The National Company Law Appellate Tribunal (NCLAT) on Monday stayed the Enforcement Directorate (ED) order to attach the properties of Bhushan Power and Steel Ltd (BPSL) as part of the ED’s investigation into money laundering by its promoter.
It also put on hold the ₹19,700-crore payout by JSW Steel for acquiring the debt-ridden BPSL till its further orders.
Hearing a petition filed by JSW Steel seeking immunity from ongoing criminal proceedings against Bhushan Power promoters, SJ Mukhopadhaya, NCLAT Chairperson, said in his order that the stand taken by the ED is contrary to that of the government and hence the order of attachment dated October 10 passed by the ED with regard to the property of BPSL is stayed.
The ED is prohibited from attaching any property of BPSL without prior approval of the NCLAT, the appellate tribunal said. The property already attached by it should be released in favour of the Resolution Professional immediately, it added.
Meanwhile, over the bid amount to be paid, the NCLAT said that JSW Steel, as the successful bidder, does not have to pay the funds until its further order till the next date of hearing (October 25).
Purpose and scheme
The purpose and scheme of the corporate insolvency resolution process (CIRP) is to hand over the asset of the corporate debtor to a bona fide new resolution applicant. Any threat of attachment of the assets of the corporate debtor, or subjecting the corporate debtor to proceedings by investigating agencies for the wrong doing of the previous management, will defeat the very purpose and scheme of the CIRP, which, inter-alia, includes the resolution of insolvency and revival of the company, said the NCLAT order.
Further, the efforts of the bank to realise dues from their NPAs would get derailed, it added.
JSW Steel emerged the successful bidder for the stressed BPSL by agreeing to pay ₹19,700 crore. While the National Company Law Tribunal (NCLT) has approved the JSW Steel bid, the ED attached the BPSL asset last Thursday in a case filed by Punjab National Bank and Allahabad Bank claiming a fraud of ₹5,500 crore by the company.