Bhushan Power Insolvency: Centre To Take Final Call On ED's Opposition To JSW Steel's Plan

Nearly four years after JSW Steel Ltd.'s Rs 20,000 crore bid for Bhushan Power & Steel attained finality, the centre on Tuesday informed the top court that a meeting will be held so that a final call can be taken on the Enforcement Directorate's opposition to the steel manufacturer's resolution plan.

Appearing for JSW Steel, senior advocate Neeraj Kishan Kaul told the court that all government bodies except the ED are in support of JSW's resolution plan going forward on a clean slate.

The Ministry of Corporate Affairs, the Serious Fraud Investigation Office, the Committee of Creditors, and even the resolution professional is in the company's favour, Kaul argued.

The adjudicating authorities had also ruled in their favour, he said. He questioned why the company should face the wrath of two conflicting stances from the same government.

It is ED's stand that JSW Steel is a related party to BPSL, and therefore the benefit accruing under Section 32A of the Insolvency and Bankruptcy Court should not be available to JSW Steel.

Section 32A of the IBC envisages that liability of a corporate debtor for an offence committed prior to the commencement of the corporate insolvency resolution process shall cease from the date the resolution plan has been approved by the NCLT.

However, a condition is attached to this provision which says that this benefit will not be available if it is found that the the two parties involved were related to each other.

Appearing for the centre, Solicitor General Tushar Mehta said that a meeting will be held so that a final call can be taken on this issue. "The meeting will be presided by someone whose word will be final in this case", Mehta said.

The case has been adjourned following centre's reassurance and will be taken up again after three weeks.

JSW Steel’s resolution plan for Bhushan Power & Steel was approved by the National Company Law Tribunal in September 2019.

But a month later, the Enforcement Directorate attached Bhushan Power’s assets worth Rs 4,000 crore. That jeopardised the insolvency resolution until December 2019, when the central government amended the Insolvency and Bankruptcy Code to provide that criminal proceedings against former promoters will not affect a resolution applicant when acquiring a stressed firm.

The National Company Law Appellate Tribunal in February 2020 vacated the attachment of Bhushan Power’s assets and approved JSW Steel’s bid for the company. But the Enforcement Directorate moved the top court to argue that the IBC amendment should not apply to this case.

While the matter is still pending, JSW Steel has been relying on an apex court verdict in a separate case (Manish Kumar v/s Union of India) where it upheld the constitutional validity of the Section 32A of the IBC, saying new owners can’t be held liable for actions of the previous management.

Bhushan Power was part of the first list of 12 companies that the Reserve Bank of India identified for immediate referral for bankruptcy proceedings in 2017.

Notably, JSW Steel had implemented the resolution plan back in March 2021 which included a repayment of Rs 19,350 crore to the financial creditors of Bhushan Power.