- It’s worth remembering and reiterating the old maxim – the justice delayed is justice denied. The judicial delivery system in India keeps meandering along for years at the best of times. Every countryman is aware of how tedious and cumbersome it is to obtain relief or a conclusion while knocking on the doors of the judiciary. Reams and reams have been written about common citizens facing tremendous obstacles while approaching the judiciary in search of relief. Timely relief is a pipedream that rarely makes its presence felt to assuage the desperate citizens looking up to the judiciary for justice. Of course, the Supreme Court-led higher judiciary has made conscious efforts to address this glaring lacuna. But it hasn’t succeeded on expected lines.
PC: Anandabazar
- However, the millions of undertrials languishing in various jails across the country starkly remind us how far yet we are to travel to receive justice on time. Millions of cases dragging on for years with no sign of adjudication is the norm rather than the exception. Even the Insolvency and Bankruptcy Code processes too are also dragging on for want of speedy delivery of verdict. Take, for instance, the SC ruling on the takeover of Bhushan Steel recently. The ruling not only shows what’s wrong with the IBC process, but also raises questions about key matters not getting settled faster. The SC’s decision last week to annul JSW Steel’s acquisition of the bankrupt Bhushan Power & Steel Ltd (BPSL) in 2021 hurts JSW, lenders, workers, and prospective buyers alike.
PC: Live Law
- Especially, the prospects of finding buyers for other insolvent companies. SC’s order is based on two technical grounds, one of them being that JSW completed the takeover with a mix of equity and optionally convertible debentures, when it should have used equity alone. However, this illegality would have been apparent at the outset and didn’t require four years of adjudication. In that long period, JSW integrated the operations of BPSL, which now accounts for 13% of its 37.5mm tonne annual steelmaking capacity. Effectively, the court order hobbles an enterprise after its successful turnaround. Needless to mention, the BPSL story is also bad optics for India at a time when the country is looking to attract investment in manufacturing.
PC: PC: Value Research
- Let’s look back to see how the BPSL saga unfolded. By 2017, BPSL owed banks around Rs. 47,000 cr. The process to select a buyer via bids dragged on through 2018 and most of 2019. While JSW’s Rs. 19,700 cr bid was selected in Sep 2019, the acquisition wasn’t completed until March 2021. This is the second ground for cancellation – failure to complete the resolution plan within the prescribed timeline. Again, this would have been apparent in 2021. The eight-year timeline of this case tells prospective lenders that getting their money back, even with a 60% cut, can take years. It warns prospective buyers of insolvent firms that a takeover, duly approved by NCLAT and NCLT, can be undone years later. Yes, legal points should be settled conclusively and swiftly. Period.
