JSW Steel’s ₹19,700-crore bid to acquire Bhushan Power and Steel Ltd (BPSL) is in trouble, as the Enforcement Directorate (ED) has filed a fresh plea in the Supreme Court to scrap the sale, finalised under the Insolvency and Bankruptcy Code (IBC). The ED has argued that the National Company Law Appellate Tribunal (NCLT) has no jurisdiction to unfreeze and approve the sale of an asset attached by the investigating agency.

The ED has also opposed a plea by the Ministry of Corporate Affairs for early resolution of BPSL under the IBC.

Last October, the ED attached assets worth over ₹4,025 crore of BPSL in connection with its money laundering probe linked to an alleged bank loan fraud by the company’s former owners. The central probe agency said it has attached the firm’s land, building, plant and machinery located in Odisha under the provisions of the Prevention of Money Laundering Act (PMLA).

In a affidavit filed in the Supreme Court last week, the ED has sought the dismissal of the plea of BPSL’s Committee of Creditors (CoC) to divest the stressed asset to JSW Steel.

The development comes even as the CoC on Monday rejected JSW Steel’s plea seeking time till next March to complete the BPSL deal, amid the Covid crisis and pending the Supreme Court hearing.

The CoC, consisting of lead bank Punjab National Bank, State Bank of India and Acre Asset Reconstruction Company, is insisting that JSW Steel make the payment to close the deal by the next hearing in the Supreme Court, slated for July 6.

While a JSW Steel official refused to comment on the matter as it is subjudice, a senior corporate lawyer said it is surprising why the banks, which were sitting on the bad asset for so many years, are in such a hurry to close the deal, particularly when the investigating agency has attached the property.

Call for clean slate

JSW Steel had sought immunity against any liabilities from the past cases. Earlier, in the case of Monnet Ispat, which was taken over by JSW Steel, it had been fined for non-disclosure of information prior to corporate insolvency resolution. JSW had to pay the penalty, so now wants a clean slate before acquiring BPSL.

“Unless there is clarity on immunity sought by JSW Steel, particularly when the ED is not ready to accept the NCLAT order, it will not be possible to conclude the Bhushan Power resolution plan,” its lawyer said.

Earlier, JSW Steel had asked the lenders to extend the deadline for making a payment of ₹19,700 crore till next March as debt-raising has become difficult due to the current economic uncertainty unleashed by the pandemic.

Though the Supreme Court had accepted the petition filed by BPSL promoters against the deal, it had not stopped the lenders from going ahead with the deal.