NCLT Postpones Bhushan Power Liquidation Until August Following Supreme Court Interim Relief Order
The National Company Law Tribunal (NCLT) has announced a significant postponement in the liquidation proceedings of Bhushan Power and Steel Ltd (BPSL), deferring the matter until August 1, 2025. This decision follows a Supreme Court directive issued on May 26, 2025, which granted interim relief to JSW Steel and ordered a status quo in the high-profile insolvency case.
The development marks another twist in the complex legal battle surrounding one of India's largest corporate insolvency cases, involving dues exceeding Rs 47,200 crore.
Supreme Court Grants Interim Relief to JSW Steel
The Supreme Court's intervention came after JSW Steel approached the apex court seeking temporary suspension of BPSL's liquidation proceedings. The steel giant requested this pause to file a review petition challenging the court's May 2, 2025 verdict that had quashed its Rs 19,300 crore resolution plan for the bankrupt steel company.
The Supreme Court acknowledged JSW Steel's request and permitted the company to file its review petition within the statutory limitation period. The court noted that allowing liquidation proceedings to continue could potentially compromise the review process and prejudice JSW Steel's legal position.
As a result, the NCLT was specifically directed to maintain the current status quo until further judicial orders, effectively halting all liquidation activities for the time being.
Timeline of the Bhushan Power Resolution Saga
The Bhushan Power case has been a landmark insolvency proceeding spanning nearly eight years:
- 2017: Reserve Bank of India identified BPSL among the first 12 large loan defaulters for resolution under the Insolvency and Bankruptcy Code
- September 2019: NCLT approved JSW Steel's Rs 19,300 crore resolution plan
- February 2020: National Company Law Appellate Tribunal (NCLAT) upheld the resolution plan
- May 2, 2025: Supreme Court struck down the resolution plan citing material non-compliance
- May 26, 2025: Supreme Court granted interim relief to JSW Steel
This chronology illustrates the prolonged legal complexities that have characterized the case, making it one of the most closely watched insolvency proceedings in India.
Grounds for Supreme Court's May 2 Decision
The Supreme Court's decision to quash JSW Steel's resolution plan was based on petitions filed by former promoter Sanjay Singhal and certain operational creditors. The court identified material non-compliance with key provisions of the Insolvency and Bankruptcy Code as the primary reason for striking down the approved plan.
Specifically, the court highlighted the failure to strictly implement the resolution plan within the approved timeline as a critical violation. This non-compliance was deemed sufficient grounds to invalidate the entire resolution process despite its previous approvals by lower tribunals.
New NCLT Bench Takes Charge
The case has been assigned to a newly constituted NCLT bench comprising Justice Ashok Kumar Bhardwaj (judicial member) and Reena Sinha Puri (technical member). This new bench will handle various pending petitions related to the case, including applications filed by former promoter Sanjay Singhal seeking enforcement of the Supreme Court's May 26 order.
The reassignment occurred after NCLT President Justice Ramalingam Sudhakar, whose bench had previously been hearing the matter, decided to transfer the case. During earlier proceedings, the NCLT president had expressed concerns about the shortage of available members to handle such a complex, high-stakes insolvency matter, particularly one that had been considered settled nearly five years ago.
Significance in India's Insolvency Framework
BPSL holds particular significance in India's corporate insolvency landscape as one of the original twelve large defaulters identified by the RBI for resolution under the newly implemented Insolvency and Bankruptcy Code in 2017. The case has served as a crucial test of the IBC's effectiveness in resolving large-scale corporate distress.
With total dues exceeding Rs 47,200 crore, the BPSL case represents one of the largest insolvency proceedings in terms of financial exposure. The resolution of this case has implications for creditor recovery rates and the overall effectiveness of India's insolvency framework.
Future Proceedings and Timeline
The Supreme Court has indicated that JSW Steel's review petition will likely be heard after the court's summer vacation period, once the petition is formally filed. This suggests that any definitive resolution of the matter may be delayed for several months.
Meanwhile, the NCLT's August 1 hearing date will primarily focus on maintaining the status quo as directed by the Supreme Court. The new bench will need to manage various stakeholder interests while ensuring compliance with the apex court's directions.
Impact on Stakeholders
The continued uncertainty surrounding BPSL's resolution affects multiple stakeholder groups. Financial creditors, including banks and financial institutions, face prolonged uncertainty regarding recovery prospects. Operational creditors and employees also remain in limbo regarding their claims and employment security.
For JSW Steel, the interim relief provides an opportunity to challenge the May 2 verdict through the review petition mechanism. However, the company must navigate the legal complexities while managing the business uncertainties associated with the prolonged proceedings.
The case continues to be closely monitored as a barometer of India's insolvency resolution mechanism's effectiveness in handling complex, large-scale corporate distress situations. The eventual outcome will likely influence future insolvency proceedings and stakeholder expectations regarding resolution timelines and compliance requirements.
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