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The National Company Law Appellate Tribunal has approved the ₹19,700-crore resolution plan of JSW Steel to takeover the bankrupt Bhushan Power and Steel. The approval comes with the immunity sought by the new owner against investigations being carried out against the erstwhile promoters of Bhushan Power and Steel.
This comes after the government recently amended Section 32A of the Insolvency and Bankruptcy Code, providing immunity to the bidders and the insolvent company’s assets from investigation. However, the Enforcement Directorate had argued that the amended Act will not have retrospective effect and cannot be applied in JSW Steel’s case.
After its bid was approved by NCLT, Sajjan Jindal-promoted JSW Steel had moved NCLAT, seeking immunity from the ongoing criminal investigation against BPSL promoters.
While providing the immunity to JSW Steel, Justices SJ Mukhopadhaya, Chairperson and Bansi Lal Bhat, on Monday, said that the order passed by the NCLAT will not come in the way of the ED or the Serious Fraud Investigation Office or the Central Bureau of Investigation proceeding with the investigation or taking any action in accordance with the law against erstwhile promoters, officers and others of the ‘corporate debtor’.
However, it has to be seen whether the investigating agencies — the ED, the SFIO and the CBI — which had earlier questioned the authority of NCLAT to provide such an immunity, will move the Supreme Court against the verdict. It is also not clear when JSW Steel will deposit the bid money to close the deal.
ED drags in the mining link
Last July, state-run lender Punjab National Bank declared loan exposure of ₹3,805 crore to bankrupt BPSL as fraudulent and filed a case in the ED against the company’s promoters. Following this, the ED had not only attached the properties under insolvency but also dragged JSW Steel into the investigation as it a had tie-up with BPSL in a mining venture.
JSW Steel dismissed the contention on the mining joint venture stating that the mining was allotted by the Government to a consortium of four companies and the allotment has since been cancelled.
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JSW Steel moves NCLAT for immunity from criminal cases against Bhushan Power and Steel
Seeks approval to retain profit made by the insolvent firm in last two years
Last month, NCLAT had reserved its judgment on JSW Steel’s purchase of the insolvent BPSL. In October, the appellate tribunal had ordered a freeze on payment, as per the resolution plan.
BPSL was one of the 12 large corporate accounts identified by the RBI in June 2017 for resolution under the Insolvency and Bankruptcy Code.
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