BPSL’s former promoter, Sanjay Singhal. Despite these hurdles, payments under the resolution plan had been processed. The recent Supreme Court verdict, however, brings all such activities to a halt and necessitates a rollback of the acquisition.

Read More: Centre Unlikely to Intervene in JSW-Bhushan Power Case Citing Supreme Court's Stance on IBC. 

Conclusion

The refund demand from JSW Steel and the request for a delay in liquidation signal that the matter is far from settled. The company’s next steps, possibly involving a review petition, could influence how future insolvency resolutions are structured, particularly in terms of compliance and legal scrutiny.

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