BPSL’s Liquidation: A Pyrrhic Victory For The IBC
- IJLLR Journal
- 2 days ago
- 2 min read
Shaashwat Mishra, Hidayatullah National Law University
Introduction
In Kalyani Transco vs. Bhushan Power1 Supreme Court’s intervention sparked a lot of discussion, especially about whether the sanctity of an approved resolution plan can be questioned. While the court’s decision to send BPSL into liquidation might seem significant, a closer look raises several concerns, particularly around post approval resolution plans, the jurisdictional boundaries between the PMLA2 and the IBC3. This makes it necessary to critically examine the impact of the decision on India’s growing insolvency regime. This case raised several intricate legal questions regarding the rights of stakeholders, statutory immunity under section 32A4 Of IBC and the legitimacy of decisions of quasi-judicial bodies, such as NCLT, NCLAT.
Brief Facts
This case began in 2017, when Punjab National Bank initiated CIRP against BPSL, which was identified as one of the twelve large non-performing assets, termed the “Dirty Dozen,” which were 12 major corporate defaulters who collectively owed Rs 3.4 lakh crore, which constituted approximately 25% of India’s non-performing assets. By the RBI in 2017, through a circular. JSW Steel submitted a resolution plan, which was approved by the Committee of Creditors, and CIRP proceeded. JSW Steel became the successful Resolution Applicant. After approval by the NCLT on 05.09.2019, the ED issued a temporary attachment order against the assets of BPSL, alleging proceeds of crime under the PMLA and stating an ongoing investigation against the erstwhile promoters of BPSL. Following that, JSW challenged the ED's attachment order in the NCLAT, which stayed the order and modified and approved the NCLT’s decision. An SLP was filed in the SC, where the Hon’ble Court reversed the NCLAT’s order, setting aside JSW’s resolution plan, pointing out violations of the IBC, including delayed implementation, and ordered the liquidation of BPSL. The judgment emphasizes that the IBC process must be used for resolving insolvency and not as a shield against legal actions. Statutory forums like the NCLAT must exercise judicial discipline and not overreach their jurisdictional boundaries.
