The National Company Law Appellate Tribunal (NCLAT) on Monday asked the Enforcement Directorate (ED) to immediately release the attached assets of Bhushan Power and Steel (BPSL) and directed the investigation agency to refrain from attaching any other asset of BPSL without the prior approval of the appellate tribunal.
The appellate tribunal also put on hold the Rs 19,700-crore payout by JSW Steel for acquiring the bankrupt firm till further orders.
The ED had on Saturday attached assets worth over Rs 4,025 crore of BPSL in connection with its money-laundering probe linked to an alleged bank loan fraud. It had said that it attached land, building, plant and machinery of the company located in Odisha under the provision of the Prevention of Money Laundering Act (PMLA).
“IBC cannot be annulled in this manner. Money laundering is by an individual,” the NCLAT observed while directing ED to release the assets. The ministry of corporate affairs said that the ED has no jurisdiction to attach the property of a corporate debtor, particularly when an appeal is pending with regard to attachment.
The appellate tribunal fixed October 25 as the next date for further hearing in the matter.
Following the attachment of the assets by the ED on Saturday, JSW said in a statement that it vindicated its stand and that’s why it had moved the NCLAT after winning the bid to seek immunity from litigation related to alleged frauds at the bankrupt company.
In September, the National Company Law Tribunal (NCLT) had allowed JSW Steel to acquire BPSL but the firm did not get relief from the scope of ongoing probes against BPSL.
The stand-off in the matter arises from the fact that in April a Delhi High Court ruling had held that laws on money laundering take precedence over the bankruptcy law. This had led JSW Steel to move NCLAT despite its proposal being declared as the winning bid.
During the proceedings on Monday, the ministry of corporate affairs (MCA) told the NCLAT that the ED has no jurisdiction to attach assets under the insolvency process. The MCA’s stand is in consultation with the department of financial services and banks.
BPSL, Sanjay Singal, the then CMD and other accused were booked by the Central Bureau of Investigation (CBI) for defrauding banks. The attachment order came after Punjab National Bank (PNB) and Allahabad Bank in July this year claimed that they had been defrauded by BPSL to the tune of Rs 1,774.82 crore. FE