JSW Steel has been allowed to acquire Bhusan Power & Steel Ltd by the National Company Law Appellate Tribunal on Monday for Rs 19,700 crore which will provide it immunity from prosecution by Enforcement Directorate.
“JSW Steel will be immuned from the acts done by the former promoters of Bhusan Power & Steel Ltd (BPSL),” said by a two-member bench headed by Chairman Justice S. J. Mukhopadhaya.
However, Enforcement Directorate can continue prosecution against the former promoters under money laundering act. Petitions filed for seeking higher claims by operational creditors has also been rejected.
JSW Steel will be gaining EBITDA (earnings before interest, tax, depreciation and amortization)
earned by BPSL during its Corporate Insolvency resolution period, as said by the bench.
On October 10, in connection with its money laundering probe linked to an alleged bank loan fraud by its former promoters, ED had attached assets worth over Rs 4,025 crore of debt-ridden BPSL.
An appeal against the ED’s move before the National Company Law Appellate Tribunal (NCLAT) was filed by JSW Steel. It emerged as the successful resolution applicant with Rs 19,700 crore bid for BPSL.
“It had registered Enforcement Case Information Report (ECIR) under Prevention of Money Laundering Act (PMLA) on April 23, 2019, while the resolution plan was approved on September 5, 2019. The Enforcement Directorate, which is investigating alleged fraud committed by the debt-laden firm’s previous management, had attached the assets of BPSL on October 10, which it believes to be from proceeds of crime,” said by Enforcement Directorate.
On October 14, ED was directed by the appellate tribunal to immediately release the confiscated assets of BPSL in favour of the resolution professional of the debt-ridden firm.
ED suggested that it can attach the property of BPSL under the Prevention of Money Laundering Act (PMLA). As the proceeding under the Insolvency and Bankruptcy Code was going on, the ministry of corporate affairs has been maintaining that the ED cannot do so.
As part of the investigation, the asset of the insolvent steel company has been seized by the Enforcement Directorate.