BPSL resolution case: JSW seeks refund and liquidation pause for 60 days

In its May 2 ruling, the Supreme Court referred to legal precedents on actions to follow if a resolution plan is overturned.

JSW Steel has sent demand notices to banks, requesting a refund of the funds it paid under its Rs 19,300-crore resolution plan for Bhushan Power and Steel (BPSL), an Economic Times report said on Friday. It has also sought a 60-day delay in the liquidation proceedings, according to sources familiar with the situation.

Earlier this month, the Supreme Court nullified JSW Steel’s 2019 acquisition of the debt-ridden BPSL, citing multiple compliance issues, and directed the company to be liquidated. The demand notices, reportedly sent less than two weeks ago, emphasized that the refund requests align with the apex court’s recent judgment.

Citing sources, the ET report added that JSW is exploring legal remedies and is requesting a temporary halt to the liquidation process during this period. It is widely speculated that the company may file a petition for a review of the Supreme Court's decision.

The liquidation will be carried out under the supervision of the National Company Law Tribunal (NCLT), while the Committee of Creditors (CoC) holds the authority to appoint the liquidator and monitor the proceedings. In its May 2 ruling, the Supreme Court referred to legal precedents on actions to follow if a resolution plan is overturned. It stated that the upfront payment made by JSW Steel must be returned by the CoC in accordance with the court’s earlier order dated March 6, 2020. The ruling also ordered JSW Steel to return control of BPSL to the financial creditors.

At the time of its insolvency admission, BPSL had outstanding liabilities exceeding Rs 45,000 crore. JSW Steel had submitted the highest bid for the company during the resolution process. The CoC accepted the payments even though litigation was still ongoing, including a legal challenge from BPSL’s former promoter, Sanjay Singhal.

JSW Steel declined to offer a statement on the issue, and Punjab National Bank, the lead member of BPSL’s CoC, did not respond to inquiries. The NCLT had initially approved JSW’s resolution plan on September 5, 2019, a decision later upheld by the NCLAT on February 17, 2020. However, the implementation of the resolution plan was postponed until March 31, 2021.