The Supreme Court pauses NCLT proceedings to liquidate BPSL, observing that doing so may prejudice JSW’s yet-to-be-filed review of its quashed resolution plan
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The bench noted that the NCLT proceedings were based on the Supreme Court’s own earlier directions. Solicitor General Tushar Mehta, appearing for the lenders, suggested that the matter be deferred till 10 June
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The Supreme Court on Monday paused the liquidation proceedings for Bhushan Steel and Power Ltd (BPSL) before the National Company Law Tribunal (NCLT). The move came after hearing a petition filed by JSW Steel, whose ₹19,700 crore resolution plan for BPSL was quashed by the apex court on 2 May.
A bench comprising Justice B V Nagarathna and Justice Satish Sharma ordered status quo, considering that JSW’s limitation period for filing a review against the judgment is still open.
A status quo order is a legal directive issued by a court to maintain the existing condition of a matter until a final decision or resolution is reached. It freezes the situation in place to prevent any changes that might complicate the case or prejudice one party.
The bench observed that liquidation might jeopardise the review petition that JSW intends to file and ordered status quo in the interest of justice. Under Indian law, the general time limit for filing a review petition is 30 days from the date of the judgment.
Senior Advocate Neeraj Kishan Kaul, representing JSW, argued that even before this window had expired, the NCLT was moving forward to appoint a liquidator. He informed the court that JSW had time until 2 June to file the review.
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“If a liquidator is appointed, we will be in great difficulty. It is a profit-making company, and this resolution plan was submitted four years ago,” Kaul said.
The bench noted that the NCLT proceedings were based on the Supreme Court’s own earlier directions. Solicitor General Tushar Mehta, appearing for the lenders, suggested that the matter be deferred till 10 June.
The court disposed of JSW’s petition with the status quo order, clarifying that it was not expressing any opinion on the merits of the matter. The bench said it was granting relief solely to avoid future complications and in the interest of justice. JSW undertook to file the review petition within the prescribed time.
“Without observing anything on the merits, we find that the interests of justice would be subserved — and in order to avoid future complications — if there is a status quo of the proceedings pending before the NCLT. We also record the submission of the learned senior counsel for the appellant (JSW) that the review petition shall be filed prior to the expiry of the limitation period and in accordance with the law,” the bench stated in the order.
On 2 May, the Supreme Court had rejected JSW Steel’s ₹19,700 crore resolution plan for BPSL, holding it “illegal” and ordered liquidation, four years after the company was acquired under the Insolvency and Bankruptcy Code (IBC).
Commenting on Monday’s development, Alay Razvi, Managing Partner at Accord Juris, said the Supreme Court’s decision to halt liquidation proceedings without a formal review petition is unusual.
“Such stays are granted after the filing of a review petition and almost never in commercial matters where timelines and finality are critical,” he said.
Amit Tungare, Managing Partner at Asahi Legal, said the court’s anticipatory stay recognised the economic implications of such insolvency proceedings.
“Such anticipatory interventions, though uncommon, demonstrate judicial pragmatism aimed at safeguarding broader stakeholder interests,” he said.
Nitin Jain, Partner at Agama Law Associates, added, “The impact would be that parties would not act upon the earlier order quashing JSW’s resolution plan for Bhushan Steel in the meantime. The fate of this order may affect large insolvency cases that have reached advanced stages of resolution.”
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