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JSW Steel has filed a petition with the National Company Law Appellate Tribunal (NCLAT) on Friday seeking immunity from the ongoing criminal fraud cases against Bhushan Power and Steel as its new owner.
The case will come up hearing on Monday, said sources
The petition has also sought NCLAT approval to retain the profit made by Bhushan Power and Steel in its books during the last two years of the insolvency period.
Financial creditors will set a new precedence if they agree to part with the profit made by Bhushan Power. Incidentally, in the Essar Steel insolvency case, NCLAT had ordered the ₹3,400-crore profit made by the insolvent company be distributed between financial and operational creditors while rejecting the winning bidder ArcelorMittal’s claim that the amount belongs to it.
Essar Steel case
While approving ArcelorMittal’s bid for Essar Steel, NCLAT said the profit generated during the Corporate Insolvency Resolution Process (CIRP), cannot be given to the Successful Resolution Applicant as he has not invested any money during the process.
If at all, the financial creditors have invested money during the CIRP to keep the debtor as a going concern they can claim interest out of the profit amount.
Moreover, it said the successful resolution applicant does not pay the total dues to the creditors but pays lesser amount than the claim. In such case, the profit should be distributed among all the financial and operational creditors, the tribunal said.
After due verification by the auditors, it should be distributed among all creditors on pro-rata basis of their claims subject to the fact that it should not exceed the admitted claim, it said.
Bhushan Power had defaulted on its ₹44,000-crore loan.
Early this week, the National Company Law Tribunal approved the ₹19,700-crore bid placed by JSW Steel but directed the company to seek relief from ongoing criminal proceedings against the company from the individual competent authority.
Various banks including Punjab National Bank and Allahabad Bank have filed cases against Bhushan Power and Steel for allegedly laundering ₹5,500 crore through its subsidiaries.
Though the government has clarified that the Insolvency and Bankruptcy Code will prevail over other laws, the recent court judgments are in contrary.
A recent High Court order, in particular, had claimed that defaulted promoters cannot walk free from investigation under Anti Money Laundering Act just because their company has been sold under IBC.
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