NCLT defers Bhushan Power & Steel insolvency matter to 30 May

New Delhi: The National Company Law Tribunal (NCLT) on Tuesday deferred the Bhushan Power & Steel Ltd (BPSL) insolvency case to 30 May, when it is expected to issue directions on a plea filed by former promoter Sanjay Singal.

Singal’s plea seeks enforcement of the Supreme Court’s 2 May ruling, which quashed JSW Steel’s ₹19,700 crore resolution plan and directed NCLT to initiate liquidation proceedings.

The adjournment followed a request from Solicitor General Tushar Mehta, representing the Union government and other stakeholders, to refrain from issuing any notices yet. He urged the bench to allow Singal to identify and implead all necessary parties before the matter is formally heard.

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“Let him (Singal) consider whom he would wish to join, or who are necessary parties before even notice is issued, and thereafter we can issue,” Mehta told the bench.

The NCLT principal bench, led by Justice R. Sudhakar, agreed with Mehta’s submission and directed Singal’s counsel to implead all relevant stakeholders before the next hearing.

"So all of you should think over it. Yes. We just can't take a decision.” the bench said.

During the NCLT hearing, Mehta indicated that stakeholders are considering various legal options in response to the Supreme Court ruling, including seeking a fresh Corporate Insolvency Resolution Process (CIRP) for BPSL.

“Every option is under consideration because this will have to be clarified by the Honourable Court,” Mehta said. “We may even persuade the Court to initiate a fresh CIRP process because the ultimate object of the IBC is to preserve the company as a going concern. Liquidation is the ultimate death,” he added.

Mehta also raised concerns over BPSL’s assets, which have been attached by the Enforcement Directorate (ED) under the Prevention of Money Laundering Act (PMLA).

He reminded the tribunal that Section 32A of the IBC was introduced to protect resolution applicants from past criminal liabilities once a resolution plan is approved. With the resolution plan now void, Mehta said, questions arise about whether ED attachments can survive and whether such assets can be included in liquidation.

“Now, with the resolution plan set aside, even those ED attachments may be revived. A broader question also arises: can properties attached under a different statute be brought under liquidation proceedings at all?” Mehta pointed out.

Meanwhile, Singal’s counsel urged the tribunal to appoint someone to take control of the company’s assets to prevent potential misuse or diversion. “Someone must be appointed to take control of the assets to prevent siphoning,” the counsel submitted.

The NCLT said it would consider all submissions and issue directions on 30 May.

The 2 May Supreme Court ruling, which overturned a fully implemented resolution plan five years after its approval by the NCLT and Committee of Creditors, has sent shockwaves through India’s insolvency ecosystem.

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The verdict also poses a financial setback for lenders. Banks must now return the ₹19,350 crore received from JSW Steel under the resolution plan. However, recoveries under liquidation are expected to be significantly lower, forcing banks to take fresh provisioning hits, particularly as public sector banks face margin pressures and potential rate cuts in FY26.

BPSL was among the first 12 large defaulters identified by the Reserve Bank of India in 2017 under the Insolvency and Bankruptcy Code, owing lenders over ₹47,200 crore.