NCLAT Reserves Judgment On JSW Steel’s Takeover Of Bhushan Power & Steel
The Bhushan Power and Steel Plant operates close to a river in the Sambalpur district of Orissa, India. (Photographer: Sanjit Das/Bloomberg News)

NCLAT Reserves Judgment On JSW Steel’s Takeover Of Bhushan Power & Steel

The National Company Law Appellate Tribunal reserved its judgment on JSW Steel Ltd.’s purchase of the insolvent Bhushan Power & Steel Ltd., more than three months after the tribunal ordered a freeze on payment by the Sajjan Jindal-led mill.

The bench, headed by Justice SJ Mukhopadhyay, will decide whether to remove the stay on the Rs 19,700-crore bid and if JSW Steel can be covered under the newly inserted Section 32A of the Insolvency and Bankruptcy Code that grants immunity to the new management of a distressed company acquired under the bankruptcy law.

JSW Steel had moved the appellate tribunal seeking immunity against future litigation after Bhushan Power was named in alleged accounting frauds. The Enforcement Directorate had seized the assets of the insolvent steel mill. The NCLAT had then asked the investigating agency to explain its view. Different organs of the government are taking a different stance, the appellate tribunal had said.

The Enforcement Directorate had argued that the immunity under Section 32A wouldn’t apply to JSW Steel. The section isn’t retrospective in nature and will not cover the companies whose resolution plan was approved before the ordinance came into effect, the investigative agency had said.

The amendment in the form of Section 32A having come into force after the resolution plan was approved in this case, and the fact that section 32A has not been given retrospective effect, would mean that it was never intended that the benefit of Section 32A would apply to the resolution plan prior to 28th December, 2019. Accordingly, it is submitted that the appellant in this case cannot take the benefit of Section 32A.
Enforcement Directorate To NCLAT

The NCLAT has not given a final date of the judgment but it indicated that the process of writing the order may start from Tuesday.

Bhushan Power & Steel is one of the 12 companies in the Reserve Bank of India’s first list of corporate debtors referred to insolvency proceedings in 2016.

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