On the Civil Appeal preferred by an operational creditor of M/s. Bhushan Power and Steel Limited namely Kalyani Transco and others, the Supreme Court directed NCLT to initiate the Liquidation Proceedings against the Corporate Debtor-BPSL under Chapter III of the IBC and in accordance with law vide its judgment dated May 02nd , 2025 in Kalyani Transco V/s M/S.Bhushan Power and Steel Ltd. & Ors.[Civil Appeal No. 1808 of 2020 (2025 INSC 621)]
Factual Background
After the enactment of the Insolvency and Bankruptcy Code, 2016 (IBC), the Banking Regulation Act, 1949 was amended w.e.f. 04.05.2017, to enable the RBI to issue directions to the Indian Banks to mandatorily initiate the Corporate Insolvency Resolution Process (for short CIRP).
The RBI vide its Circular dated 13.06.2017, therefore identified 12 big accounts for resolution, infamously known as the “dirty dozen”, which included BPSL, constituting about 25% of total non-performing assets in the country, for immediate admission under the IBC.
Initiation of CIRP proceedings against Bhushan Power and Steel Ltd (BPSL )
The CIRP proceedings were triggered against Bhushan Power and Steel Ltd (BPSL ) at the instance of Punjab National Bank, which filed a Company Petition being C.A. (IB) No. 202 (PB) of 2017 before the NCLT , New Delhi Principal Bench under the provisions contained in the IBC. The said petition was admitted on 26.07.2017.
Mr. Mahender Kumar Khandelwal was appointed as Interim Resolution Professional (IRP)
As per Section 15 of IBC, the Interim Resolution Professional (IRP) invited claims on 28.07.2017 from all the stakeholders.
The IRP received various claims, out of which the Resolution Professional admitted claims to the tune of INR 4,72,04,51,78,073.88 (Rupees Forty-Seven Thousand Two Hundred and Four Crores Fifty-One Lakhs Seventy-Eight Thousand and Seventy-Three and Eighty-Eight Paise) in respect of Financial Creditors, and admitted claims to the tune of INR 6,21,37,61,735 (Rupees Six Hundred and TwentyOne Crores Thirty-Seven Lakhs Sixty-One Thousand Seven Hundred and Thirty-Five), in respect of Operational Creditors.
JSW, Tata Steel and Liberty House submitted Resolution Plans. The plans submitted were evaluated by the CoC on 14.08.2018, as per the evaluation matrix formulated by it, and the JSW was found to have scored the highest in terms of the said evaluation matrix.
Pursuant to the further negotiations between the Core Committee comprising of small group of lenders, JSW submitted the Consolidated Resolution Plan on 03.10.2018. The said Consolidated Plan was circulated by the Resolution Professional to the members of CoC on 05.10.2018 and uploaded in the Virtual Data room.
Thereafter, the Resolution Professional having received a requisition from some of the Banks, he called for a meeting of CoC on 10.10.2018 for consideration and approval of Consolidated Resolution Plan.
Pursuant to the discussion held in the meeting on 10.10.2018, JSW submitted a letter dated 10.10.2018 (Addendum Letter) amending and clarifying certain terms of the Consolidated Resolution Plan, in view of the Amendments made in the CIRP Regulations, vide Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Fourth Amendment Regulations, 2018.
The consolidated Plan as amended by the Addendum letter, was approved by the CoC by e-voting held between 15.10.2015, 5 PM and 16.10.2015, 5 PM on Central Depository Services (India) Limited.
The Resolution Professional thereafter filed a Company Application being no. 254 (PB)/2019 on 14.02.2019 under Section 30(6) and 31(1) of the IBC, read with Regulation 39(4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulation, 2016, (hereinafter referred to as the Regulations, 2016), with a principal prayer of accepting the Resolution Plan approved by the CoC, submitted by the JSW.
CBI case against BPSL, its Directors and others
Pending the said proceedings, the CBI on 05.04.2019 registered an FIR bearing No. RCBD1/2019/E/2002 against BPSL, its Directors and others under Section 120B read with Sections 420, 468, 471, 477A IBC and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act. On the basis of the said FIR, the Directorate of Enforcement, New Delhi, registered the case being ECIR/DLZO-I/02/2019 on 25.04.2019 for the offences under the Prevention of Money Laundering Act, 2002 (PMLA).
