Bhushan Power buyout: NCLAT to hear probe agencies over JSW Steel's plea seeking protection from investigation against BPSL

New Delhi: The National Company Law Appellate Tribunal (NCLAT) will hear three probe agencies, including ED and SFIO, regarding JSW Steel’s plea seeking immunity from prosecution after buyout of Bhushan Power and Steel, which is facing money-laundering allegations. A three-member NCLAT bench headed by chairperson Justice S J Mukhopadhaya Monday directed impleading the Ministry of Corporate Affairs, the CBI and the Enforcement Directorate (ED) as a party in the matter. The next hearing would be on 14 October. The NCLAT also said it will decide over the payment of Rs 19,350 crore by JSW Steel to the Committee of Creditors (CoC) of Bhushan Power and Steel (BPSL) on the next date of hearing. “Taking into consideration the nature of the case, we allow the appellant (JSW) to implead Union of India through the secretary, Ministry of Corporate Affairs and director, Directorate of Enforcement as respondent Nos 3 and 4, respectively,” said the NCLAT. [caption id=“attachment_4407133” align=“alignleft” width=“380”] Representational image. Reuters.[/caption] It further said: “Union of India may also address the matter on behalf of the CBI and SFIO.” The NCLAT also said the Centre would also address the matter on behalf of Central Bureau of Investigations (CBI) and Serious Fraud Investigation Office (SFIO) over the issue. The appellate tribunal’s direction came during the hearing of a petition filed by JSW Steel seeking protection against the ongoing investigation going under the Prevention of Money Laundering Act (PMLA) against BPSL. However, the bench declined to stay the order of depositing the amount within a month, which is 5 October. During the proceedings, senior advocate Ramji Srinivasan appearing for the CoC said that JSW Steel to pay Rs 19,350 crore and said the group in the resolution plan filed before it had anticipated PMLA proceedings against BPSL in future. According to him, in the resolution plan, JSW Steel has said “even such immunity is not granted, they would never the less implement” it and make payment and no stay should be granted over it. However, this was opposed by senior advocate Kapil Sibal representing JSW Steel and said the company was not going away from it but want some assurance from it. According to him, investigations against BPSL is at ECIR stage (Enforcement Case Information Report) and they may file cases in future and the assets of BPSL could be attached by the ED. However, the NCLAT asked the creditors to wait till 14 October. The plan, which was approved on 5 September, JSW Steel is bound to pay the amount within 30 days. Last week, Delhi-based principal bench of the National Company Law Tribunal (NCLT) approved Rs 19,700 crore bid of JSW Steel for debt-ridden BPSL. Although in its 138-page order, the NCLT allowed protection to JSW Steel from criminal cases filed against the promoters, it was silent over the money laundering cases. Under the insolvency proceedings, JSW Steel has emerged as the winning bidder for BPSL.

According to the resolution plan approved by the NCLT, Rs 19,350 crore will be distributed among financial creditors to settle their Rs 47,158 crore of admitted claims. The remaining Rs 350 crore would be paid to operational creditors to settle less than half of their Rs 733.76 crore admitted claims.

Banks will get 41.03 percent of their outstanding dues as compared to a liquidation value of between Rs 9,320-9,707 crore, it said. JSW Steel will make an infusion of Rs 7,200 crore in BPSL for improving its operations.

BPSL was dragged to insolvency proceedings by lenders led by Punjab National Bank (PNB) after the company failed to pay loans within a stipulated time-frame. The NCLT said criminal proceedings against the former founders of BPSL on alleged siphoning off of funds would not impact takeover by JSW.

“The criminal proceedings initiated against the erstwhile members of the board of directors and others shall not affect the JSW - H1 (highest) Resolution Plan Applicant or the implementation of the resolution plan,” it had said. It, however, did not grant JSW certain relief sought from statutory authorities under the Income Tax Act, and the RBI. “We leave it open to the members of the CoC to file appropriate applications if criminal proceedings result in the recovery of money which has been siphoned off or on account of tainted transactions or fabrication,” the NCLT said on charges against former promoters.