JSW Steel on Friday approached the NCLAT to seek protection from the ongoing investigation in money laundering cases against former promoters of Bhushan Power & Steel, for which it has emerged as the highest bidder under the insolvency process.
The Jindal group firm is seeking immunity as the Delhi High Court in a recent ruling said that money laundering laws prevails over the Insolvency and Banruptcy Code (IBC).
It has also challenged the NCLT's direction to redistribute profits earned by Bhushan Power & Steel Ltd (BPSL) during the Corporate Insolvency Resolution Process (CIRP) - from July 2017 to August 2019 - among the financial creditors and operational creditors of the debt-ridden firm.
JSW Steel's petition is expected to be listed for hearing on Monday before a National Company Law Appellate Tribunal (NCLAT) bench headed by Chairperson Jutsice S J Mukhopadhaya.
Earlier this week, the Delhi-based prinicipal bench of the National Company Law Tribunal (NCLT) has approved Rs 19,700 crore bid of JSW Steel for debt-ridden BPSL.
Although, in its 138-page-long order, the NCLT has given it protection from the criminal cases filed against the promoters but was silent over the money laundering cases.
The Jindal group firm, in a regulatory filing, has also confirmed that it has appealed against the NCLT order passed on September 5 before appellate tribunal.
"We hereby inform you that on detailed examination of the terms and conditions of the NCLT Order approving the Resolution Plan, it has come to our notice that the approval contains certain modifications.
"Further, certain important reliefs sought by the Company have also not been granted. The Company has therefore appealed against the said Order dated September 5, 2019 before the relevant judicial forum," said JSW Steel.
According to the resolution plan approved by the NCLT, Rs 19,350 crore will be distributed among financial creditors to settle their Rs 47,158 crore of admitted claims. The remaining Rs 350 crore would be paid to operational creditor to settle less than half of their Rs 733.76 crore admitted claims.
Banks will get 41.03 per cent of their outstanding dues as compared to a liquidation value of between Rs 9,320 crore and Rs 9,707 crore, it said.
JSW Steel will make an infusion of Rs 7,200 crore in the company for improving operations of the company.
BPSL was dragged to insolvency by lenders led by PNB after the company failed to pay loans within the stipulated time-frame.
The NCLT said criminal proceedings against the former founders of Bhushan Power and Steel on the alleged siphoning off of funds would not impact JSW's takeover.
"The criminal proceedings initiated against the erstwhile members of the board of directors and others shall not effect the JSW - H1 (highest) Resolution Plan Applicant or the implementation of the resolution plan," it said.
It, however, did not grant JSW certain reliefs sought from statutory authorities under the Income Tax Act and the RBI, among others.
"We leave it open to the members of the Committee of Creditors to file appropriate applications if criminal proceedings result in the recovery of money which has been siphoned off or on account of tainted transactions or fabrication," the NCLT said on charges against former promoters.
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