NCLAT puts Bhushan Power and Steel sale to JSW Steel on hold

New Delhi: The National Company Law Appellate Tribunal (NCLAT) has put on hold the Rs 19,700-crore payout by JSW Steel to buy the debt-ridden Bhushan Power and Steel (BPSL) on Monday. It also asked the Enforcement Directorate to release the attached properties of Bhushan Power and Steel and directed the agency to not attach any further assets without its permission.

NCLAT pulls up ED over Bhushan Power and Steel

An NCLAT bench headed by Chairman Justice SJ Mukhopadhyaya pulled up the ED for taking action against Bhushan Power and Steel. The bench said that the Insolvency and Bankruptcy Code (IBC) would fail if the agency functions like this and directed it to file a reply in the next two days, along with CBI.

“IBC cannot be annulled in this manner. Money laundering is by an individual,” NCLAT said.

“Under facts and circumstances, while we allow the ED to file a reply affidavit, the deputy director ED and any other officials of the ED are to release the property attached in favour of resolution professional immediately,” the NCLAT said. It added that the ED does not have the jurisdiction to attach the property of a corporate debtor, particularly when an appeal is pending with regard to attachment.
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Next hearing on the matter on Oct 25

The NCLAT has set directed to list the matter for next hearing on October 25. Officers and directors are also prohibited from attaching any property of Bhushan Steel and Power till permission from this appellate tribunal (is granted), it said. The NCLAT bench also said that JSW Steel would not pay the funds until its further order.

The backdrop

The NCLAT gave the verdict while hearing a bunch of petitions filed by JSW Steel, former promoters of BPSL, among others, challenging the order of the principal bench of the National Company Law Tribunal (NCLT). On September 5, NCLT had approved the JSW Steel’s Rs 19,700 crore resolution plan for BPSL. However, JSW Steel had moved NCLAT to seek protection from the ongoing investigation in money laundering cases against the former promoters of BPSL. The ED last week attached assets of Bhushan Power and Steel worth Rs 4,025 crores.