NCLT to JSW Steel, Lenders: Present Concrete Plan to Reverse Bhushan Power Takeover by May 26

In a big move, the National Company Law Tribunal (NCLT) directed JSW Steel and its lenders to submit a clear roadmap on May 26 to reverse the company’s acquisition of Bhushan Power and Steel Ltd (BPSL), by a Supreme Court order.

In a hearing on May 21, the NCLT reiterated that complete and punctual compliance with the top court’s directive is not an option. The Supreme Court had previously set aside JSW Steel’s ₹19,350 crore takeover of BPSL on grounds of serious defaults by the Committee of Creditors (CoC) and the resolution professionals in the process of insolvency.

With JSW Steel already having assumed control and infused funds into BPSL, the tribunal now expects all stakeholders to return on Monday with a “concrete plan of action” to restore BPSL to its pre-acquisition state. The tribunal stressed the Supreme Court’s order must be followed in both “letter and spirit.”

The case, which has dragged on for over four years, now enters uncharted territory. Among the possible next steps: appointing a liquidator to oversee the reversal. But that move is likely to face resistance from JSW Steel, which argues that the company and its assets have already been fully integrated into JSW’s operations.

Legal and financial hurdles loom large. Creditors who were paid under the now-scrapped plan may be required to return funds and recreate security charges that were extinguished after JSW’s takeover. “All of this will now need to be done again, from scratch,” said Honey Satpal, Founder of HS Legal.

Further complicating matters are JSW’s post-acquisition investments, including possible new debts and encumbrances that could clash with the restitution process.

“The Supreme Court’s order opens Pandora’s box from questions around JSW’s capital infusion and profits to the status of the workforce,” Satpal noted. While a review petition is likely, the immediate priority is a workable interim mechanism to enforce the Supreme Court’s ruling.