Supreme Court Rejects Resolution Plan of JSW, Orders Liquidation
The court quashed and set aside the judgment and orders dated 05.09.2019 and 17.02.2022 passed by the NCLT and the NCLAT
Supreme Court – JSW – Orders Liquidation – taxscan
Supreme Court – JSW – Orders Liquidation – taxscan
The Supreme Court rejected the Resolution Plan submitted by JSW Steel for Bhushan Steel and Power Ltd holding that the Resolution Plan was illegal and contrary to the provisions of the Insolvency and Bankruptcy Code ( IBC ).The Court ordered the liquidation of Bhushan Steel and Power Ltd.
A two-judge bench comprising Justice Bela M. Trivedi and Justice Satish Chandra Sharma found that the Committee of Creditors(CoC) should not have accepted it. The bench also faulted the National Company Law Tribunal for approving the Resolution Plan.
Justice Bela Trivedi found that the resolution professional had utterly failed to discharge his statutory duties, contemplated under the IBC, during the course of the entire Corporate Insolvency Resolution Process (CIRP) of the corporate debtor.
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It was noted that the CoC had completely violated the obligatory conditions of the IBC and CIRP laws by failing to use its business acumen when approving JSW's Resolution Plan. Additionally, by taking opposing positions before the Supreme Court, accepting JSW's payments without protest, and endorsing JSW's self-serving scheme against the interests of the creditors, the CoC failed to safeguard the interests of the creditors.
The bench found that JSW willfully violated and failed to adhere to the requirements of the Resolution Plan for two years, even after NCLAT approved its plan. This upset the fundamental purpose of the IBC and tainted the BPSL CIRP proceedings.
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In blatant disregard for the specific provisions of the IBC and CIRP laws, the resolution plan of JSW, as approved by the CoC, did not meet the requirements in Section 30(2) of the IBC. According to Section 31(2), the NCLT has the right to reject the aforementioned Resolution Plan right away.
The court quashed and set aside the judgment and orders dated 05.09.2019 and 17.02.2022 passed by the NCLT and the NCLAT. The CoC-approved Resolution Plan of JSW is rejected because it does not comply with Section 30(2) of the IBC and Section 31(2) of the IBC. The NCLT is instructed to start liquidation proceedings against corporate debtor BPCL under Chapter III of the IBC in order to exercise its authority under Section 33(1) of the IBC and Article 142 of the Indian Constitution.
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