India's top court on Friday rejected JSW Steel's resolution plan to acquire Bhushan Power and Steel four years after the takeover was completed, and ordered the liquidation of the debt-ridden firm, two lawyers involved in the case said.
The insolvency administrator and the lenders panel, which ran the insolvency process, failed to discharge their duties in line with the law, one of the lawyers said, citing the Supreme Court's verbal order.
The lawyers spoke on the condition of anonymity as they are not authorised to speak to the media. The full judgment will be uploaded later on the court's website.
The basis for the court's decision was not immediately clear.
On Friday, news channel CNBC-TV18 reported the Supreme Court saying that JSW Steel's plan to acquire Bhushan Power was "illegal" and should not have been accepted by the latter's committee of creditors.
Shares of the steelmaker, India's largest by capacity, tumbled nearly 7% after the news.
JSW Steel said it is yet to receive a formal copy of the order to understand the grounds for rejection and the implications.
"Once we receive the order... we will decide on our further course of action."
Bhushan Power did not immediately respond to Reuters' email seeking comment.
JSW Steel was the successful resolution applicant with a 197 billion-rupee ($2.35 billion) bid for Bhushan Power, with the acquisition completed in 2021.
Bhushan Power owed over 470 billion rupees to its creditors when it was short-listed by the Reserve Bank of India to be admitted under the country's insolvency and bankruptcy code in 2017.
Punjab National Bank had initiated criminal proceedings in 2019 against the former board of directors of Bhushan Power after the lender discovered fraud amounting to 38 billion rupees in the accounts of the company.
Punjab National Bank and State Bank of India, which led the committee of creditors, also did not respond to Reuters' emails.
