December 06, 2019

NCLAT directs ED to file final affidavit in relation to Bhushan Power & Steel

[ by Kavita Krishnan ]


A two-member bench of the National Company Law Appellate Tribunal (NCLAT) headed by Chairperson Justice S J Mukhopadhaya has directed the Enforcement Directorate (ED) to file a final affidavit containing developments related to attachment of Bhushan Power Steel Ltd assets (BPSL).

The appellate tribunal was hearing a batch of petitions, including one filed by JSW Steel, against the attachment of BPSL assets.

The ED and Ministry of Corporate Affairs (MCA) are having conflicting views over the attachment of the assets of the debt-ridden firm over the money allegedly siphoned off by the erstwhile promoters of BPSL, which is presently going through insolvency resolution process.

ED is of the opinion that it can attach the property of BPSL under the Prevention of Money Laundering Act (PMLA). On the other hand, the MCA has been maintaining that the ED cannot do so as proceedings under the Insolvency and Bankruptcy Code was going on.

The NCLAT had on October 25 asked both the organisations viz., ED and MCA to settle the matter and added that there was no question of amendment of laws.

In October the ED had attached assets worth over Rs. 4,025 crore of debt-ridden BPSL in connection with its money laundering probe linked to an alleged bank loan fraud by the former promoters of BPSL. JSW Steel emerged as a successful bidder for BPSL with its bid of Rs 19,700 crore.

JSW Steel filed an appeal against ED’s move of attaching the assets before the NCLAT, which directed them to be immediately released in favour of the resolution professional of BPSL. The appellate tribunal had directed the ED to release BPSL properties attached by the agency on the JSW Steel plea, alleging siphoning off of funds by its erstwhile promoters.

The ED filed an affidavit before the NCLAT questioning its jurisdiction for having released BPSL properties. In the said affidavit, the ED told the appellate tribunal that it had no jurisdiction over the properties attached by the ED under the PMLA and asked it to vacate its earlier order and dismiss the appeal filed by JSW Steel.

The ED said in an affidavit filed before the appellate court that, “It is submitted that the provisional attachment order dated October 10, 2019 passed under Section 5 of PMLA Act is not amenable to the jurisdiction of this Hon’ble tribunal (NCLAT) and its validity can only be examined by the adjudicating authority under Section 8 of the PMLA.”

It also stated that the appellate tribunal had no power under the Insolvency and Bankruptcy Code, 2016 (IBC) to interfere with a provisional attachment order passed.

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