NEW DELHI :
The National Company Law Appellate Tribunal (NCLAT) on Monday rejected pleas challenging the sale of bankrupt steel maker Bhushan Power and Steel Ltd (BPSL) to JSW Steel Ltd, paving the way for the latter to complete the process of its impending acquisition.
A bench headed by Justice SJ Mukhopadhyay in January had reserved its judgement on the purchase of Bhushan Power by the Sajjan Jindal-led steel giant, more than three months after the court ordered freezing the payment by JSW Steel to all lenders of the insolvent firm.
The appellate tribunal had to decide on whether to remove the stay on the ₹19,700-crore bid by JSW Steel or if the company could be granted immunity under new amendment of the Insolvency and Bankruptcy Code (IBC). The newly introduced Section 32A of the IBC provides immunity to the new management of a distressed company acquired under the law.
JSW Steel moved NCLAT seeking immunity from future litigation after Bhushan Power was booked for alleged accounting frauds, which had led to seizing of assets by the Enforcement Directorate (ED).
After the NCLAT sought explanation from the ED, the probe agency argued that Section 32A would not apply to JSW Steel. ED had told the court that the Section is not retrospective in nature and will not include companies whose resolution plan was approved before the ordinance came into effect.
Bhushan Power faces investigation by different investigative agencies, after state-owned Punjab National Bank (PNB) and Allahabad Bank had reported fraud amounting to ₹5,500 crore combined by the steel company’s erstwhile promoters.
Even as JSW Steel had expressed worries over the acquisition of Bhushan Power amid the ongoing investigation, its resolution plan was approved by respective authorities.
Bhushan Power and Steel was among the 12 companies identified by the Reserve Bank of India (RBI) in its first list of big loan defaulters in June 2017. The RBI had directed banks to refer these cases to the National Company Law Tribunal (NCLT) and initiate insolvency proceedings against them.