SC upholds NCLAT nod to JSW Steels 19,700-cr decision plan for BPSL

The Supreme Court on Friday upheld the February 2020 order of the National Company Law Appellate Tribunal (NCLAT) approving JSW Steel’s ₹19,700-crore decision plan for Bhushan Power and Steel (BPSL).

The prime courtroom had in May rejected JSW Steel’s plan and ordered liquidation proceedings towards BPSL. A Special Bench later recalled this order in July and reheard the appeals. The case concerned challenges from operational collectors, together with Kalyani Transco, and objections from former promoters.

In a judgment authored by Chief Justice of India B.R. Gavai, the courtroom held that JSW Steel, because the Successful Resolution Applicant (SRA), had achieved a turnaround and transformed a “substantial” loss-making entity right into a profit-earning one.

“The company debtor [BPSL] had been operating into substantial losses which has now turn out to be a profit-making entity incomes substantial income. The SRA – JSW invested large quantities in modernization and enlargement of the entity. Not solely that however hundreds of workers have been incomes their livelihood on account of the company debtor operating as an ongoing concern as a result of Resolution Plan being applied by the SRA – JSW,” the courtroom noticed.

The Bench castigated the previous promoters for extended litigation, stressing that the very goal of the Insolvency and Bankruptcy Code (IBC) was to make sure the continuity of company debtors. “As such, the very goal for which the IBC was enacted – specifically, to make sure that the company debtor continues as a going concern – has not solely been achieved, however the company debtor has been reworked from a loss-making to a profit-making entity. If, after the implementation of the Resolution Plan, the SRA – JSW has transformed a loss-making entity into the one making income, can it’s penalised for that?” Chief Justice Gavai wrote.

The courtroom mentioned entertaining belated claims would “open a Pandora’s field” and undermine the finality of decision plans. It, nevertheless, discovered fault with the Committee of Creditors (CoC) for shifting its stance on the distribution of Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA), however held that elevating such arguments at a late stage would defeat the intent of the IBC.

Clarifying that the CoC would live on till the decision plan is applied or the company debtor liquidated, the courtroom dismissed the ex-promoters’ problem to its function. Solicitor-General Tushar Mehta, showing for the CoC, argued the ex-promoters had “no enterprise” questioning the plan.

Senior advocate Neeraj Kishan Kaul, representing JSW, submitted that BPSL had achieved an annual turnover of ₹28,000 crore, with manufacturing rising from 2.5 million tonnes to 4.5 million tonnes, and that 25,000 folks had been employed.

On May 2, nevertheless, the Supreme Court had earlier discovered JSW’s decision plan in “flagrant violation and contravention” of the IBC, citing lapses by the Resolution Professional. It had then invoked Article 142 of the Constitution to direct the National Company Law Tribunal (NCLT) to provoke liquidation proceedings.