The National Company Law Appellate Tribunal (NCLAT) directed the Enforcement Directorate (ED) to release assets of Bhushan Power and Steel Ltd. (BPSL) attached as part of investigations into alleged loan fraud and money laundering by the company and erstwhile promoter Sanjay Singhal. JSW Steel, which is looking to acquire the company in bankruptcy proceedings, had sought protection from the ongoing probes.
The tribunal has put on hold the Rs 19,700-crore payout by JSW Steel for acquiring the debt-ridden firm.
The NCLAT told ED that its actions would undermine the Insolvency and Bankruptcy Code (IBC), a key pillar of the strategy to repair bank finances.
“You are going to kill the economy of the country… (You are) playing with fire,” the bench headed by NCLAT Chairman Justice SJ Mukhopadhyaya told the directorate. “No outsider will come and purchase (distressed companies)… IBC cannot be annulled in this manner. Money laundering is by an individual.”
The NCLAT also directed ED not to attach any further assets without its permission. The Delhi bench of the National Company Law Tribunal (NCLT) had approved JSW Steel’s Rs 19,700 crore resolution plan for BPSL on September 5. JSW Steel doesn’t have to pay the money until the next date of hearing, which is October 25, the NCLAT said.
The bench directed the agency and the CBI to file a reply in the next two days.
The ED last week attached plants and property of BPSL worth more than Rs 4,025 crore after obtaining an order from a Prevention of Money Laundering Act (PMLA) court. The central probe agency said it has seized land, building, plant and machinery of the firm located in Odisha under PMLA provisions.
The tribunal said the ED doesn’t have the jurisdiction to seize the property of a corporate debtor, particularly when an appeal is pending with regard to attachment, questioning the move by ED. Counsel for the Ministry of Corporate Affairs (MCA) also told the NCLAT that the ED has no jurisdiction to attach assets under the insolvency process. The MCA said its stand was in consultation with the Department of Financial Services and banks.
The ED’s provisional attachment order of October 10 has been stayed until the issue is decided by the appellate tribunal, it said. Officers and directors are also prohibited from attaching any property of BSPL without permission.