Approval of Resolution Plan by NCLT
The NCLT vide its Order dated 05.09.2019 approved the Resolution Plan of JSW subject to the conditions :
(a) The amount due to the operational creditors under the resolution plan must be paid in accordance with the amended Section 30 (2) of the Code as the amendment expressly provides that it would be applicable to all applications pending for approval of the resolution plan like the one in hand.
(b) The resolution plan would be binding on the corporate debtor, its creditors, guarantors, members, employees and other stakeholders. The reduction of share capital of the corporate debtor as contemplated by the resolution plan would take effect without any further deed or act on the part of the corporate debtor and/ or its constitutes.
(c) Approved the appointment of Monitoring Agency from the date of this order until the closing date. Accordingly, the CoC and the RP would continue as Monitoring Agency.
(d) The power of the Board of Directors of the Corporate Debtor shall remain uspended until the closing date.
(e)Various reliefs sought from the statutory authorities under the Income Tax Act, 1961,Ministry of Corporate Affairs, Department of Registration and Stamps, Reserve Bank of India and others are also disposed of. We do not feel persuaded to accept the prayer made in the resolution plan yet the resolution plan applicant may file appropriate applications before the competent authorities which would be considered in accordance with law because it would not be competent for the Adjudicating . Authority-NCLT to enter into any such area for granting relaxation, concession or waiver which is wholly within the domain of competent authorities.
(f) Section 30(2)(f) of the Code mandates that the Resolution plan should not be against any provisions of the existing law. The resolution applicant, therefore, shall adhere to all the applicable laws for the time being in force.
(g)The criminal proceedings initiated against the erstwhile Members of the Board of Directors and others shall not effect the JSW-H1 Resolution Plan Applicant or the implementation of the resolution plan by the Monitoring Agency comprising of CoC and RP. We leave it open to the Members of the CoC to file appropriate applications if criminal proceedings result in recovery of money which has been siphoned of or on account of tainted transactions or fabrication as contemplated under the various provisions of the Code or any other law. Those applications shall be considered in accordance with the prevalent law.
(h)The RP was directed to redistribute the profits earned by running the Corporate Debtor during the Corporate Insolvency Resolution Process in accordance with the judgment of the Hon’ble NCLAT rendered in the case of Standard Chartered Bank v. Satish Kumar Gupta, R.P. of Essar Steel Ltd. & Ors., Company Appeal (AT) (Ins.) No. 242 of 2019 decided on 04.07.2019.
(i)The cases in which the Adjudicating Authority or the Appellate Authority could not decide the claim on merit, all such Applicants may raise the issue before an appropriate forum in terms of Section 60(6) of the Code.
Provisional attachment Order (PAO) by ED
After the approval of the plan by the NCLT as aforesaid, the Directorate of Enforcement of Central Government (ED), passed provisional attachment order (PAO) on 10.10.2019 provisionally attaching the assets of the CD-BPSL under Section 5 of the Prevention of Money Laundering Act, 2002 (PMLA).
Appeal to NCLAT
The Successful Resolution Applicant-JSW, challenged some of the conditions mentioned in said order passed by NCLT approving its Resolution Plan, by filing the Appeal being Company Appeal No. 957 of 2019, under Section 61 of IBC. PAO was also challenged by JSW before NCLAT.
Several Company Appeals also came to be filed by various parties before the NCLAT challenging the order dated 05.09.2019 passed by NCLT.
The NCLAT stayed the order of NCLT as well as the PAO vide the Order dated 14.10.2019.
The CoC also challenged the PAO in Supreme Court by filing SLP (C) Nos. 29327-29328 of 2019, wherein Supreme Court vide the Order dated 18.12.2019 stayed the PAO dated 10.10.2019.
