February 17, 2020

NCLAT Clears Way For JSW Steel To Acquire Bhushan Power

[ By Bobby Anthony ]


The National Company Law Appellate Tribunal (NCLAT) has rejected pleas challenging the sale of Bhushan Power & Steel Ltd (BPSL) to JSW Steel Ltd, effectively allowing the latter to acquire the bankrupt steel maker.

The NCLAT had to decide about whether to remove the stay on the Rs 19,700-crore bid by JSW Steel or if the company could be granted immunity under Section 32A of the Insolvency & Bankruptcy Code (IBC) which provides immunity to the new management of a distressed company acquired under the law.

JSW Steel had moved the NCLAT seeking immunity from future litigation after Bhushan Power was booked for alleged accounting frauds, which had led to seizing of assets by the Enforcement Directorate (ED).

After the NCLAT sought an explanation from the ED, the investigation agency argued that Section 32A would not apply to JSW Steel.

Incidentally, Bhushan Power faces an investigation by various investigative agencies, after the Punjab National Bank (PNB) and Allahabad Bank reported a fraud amounting to Rs 5,500 crore by the steel company’s erstwhile promoters.

It may be recalled that Bhushan Power & Steel was among 12 companies identified by the Reserve Bank of India (RBI) in its first list of big loan defaulters in June 2017. The RBI had directed banks to refer these cases to the National Company Law Tribunal (NCLT) and initiate insolvency proceedings against them.

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