NCLT reserves orders on bankruptcy pleas against Bhushan Steel and Power
Mumbai/New Delhi/Hyderabad: The National Company Law Tribunal (NCLT) on Wednesday reserved orders in two separate petitions filed by banks seeking to initiate bankruptcy proceedings against Bhushan Steel Ltd and Bhushan Power and Steel Ltd.
These two are among the big 12 firms identified for early bankruptcy proceedings by the Reserve Bank of India (RBI).
NCLT benches have already admitted bankruptcy petitions against Jyoti Structures, Monnet Ispat and Power Ltd and Alok Industries Ltd.
Bhushan Steel had objected to the loan amount cited by State Bank of India (SBI) in its application, saying that it was Rs100 crore more than what’s due.
The steelmaker’s lawyer said “working capital becomes payable only when there is a recall or demand for payment”.
“There is a difference between debt and default—the entire amount has been shown as a default, even though no default notice was served about the working capital,” he said. “Material facts should have been revealed and they have been omitted despite the knowledge of them being material. There has to be some sanctity for the exercise of powers of NCLT as the adjudicating authority.”
He also referred to two orders of the National Company Law Appellate Tribunal (NCLAT), wherein if there is no default or there are misleading statements, the application has to be rejected.
In reply to the objections raised on behalf of Bhushan Steel, SBI argued, “Merely allowing the cash credit account to operate in order to not choke the company does not imply that SBI is now not entitled to recover its dues.”
This is the second instance of a petition being challenged on the grounds of incorrect amount.
On Tuesday, State Bank of India had to clarify on the claim amount for Monnet Ispat Ltd.
Bhushan Steel owes banks at least Rs43,000 crore.
In the case of Bhushan Power, NCLT president M.M. Kumar pointed out that the insolvency resolution professional appointed by Punjab National Bank (PNB), Mahendar Khandelwal, has not submitted an affidavit stating the final registration number.
The documents submitted by the bank during the earlier hearing contains the interim registration number of the professional which is not valid post insolvency examinations held in July.
Lawyers of law firm Cyril Amarchand Mangaldas who are representing PNB said they will submit the affidavit to NCLT shortly as Khandelwal, partner and head of consultancy firm BDO LLP, has cleared the exam.
Bhushan Power, which has not objected to the petition, has said that the company employs more than 30,000 people and it should be “treated as a going concern”. It owes banks a total of Rs37,000 crore.
Separately, the Hyderabad bench of NCLT declared a six-month moratorium on Deccan Chronicle Holdings Ltd (DCHL). It had admitted the insolvency petition against the firm in May.
It also accepted Canara Bank’s nominated Interim Resolution Professional (IRP).
Earlier this month, it had accepted Canara Bank’s plea, seeking initiation of insolvency resolution process on 5 July, and had asked the bank to appoint an interim IRP.
A moratorium period of 180 days has been set, during which the nominated IRP will publicize the matter through the press and form a committee of creditors to decide further action, said a representative of Canara Bank, who did not want to be named. DCHL owes some Rs723 crore to Canara Bank.