Supreme Court Grants Stay on Bhushan Steel Liquidation
JSW Steel Ltd., an Indian Steel giant, informed the stock exchanges on 29th May 2025 that the Hon’ble Supreme Court has granted stay on the liquidation of Bhushan Steel Ltd., which JSW Steel had acquired in 2021.
Brief Background of the Bhushan Steel Acquisition Matter
Bhushan Steel had been admitted into Indian Bankruptcy Code (IBC) proceedings in 2017 when it had failed to repay debts to the tune of Rs. 47,000 crore. In September 2019, JSW Steel’s Rs. 19,700 crore resolution plan for Bhushan Steel was approved by NCLT. However, in October 2019, the Enforcement Directorate (ED) had attached Bhushan Steel’s assets under the Prevention of Money Laundering Act (PMLA), and described them as ‘proceeds of crime’. This was done citing diversion of loans and money laundering by Bhushan Steel’s erstwhile promoters.
This matter was taken by JSW Steel to the NCLAT, on the grounds of risk attached with Bhushan Steel’s assets. NCLAT declared in February, 2020 that ED’s attachment of Bhushan Steel under PMLA was illegal. It must be noted that in December 2019, section 32A was added to the IBC, which provides protection to acquiring companies from any prosecution on account of the acquired company’s past actions. However, this led to NCLT issuing certain directions pertaining to declassification of Bhushan Steel’s promoters and corporate restructuring, which were outside the scope of the IBC. Thereafter, JSW formally acquired Bhushan Steel in March 2021.
Supreme Court’s May 2, 2025 Order on JSW’s Bhushal Steel Acquisition
On 2nd May, 2025 Hon’ble Supreme Court declared that the acquisition of Bhushan Steel by JSW Steel was ‘illegal’, due to discrepancies in the resolution process. What was surprising was that this order came after over 4 years of Bhushan Steel’s formal acquisition by JSW Steel. Through this order the Supreme Court called for the liquidation of Bhushan Steel’s assets.
Following this, Mr. Sanjay Singhal, erstwhile promoter of Bhushan Steel approached NCLT seeking implementation of Hon’ble SC’s order for liquidation of Bhushan Steel. Orders for the same were issued by the NCLT.
However, on 26th May 2025, Hon’ble Supreme Court issued a status quo on Bhushan Steel’s liquidation, mentioning that “status quo needs to be maintained in the interest of justice”, thus giving JSW Steel an opportunity to file a review petition against the NCLT orders.
What is at Stake for JSW Steel?
Bhushan Steel, if liquidated, would be a substantial loss to JSW Steel in terms of production and revenue generation.
JSW Steel’s assets linked to Bhushan Steel amount to about Rs. 14,901 crore as of March 2025. In terms of production capacity, Bhushan Steel is capable of churing out about 4.5 Million Metric Tonne Per Annum (MMTPA) of Steel, which is a considerable chunk of JSW Steel’s total Steelmaking capacity of 34.2 MMTPA in India.
Moreover, for FY25, JSW Steel attributed crude Steel production of 3.54 Million Metric Tonne (MMT), and Steel sales of 3.31 MMT to Bhushan Steel.
About JSW Steel Ltd.: JSW Steel Ltd. is the flagship company of the JSW Group. The company has manufacturing facilities in India and the US. In FY-25, the company reported a consolidated top line of Rs. 168,824 crore.
