The National Company Law Appellate Tribunal (NCLAT) on Monday directed the Enforcement Directorate (ED) and other investigative agencies to clarify whether JSW Steel, the successful bidder for the debt-laden Bhushan Power and Steel, would have immunity for offences committed by the previous management under a December ordinance.
ED had in October last year attached Bhushan Power and Steel’s Rs 4,025-crore worth of land, buildings, plant and machinery in Odisha in a case related to the alleged diversion of bank funds, stalling the implementation of JSW Steel’s Rs 19,700-crore resolution plan.
A three-member bench of the NCLAT directed the ED and the corporate affairs ministry, on behalf of the Serious Frauds Investigations Office (SFIO), and the Central Bureau of Investigation to file an affidavit stating whether JSW Steel is covered by the newly inserted Section 32A of the Insolvency and Bankruptcy Code (IBC).
Section 32A of IBC, introduced through a December ordinance, grants immunity to the new management of a distressed company acquired under the insolvency law as long as the new owner is not a related party to previous promoters, and investigative authorities do not believe that the acquirer has been a party to offences committed under the watch of the erstwhile management.
The ordinance also protects assets of the corporate debtor, acquired through IBC, from attachment.
The bench further directed the government and the ED to enclose evidence in their affidavits should they submit that JSW Steel does not have immunity under this law.
The SFIO, CBI and ED are investigating erstwhile promoter and managing director Sanjay Singhal for alleged diversion of funds at Bhushan Power and Steel.
The bench rejected requests by the counsels for the ED that JSW Steel also be directed to file an affidavit stating that it is immune from prosecution under the new ordinance, saying that such a direction would be “an insult.” The NCLAT had previously stayed the order of attachment of the company’s assets. The Delhi bench of the National Company Law Tribunal approved JSW Steel’s resolution plan for the distressed asset in September.
Under the JSW Steel resolution plan, financial creditors will be able to recover Rs 19,350 crore, or 41% of their total admitted claims of Rs 47,158 crore. Operational creditors will get Rs 350 crore, or 47.7% of their admitted claims of Rs 734 crore.
Source- Economic Times.