NCLAT gives JSW Steel immunity from ED in Bhushan Power acquisition

India’s top bankruptcy court approved the sale of distressed Bhushan Power and Steel Company to JSW Steel on Monday. The court also gave the buyer immunity from investigations into financial fraud allegedly committed by the former owners of the steel firm.

Bhushan Power was part of the original dirty dozen cases identified by the Reserve Bank of India to be referred to bankruptcy courts. JSW Steel, with an offer of ₹19,700 crore for the bankrupt steel mill, was the highest bidder for the asset. However, the Enforcement Directorate, which is pursuing an investigation into alleged money laundering by the company under its previous management, attached the assets of the steel mill, stalling its sale.

A two-member bench headed by Chairman Justice S J Mukhopadhaya said that JSW Steel and the assets it acquires through bankruptcy will receive immunity from the acts done by the former promoters of Bhushan Power & Steel Ltd. At the same time, the court asked the ED, in its order, to continue the investigation under the Prevention of Money Laundering Act and said that it could act against the former promoters, equity shareholders and guarantors of the steel mill.

Mint has seen a copy of the court order.

In its order, the court also rejected claims from the mill’s operational creditors for higher settlements under bankruptcy law. In addition, the bench said that the operating revenue that the mill earned through its bankruptcy period would accrue to JSW Steel, and not the lenders. Bhushan Power was part of the original dirty dozen cases identified by the Reserve Bank of India to be referred to bankruptcy courts.