By Our Correspondent/Agencies
NEW DELHI/BHUBANESWAR: The Sajjan Jindal led JSW Steel on Wednesday recived a major setback after it’s Rs 19,700-crore bid to acquire Bhushan Power & Steel (BPSL) is again in trouble as the resolution professional (RP) of the latter has come under the Enforcement Directorate’s (ED’s) scanner. On Wednesday, the ED carried out an extensive search operation at four locations belonging to the RP and a former director of the debt-ridden steel company.
Sources say certain irregularities in the dealings with BPSL have triggered the searches on the RP and some close associates. Confirming the development, an official said the three premises at Delhi and one at Gurugram have been covered so far in connection with the ongoing money laundering probe against the beleaguered steel firm, media reports said.
Last year, the ED attached assets worth over Rs 4,000 crore of BPSL for alleged bank loan fraud by the company’s former owners. The BPSL case is in the final leg of hearing in the Supreme Court. The ED had filed an appeal against a National Company Law Appellate Tribunal order that ordered the agency to release assets of BPSL attached under the Prevention of Money Laundering Act.
The attachment order came about seven months after JSW Steel was declared a successful resolution applicant for the debt-laden BPSL. JSW Steel was seeking immunity under Section 32A of the insolvency law, which provides immunity to the corporate debtor. However, the ED was objecting to the applicability of Section 32A of the insolvency law to the JSW-Bhushan deal on two counts.
Primarily, JSW Steel’s resolution plan was approved by the National Company Law Tribunal in October 2019, prior to the introduction of Section 32A. Second, JSW Steel and BPSL are associates in the joint venture firm Rohne Coal Company, which disqualifies the resolution applicant from the purview of Section 32A, being a related party.
With the lenders of Bhushan Power and Steel Ltd have claimed that Sajjan Jindal owned JSW Steel is using the ongoing investigation by the Enforcement Directorate to delay the implementation of the resolution plan approved by the NCLT, the Principal Bench of the National Company Law Tribunal at Delhi has sought response from the Monitoring Committee of debt-ridden BPSL in relation to its retirement policy issued to over 200 BPSL employees last month.
The Tribunal was hearing a challenge to the validity of the Retirement Policy which provides that all BPSL employees who are older than 60 years shall be retired with effect from July 31, 2020. The bench of NCLT President (Acting) BSV Prakash Kumar and Member (Technical) Hemant Kumar Sarangi has provided interim relief in the matter, noting that “no adverse action will be taken against the employee until further orders or until the new Board takes a decision on the issue, whichever is earlier. Further the Tribunal directed the Monitoring Committee to file a reply within ten days and listed it for hearing on August 28, 2020.
The corporate insolvency resolution process in relation to BPSL commenced in 2017 before NCLT, New Delhi. In September last year, the Tribunal approved the Resolution Plan in favour of JSW Steel Limited.The implementation of the Resolution Plan is being monitored by the Monitoring Committee, which includes the erstwhile Resolution Professional and a Steering Committee comprising three largest financial creditors.
In July 2020, the Monitoring Committee sought to implement a Retirement Policy according to which all BPSL employees who are older than 60 years shall be retired with effect from July 31, 2020.The validity of the Retirement Policy was challenged by Madan Kumar Goel, who is currently working as the Deputy General Manager, Indirect Taxation. It has been argued that BPSL has no power or authority to formulate and implement the policy once the Resolution Plan is approved.
The respondent submitted that even though it was a policy that had been formulated by the Monitoring Committee, the new Board had already been in place since Feb 2020. Therefore, if the said policy had been ratified by the Board, it would become valid. The respondent submitted that no adverse action would be taken against Madan Kumar Goel until further orders or until a decision by the Board, whichever was earlier.
Goel was represented by Senior Advocate Sharan Jagtiani and Advocates Ashish Goel, Himanshu Bhushan, Shilpa Goel and Surabhi Agrawal. BSPL was represented by Senior Advocate Abhinav Vaishisth with Advocates Misha, Vaijayant Paliwal and Charu Bansal.
Meanwhile, the current appeal has been filed by the Enforcement Directorate challenging the sale of the bankrupt BPSL to JSW Steel. ED has filed a complaint stating that the cases against the BPSL should continue and argued that National Company Law Appellate Tribunal has no jurisdiction to unfreeze assets attached under PMLA and allow sale of those assets.
The Supreme Court said that will hold the final hearing in the Bhushan power and steel Ltd insolvency case on September 8 and has directed all the parties to file their affidavits, replies and rejoinders within four weeks.
On the other senior advocate Abishek Manu Shinghvi, who had appeared for Committee of Creditors, submitted that the as per the provisions of the new law, it is the new management which is held liable and accountable for the cases pending on the old company.
JSW Steel, whose resolution plan has been approved by the National Company Law Tribunal and the appellate tribunal to take over the bankrupt Bhushan Power and Steel, told the Supreme Court that it iss not possible for it to pay the lenders and then wait for the outcome of the Enforcement Directorate’s proceedings against the old management in an alleged money laundering case.
JSW Steel had offered to pay INR 19,350 crore to the financial creditors as part of its resolution plan, which was a near 60% haircut for the lenders and had earlier missed the deadline of March 17 to make the payment as per approval from National Company Law Appellate Tribunal.
