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

According to Moneycontrol news, the Central government may not be interested in any review petition against the Supreme Court's recent judgment that annulled JSW Steel's acquisition of Bhushan Power and Steel (BPSL). 

Despite acknowledging possible errors in the ruling, officials from the government, speaking on the condition of anonymity, indicated a preference for observing developments rather than immediate intervention.

Centre Steps Back from Legal Challenge

Government officials have clarified that there is no necessity for the Centre to participate in any legal review of the Supreme Court's May 2 verdict, which scrapped JSW Steel's ₹19,700 crore acquisition of BPSL and ordered the liquidation of the debt-ridden firm. 

The acquisition, which was completed under the Insolvency and Bankruptcy Code (IBC), was initially approved by the National Company Law Tribunal (NCLT) in 2019.

On May 7, Moneycontrol had reported that the government feels there are many "errors" in the JSW-BPSL judgement, which warrants review.

JSW Steel and Lenders Prepare for Review Petition

Media reports indicated that JSW Steel is in active discussions with stakeholders, including the Ministry of Corporate Affairs (MCA), Insolvency and Bankruptcy Board of India (IBBI), and the Department of Financial Services (DFS), regarding the court’s decision. Senior executives of JSW Steel have already met with government officials to deliberate on possible responses.

In the coming days, the Committee of Creditors (CoC), led by Punjab National Bank, is likely to join JSW Steel in seeking a review of the Supreme Court verdict. Since the CoC was not part of the earlier litigation, joining JSW’s review plea is the only available legal recourse for the lenders. They fear that the cancellation of the resolution plan could significantly impact the financials of the participating banks, as per news reports.

Read More: JSW Energy Commits ₹14,000 Crore to Boost O2 Power’s Renewable Energy Capacity

Conclusion

The government's current stance reflects a cautious approach, avoiding direct legal confrontation while closely monitoring the situation. Although initially considering participation, the Centre appears content to let JSW Steel and the CoC lead the legal effort to challenge the Supreme Court ruling. 

As developments unfold, the outcome of any potential review petition could have significant implications for the insolvency resolution framework in India.
 

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