The Enforcement Directorate (ED) has sought legal opinion to challenge in the Top Court the National Company Law Appellate Tribunal (NCLAT)'s order asking it to return the Bhushan Power & Steel's Rs 4,025 crore worth of properties it attached recently.
The Enforcement Directorate (ED) had last week provisionally attached Bhushan Power & Steel Ltd's properties, which included land, buildings & machinery of the company's plant in Sambalpur district of Orissa. 2 banks - Punjab National Bank & Allahabad Bank - had earlier accused the ex-promoters & directors of Bhushan Power & Steel of fraudulently availing loans worth over Rs 5,500 crore.
JSW Steel, which had successfully bid for the Bhushan Power & Steel under the insolvency process, has moved National Company Law Appellate Tribunal (NCLAT) against any such move by the probing agencies.
An Enforcement Directorate (ED) official told Business Today that it is surprising that a civil law can override a criminal law. "The Delhi HC has already said that money-laundering law prevails over the Insolvency & Bankruptcy Code when it comes to attachment of properties obtained as proceeds of crime. I think the law on this matter is settled," said the official explaining why the Enforcement Directorate (ED) might move the Top court against the National Company Law Appellate Tribunal (NCLAT) order.
The National Company Law Appellate Tribunal (NCLAT) in its order has said that the Enforcement Directorate (ED) has no jurisdiction to attach the property of a corporate debtor especially when an appeal is pending against such an attachment. It also said that Insolvency & Bankruptcy Code couldn't be annulled in this manner as laundering had been committed by individuals.
However, the appellate tribunal also stayed the insolvency proceedings of Bhushan Power & Steel under which JSW Steel had emerged as the successful bidder for the former with a bid of Rs 19,500 crore against dues of Rs 48,000 crore.
While the National Companies Law Tribunal (NCLT), the adjudicating authority under Insolvency & Bankruptcy Code, has accepted JSW Steel's resolution plan, it has refused to give immunity to JSW Steel from any criminal proceedings against the ex-promoters & directors of Bhushan Power & Steel if such proceedings lead to recovery of money siphoned off by these people.
The National Companies Law Tribunal (NCLT) has observed that the resolution applicant (JSW Steel) should adhere to the existing laws, as the resolution plan should not be against any provisions of the existing laws.
This order didn't go down well with the JSW Steel as it wanted to acquire a clean company. It apprehends that any attachment or seizure of Bhushan Power & Steel's properties because of the criminal proceedings may undermine the value of the assets acquired.
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