Tata Steel BSL gets relief from HC from appearance in Bhushan Steel case

The Delhi High Court Monday granted exemption from appearance to Tata Steel BSL Ltd before a trial court in a case registered by the Serious Fraud Investigation Office (SFIO) against former promoters of Bhushan Steel Ltd (BSL), which was acquired last year by the Tata group firm.

Justice Brijesh Sethi granted the interim relief on the Tata Steel BSL plea seeking quashing of the SFIO complaint as also the trial court's order summoning BSL in the fraud case.

The company was asked by the trial court to appear, through its authorised representative, before it on Tuesday.

The high court listed the matter for further hearing on February 14.

It had earlier issued notice and sought response of SFIO, represented through central government standing counsel Anurag Ahluwalia and Amit Mahajan, on the petition.

In its plea, Tata Steel BSL Ltd sought quashing of complaint filed by SFIO and trial court's August 21 order on the ground that it cannot be fastened with criminal liability for the illegalities committed by erstwhile promoters pertaining to a period prior to the completion of Corporate Insolvency Resolution Process (CIRP).

It sought protection from the court against an alleged "illegal and unjust criminal prosecution" initiated by the SFIO which culminated into issuance of summons against the company.

BSL was acquired by Tata Steel on May 18, 2018 through CIRP under the Insolvency and Bankruptcy Code.

"The CIRP, which resulted in the eventual acquisition of and change in management of Bhushan Steel Ltd, was in fact initiated by the RBI in exercise of its powers under Section 35AA of the Banking Regulation Amendment Act, 2017.

"This reflects the decision of the government to resolve debt-ridden companies and unlock capital. Having induced the petitioner no. 2 (Tata Steel Ltd) to infuse funds to rehabilitate Bhushan Steel Ltd, it is unfair on the part of the government through another arm/ investigating agency to now initiate prosecution against Petitioner no. 1 (Tata Steel BSL Ltd)," the petition said.

The case against BSL, its former promoters and others, was filed on a complaint by the SFIO, which comes under the Ministry of Corporate Affairs. The ministry in 2016 directed the SFIO to investigate the affairs of BSL.

After the investigation report was submitted to the ministry, it directed initiation of prosecution against all the accused mentioned in the report and thereafter, the SFIO on July 1 filed a complaint in the trial court.

The trial court on August 16 took cognisance of the offences, under the Companies Act and the Indian Penal Code (IPC), mentioned in the complaint and issued summons to all the accused.

The SFIO complaint alleged that the former promoters of BSL manipulated stocks in the books of accounts to show inflated figures on the basis of false valuation reports.

It also alleged that the former promoters opened fake letters of credit and created fake vouchers to siphon off funds from the company.