The NCLAT , after hearing the appeals before it on the subject vide the impugned Judgment and Order dated 17.02.2020 approved the judgment and order dated 05.09.2020 passed by the NCLT, subject to the modifications/clarifications as follows:
ORIGINAL CONDITIONS BY NCLT | MODIFIED CONDITIONS BY NCLAT |
E- We also approve the appointment of Monitoring Agency from the date of this order until the closing date. Accordingly, the CoC and the RP would continue as Monitoring Agency. | 1. Reference to the ‘Monitoring Agency’ in the impugned order may be read as a reference to the Steering Committee and the Monitoring Professional as set out in Resolution plan and that the implementation of the Resolution Plan until the Effective Date would be by the ‘Reconstituted Board’, also in terms of the Resolution Plan. 2. Actions taken by the ‘Monitoring Agency’ as constituted in the impugned order in interim to be deemed to have been valid, without requiring any further action/ratification from the ‘Reconstituted Board’ |
F– The power of the Board of Directors of the Corporate Debtor shall remain suspended until the closing date. | 1. Board of Directors shall remain suspended until the closing date only to ensure that the previous suspended board of directors does not stand revived on account of the completion of the CIR Process, and does not interfere with the interim management mechanism in the Resolution Plan. |
G-Various reliefs sought from the statutory authorities under the Income Tax Act, 1961, Ministry of Corporate Affairs, Department of Registration and Stamps, Reserve Bank of India and others are also disposed of. We do not feel persuaded to accept the prayer made in the resolution plan yet the resolution plan applicant may file appropriate applications before the competent authorities which would be considered in accordance with law because it would not be competent for the Adjudicating Authority- NCLT to enter into any such area for granting relaxation, concession or waiver which is wholly within the domain of competent authorities. | 1. All penalties, interest, delayed payment charges, any other liabilities for any non-compliance with statutory obligations including taxes, including delays in filing returns or payment of tax dues, against the Company shall stand settled in accordance with the provisions of this plan as approved by NCLT. |
I The criminal proceedings initiated against the erstwhile Members of the Board of Directors and others shall not affect the JSW-Hl Resolution Plan Applicant or the implementation of the resolution plan by the Monitoring Agency comprising of CoC and RP. We leave it open to the Members of the CoC to file appropriate applications if criminal proceedings result in recovery of money which has been siphoned off or on account of tainted transactions or fabrication as contemplated under the various provisions of the Code or any other law.
Those applications shall be considered in accordance with the prevalent law. | We set aside the condition stipulated in second part of para 128(i) of the impugned order, regarding monies recovered from tainted and other such transactions, as being contrary to the agreed position in terms of para 13 of the Addendum Letter, which forms a part of the Resolution Plan. |
J– The RP is directed to redistribute the profits earned by running the Corporate Debtor during the Corporate Insolvency Resolution Process in accordance with the judgment of the Hon’ble NCLAT rendered in the case of Standard Chartered Bank v. Satish Kumar Gupta, R.P. of Essar Steel Ltd. & Ors., Company Appeal (AT) (Ins.) No. 242 of 2019 decided on 04.07.2019 and the action to be taken by the RP is evident from the reading of para 211 of the said judgment. | The Monitoring Committee with the help of the ‘Resolution Professional’ will now go through the RPF issued in terms of Section 25 of IBC and as consented to by the Resolution Applicant JSW will make distribution of profit accordingly. |
K– The cases in which the Adjudicating Authority Or the Appellate Authority could not decide the claim on merit, all such Applicants may raise the issue before an appropriate forum in terms of Section 60(6) of the Code. The other Financial Creditors/Operational Creditors’ would not be entitled any remedy under Section 60 (6) of the Code. | This condition requires consideration in view of decision of the Hon’ble Supreme Court in “Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta & Ors. – 2019 SCC OnLine SC 1478. This condition being against the provision of law is set aside as The Appellant being the ‘Successful Resolution Applicant’ cannot be asked to face with undecided claims after the Resolution Plan’ submitted by him and accepted by the ‘Committee of Creditors’ as this would amount to a hydra head popping up which would throw into uncertainty amounts payable by a prospective resolution applicant who successfully takes over the business of the ‘Corporate Debtor’, as held by the Hon’ble Supreme Court. |