The National Company Law Appellate Tribunal (NCLAT) on Monday asked the Enforcement Directorate (ED) and the Ministry of Corporate Affairs (MCA) to file affidavits clarifying that JSW Steel, which placed the winning bid for Bhushan Power & Steel, will not be persecuted for financial irregularities allegedly committed by former promoters of the company.
If the probe agencies wanted to continue pursuing Bhushan Power in their case of money laundering, they must explain the reasons for the same, the NCLAT said.
The MCA will file the affidavits on behalf of Serious Fraud Investigation Office (SFIO), and the Central Bureau of Investigation, latest by January 20, a three-member Bench led by Chairperson Justice S J Mukhopadhaya said.
JSW Steel, which at Rs 19,700 crore had placed the winning bid for Bhushan Power & Steel, had been wary of proceeding with the resolution plan owing to cases pending against the latter. This was after the ED had remained firm on its idea to attach the properties of Bhushan Power, as well as its former promoters and directors for alleged money laundering.
JSW Steel had been wary of pursuing the resolution plan after the ED had in October started attaching properties worth nearly Rs 4,000 crore, belonging to Bhushan Power. Following the raids, JSW Steel approached the NCLAT, while halting the implementation of the resolution plan, asked ED to release the assets attached by it.
In December 2019, the government amended the Insolvency and Bankruptcy Code (IBC), which bypassed the stand taken by the ED. Article 32 (A) of the IBC, introduced via an amendment, provided immunity to successful resolution applicants from any old and ongoing cases against the corporate debtors. The new amendment also said that there would be no action, including attachment by any agency, against any property of the corporate debtor.
The appellate tribunal, last October, also noted that such actions by agencies like ED, and the CBI or SFIO would “fail” IBC. “IBC cannot be annulled in this manner. Money laundering is by an individual not company,” the appellate tribunal bench had then said.
Though the Committee of Creditors of Bhushan Power requested the NCLAT to lift its stay on the implementation of the plan, the appellate tribunal denied the plea and said that there were several other pleas, including one moved by the former promoters of the corporate debtor.
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