Mumbai, May 3 -- The Supreme Court on Friday ordered the surprise liquidation of Bhushan Power & Steel Ltd, nearly five years after India's largest steelmaker JSW Steel Ltd acquired the bankrupt company in an insolvency auction.Lawyers termed the order unprecedented, as it overturns prior orders by the company law tribunal, raises questions over the fate of loans recovered by the banks, and imperils the investments that JSW Steel made into the company. JSW Steel's Rs.19,700-crore rescue plan violated provisions of the Insolvency and Bankruptcy Code (IBC), and BPSL's committee of creditors (CoC) erred in approving it, a bench of justices Bela M. Trivedi and Satish Chandra Sharma ruled. The court declared the resolution plan "illegal and contrary to IBC provisions" and criticized the CoC for failing to follow the legal framework, before invoking Article 142 of the Constitution to order the liquidation. The decision marks a dramatic end to one of India's longest and closely-watched insolvency cases. It could have significant implications for lenders including State Bank of India and Punjab National Bank, among BPSL's largest creditors. That's because liquidations typically result in much lower recoveries than resolutions. It is unclear what happens to the recoveries made by banks. Shares of JSW Steel tumbled as much as 8% after the apex court judgement, before paring losses to close 5.5% lower at Rs.972.15 on the BSE. "We are yet to receive the formal copy of the order to understand the grounds for rejection in detail and its implications," said a spokesperson for JSW Steel. "Once we receive the order and are able to review the same along with our legal advisors, we will decide on our further course of action." A banker from a lender that was part of the resolution process termed the order unprecedented, adding that lenders will discuss it with their legal teams. "JSW acquired it four years ago, and the character of the asset has changed over the years. It is difficult to say what happens now," the banker added. Others were also left perplexed by the judgement. "All creditors had been paid, and there is no precedent like this in the history of IBC," a second person said. "We are waiting for the full judgment and will consult with our legal counsel and the CoC to decide the next steps." The IBC debuted in December 2016, raising hopes that it would be the ultimate solution for cleaning up India's bad loan mess. The initial years saw several tycoons lose control of their assets and banks making significant recoveries. According to Durgesh Khanapurkar, a partner at law firm Desai & Diwanji, the asset value (of BSPL) has improved because the plant is now operational. "JSW has invested time and money into making the unit functional. It remains to be seen how the entire plan will be undone," Khanapurkar said. "This is a case that has scope for review," he said. "JSW may file a review petition to secure relief." Daksh Ahluwalia, founder and principal, Aikyam Law Offices said it appears that BSPL's insolvency plan was derailed by a tangle of legal complications. "A major factor was the Enforcement Directorate's (ED) attachment of over Rs.4,000 crore in alleged proceeds of crime under PMLA," said Ahluwalia. "These combined factors-regulatory attachments, statutory ambiguity, and non-performance-made meaningful restructuring impossible," he said....