The Enforcement Directorate (ED) has sought legal opinion to challenge in the Supreme Court the National Company Law Appellate Tribunal (NCLAT)'s order asking it to return the Bhushan Power and Steel's Rs 4,025 crore worth of properties it attached recently.
The ED had last week provisionally attached BPSL's properties, which included land, buildings and machinery of the company's plant in Sambalpur district of Orissa. Two banks - Punjab National Bank and Allahabad Bank - had earlier accused the ex-promoters and directors of Bhushan Power and Steel of fraudulently availing loans worth over Rs 5,500 crore.
JSW Steel, which had successfully bid for the Bhushan Power and Steel under the insolvency process, has moved NCLAT against any such move by the probing agencies.
An ED official told Business Today that it is surprising that a civil law can override a criminal law. "The Delhi High Court has already said that money-laundering law prevails over the Insolvency and 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 ED might move the apex court against the NCLAT order.
The NCLAT in its order has said that the 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 IBC 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 and 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 IBC, has accepted JSW Steel's resolution plan, it has refused to give immunity to JSW Steel from any criminal proceedings against the ex-promoters and directors of Bhushan Power and Steel if such proceedings lead to recovery of money siphoned off by these people.
The 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 did not 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 and Steel's properties because of the criminal proceedings may undermine the value of the assets acquired.