MCA shifts stance, says onus of probing if JSW Steel complies with IBC is on NCLT, agencies

Specifically, with respect to Section 32 (A), the onus has been placed by the Code on the adjudicating authority and the investigating authorities to ensure that conditions prescribed under Section 32 (A) are met, before approval is granted for any resolution plan,” the MCA said in its affidavit, a copy of which has been seen by The Indian Express.

In its affidavit, the MCA has, for the first time, also said it is mandatory for the National Company Law Tribunal (NCLT), which is the adjudicating authority, to ensure that before approving any resolution plan, it seeks relevant comments and clearance from investigating authorities.

The MCA’s stand, absolving itself of any responsibility, comes after the NCLAT, on January 13, asked the MCA, the Enforcement Directorate (ED), the Serious Fraud Investigation Office and the Central Bureau of Investigation to clarify their stand on whether the latest amendment introducing Section 32 (A) in IBC would protect JSW Steel from probe in the alleged money laundering probe in Bhushan Power.

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 ED, which is probing Bhushan Power for alleged irregularities and money laundering had earlier in January told the NCLAT that it would, apart from probing the former promoters of Bhushan Power, and the company, also probe JSW Steel, as it was a related party.

Citing a joint venture formed by JSW Steel and Bhushan Power, the ED had told the NCLAT that the new amendment would only apply prospectively, and not retrospectively.

The ED had then also said as that Enforcement Case Information Report (ECIR), which is similar to a police First Information Report (FIR) was filed in April, and the resolution plan of JSW Steel was approved in September, there was no question of them getting the immunity under IBC.

The government’s move to bring the ordinance which ring-fenced new bidder for corporate debtors was seen as a reaction to JSW Steel being wary of proceeding with the resolution plan of Bhushan Power.

JSW Steel, which had at Rs 19,700 crore placed the winning bid for Bhushan Power, had been wary 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.

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. The appellate tribunal, after hearing the responses from all the parties, had on February 4 reserved its judgment on whether JSW Steel would get the immunity from ED probe.