NEW DELHI: Supreme Court on Friday quashed the acquisition of bankrupt Bhushan Power & Steel Ltd by JSW under the Insolvency and Bankruptcy Code and ordered liquidation of the debt-ridden company, in a blow to the Sajjan Jindal-led group and public sector banks, reports Amit Anand Choudhary.
The court said there were multiple violations of law and regulations in accepting JSW’s Rs 19,700 crore plan and held that the resolution professional “utterly failed to discharge his statutory duties” and the committee of creditors, largely comprising lenders, “failed to exercise its commercial wisdom” and protect the interest of creditors.
The bench accepted the submission that there was “a dishonest and fraudulent attempt” by JSW by misusing the court process, not making upfront payments after its plan was approved.
There was an entire spectrum of flaws in JSW’s resolution plan: SC
A bench of Justices Bela M Trivedi and Satish Chandra Sharma set aside the National Company Law Appellate Tribunal (NCLAT) order approving JSW’s Rs 19,700 crore resolution plan.
“There was an entire spectrum of lacunae and flaws in the resolution plan of JSW with regard to non-compliance of the mandatory requirements under IBC. The upfront payments as agreed to be made in the resolution plan within 30 days of the approval of the plan by National Company Law Tribunal (NCLT) was delayed by 540 days in respect of payment to the financial creditors and by 900 days in respect of payment to the operational creditors,” the bench said.
JSW’s actions faced severe criticism. “Instituting vexatious and frivolous litigations in NCLT or NCLAT and delaying the implementation of resolution plan under the garb of pendency of proceedings has clearly proved the mala fide and dishonest intention on the part of JSW, in firstly securing highest score making misrepresentation before CoC and then not implementing the same under the garb of pendency of proceedings, though the resolution plan was supposed to be an unconditional one,” the bench said.
In 2017, Punjab National Bank had initiated insolvency action. In Sept 2019, NCLT had approved JSW’s resolution plan, and in Feb 2020, NCLAT had passed its order on a batch of petitions filed against the order. The admitted claims of financial creditors, led by SBI, was to tune of Rs 47,000 crore.