JSW Steel Not Backing Out Of Bhushan Power Resolution Process Despite Fraud
A worker at a JSW Steel manufacturing facility in Dolvi, Maharashtra. JSW Steel is the frontrunner for acquiring Bhushan Power & Steel Ltd undergoing bankruptcy proceedings at the NCLT. (Photographer: Dhiraj Singh/Bloomberg)

JSW Steel Not Backing Out Of Bhushan Power Resolution Process Despite Fraud

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JSW Steel Ltd. on Monday told the National Company Law Tribunal that the company is not backing out of the ongoing resolution process for Bhushan Power & Steel despite reports of alleged bank fraud by its former promoters.

During BPSL NCLT proceedings Monday, JSW Steel’s counsel said that the steelmaker was anxious about the alleged fraud reports and needs to know what is going inside Bhushan Power & Steel.

A two-member NCLT bench headed by the President Justice MM Kumar asked BPSL’s Resolution Professional to hand over a copy of the forensic report to JSW Steel.

NCLT said that the alleged BPSL fraud reports will not have any impact on the insolvency resolution process and JSW Steel's resolution plan for BPSL. NCLT has to take a decision over the lenders' approval of the resolution plan of JSW Steel for BPSL.

On February 4, the National Company Law Appellate Tribunal had dismissed the plea of Tata Steel Ltd. and upheld the Committee of Creditors decision to approve JSW Steel's bid. The NCLAT had said the CoC decision was well within its rights to negotiate better terms with resolution applicants and asked NCLT to decide over JSW Steel's bid by March 31. The judgement, however, is still pending before the principal bench of NCLT.

Last week, state-owned lender Allahabad Bank had reported fraud of over Rs 1,774 crore by BPSL to the Reserve Bank of India.

Punjab National Bank too is a victim of the BPSL fraud, amounting to Rs 3,805.15 crore, by way of misappropriation of bank funds and manipulation of its books. Around 85 percent of PNB's Rs 4,399 crore exposure to the company had been siphoned off.

In April, the Central Bureau of Investigation registered a complaint in the BPSL fraud, naming several lenders. According to CBI, BPSL diverted around Rs 2,348 crore through its directors and staff from the loan accounts of Punjab National Bank, Oriental Bank of Commerce, IDBI Bank and UCO Bank into the accounts of more than 200 shell companies without any obvious purpose.

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