NCLAT Asks ED, MCA To Reach Consensus On Bhushan Power and Steel’s Assets
The Bhushan Power and Steel Plant operates close to a river in the Sambalpur district of Orissa, India. (Photographer: Sanjit Das/Bloomberg News)

NCLAT Asks ED, MCA To Reach Consensus On Bhushan Power and Steel’s Assets

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The National Company Law Appellate Tribunal on Friday asked the divergent Enforcement Directorate and the Ministry of Corporate Affairs to discuss and reach a consensus on the attachment of assets of Bhushan Power & Steel Ltd..

The ministry and directorate have locked horns over the issue. While the ED is of the opinion that it can attach the property of BPSL under the Prevention of Money Laundering Act, the corporate affairs ministry has been maintaining that ED can not do so as the company is under the insolvency proceedings.

The case is currently being heard by the NCLAT. A three-member bench headed by Chairperson Justice SJ Mukhopadhaya said there was no question of amendment of laws, and both the wings of the central government should settle the issue.

"Sort it out. You are the two wings of the same government," the bench said.

Moreover, the appellate tribunal said that ED can claim its dues, which is from the proceeds of crime, under the Insolvency and Bankruptcy Code as an operational creditor.

Also read: India Court Halts $2.8 Billion Bhushan Power Sale to JSW Steel

"The amount generated would be under the meaning of operational debt and ED can claim this under the IBC," NCLAT said.

The bench further said, "sell it and give to the creditors. Whatever you are entitled, you would get it. There is no question of amendment of law," said NCLAT.

The appellate tribunal has directed to list the matter on Nov. 18 for next hearing.

Earlier, ED in an affidavit filed before NCLAT had said that the appellate tribunal has no jurisdiction over the properties attached by the agency under the PMLA.

The validity of the attachment could be examined by an adjudicating authority only under the PMLA, and hence the NCLAT should vacate its order passed on Oct. 14, directing it to release the assets of BPSL.

On Oct. 14, the NCLAT had directed the ED to release BPSL properties attached by the agency on the JSW Steel plea, alleging siphoning of funds by its erstwhile promoters.

"It is submitted that the provisional attachment order dated Oct. 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," ED had said in an affidavit filed before the appellate court.

"There is no power under the IBC to interfere with a provisional attachment order passed," it had said.

On Oct. 10, 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 its former promoters.

JSW Steel, which has emerged as successful bidder for BPSL with its bid of Rs 19,700 crore, filed an appeal against ED's move before the NCLAT, which had on Oct. 14 directed them to be immediately released in favour of the resolution professional of the debt-ridden firm.

Questioning the NCLAT authority, the ED had asked the tribunal to vacate its earlier order and dismiss the appeal filed by JSW Steel Ltd., the successful resolution applicant.

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