How Bhushan Power & Steel entered the 'dirty dozen' list of defaulters

Nine years ago, on May 3, 2016, the Ministry of Corporate Affairs ordered a probe into the affairs of Bhushan Steel Limited (BSL), Bhushan Steel and Power Limited (BSPL), and 13 other group companies, 12 of which were related to BSPL, while one was related to BSL.

 

A year later, in June 2017, the Reserve Bank of India named it among 12 large defaulters referred for insolvency under the newly enacted Insolvency and Bankruptcy Code. The company, led by promoter Sanjay Singal, had defaulted on loans totalling ₹47,204 crore.

 

The insolvency proceedings drew interest from major suitors, including Tata Steel Ltd and Liberty House of the UK. After prolonged litigation, JSW Steel Ltd secured the asset with a winning bid of ₹19,700 crore.

 

The insolvency proceedings against both BSL and BSPL notwithstanding, the two brothers Neeraj and Sanjay Singal, along with their father Brij Bhushan Singal, faced a string of cases related to fraudulent transactions. The Enforcement Directorate, as well as the Serious Fraud Investigation Office (SFIO), were probing the matter.

 

Younger brother Neeraj, the erstwhile promoter of BSL, was in fact the first person to be arrested by the SFIO for fraudulent activities in August 2018 after the probe agency was given arresting powers in 2017.

 

The Bhushan Promoters have had a complex family split too, with Sanjay Singal, the elder of two brothers, locked in a decade-long dispute with father Brij Bhushan, and younger brother Neeraj.

 

In 2011, a settlement agreement was reached which divided the family’s steel empire, handing BSL to Neeraj and BSPL to Sanjay. Merely six years later, however, both BSL and BSPL were named among the infamous “dirty dozen”— the then top loan defaulters of the country.

 

Bhushan Steel was later acquired by Tata Steel through a separate bankruptcy process.

 

The BSPL saga took a criminal turn on April 24, 2019, when the ED registered a money-laundering case against the company and its senior officials, following an earlier first information report filed by the Central Bureau of Investigation.

 

By November, Sanjay Singal was arrested for allegedly siphoning funds off the company.

 

In January 2020, the ED filed a charge sheet in a New Delhi court, describing Singal as the “mastermind” behind the diversion of loan proceeds. The agency alleged that funds were routed into equity infusions and used to acquire assets in the name of family members.

 

Prosecutor Nitesh Rana had then told the court that BSPL had defaulted on loans from 33 banks and financial institutions between 2007 and 2014, with an outstanding liability of ₹47,204 crore as of January 2018.

 

The charge sheet, as reported by the media, claimed the company and its directors “deliberately defaulted” on repayments and consistently maintained irregular accounts. The ED also alleged that ₹2,348 crore was illicitly funnelled into various entities under the guise of advances during a seven-year period.

 

The income-tax department had earlier, in 2014, conducted searches at Bhushan Power’s Chandigarh premises, uncovering evidence of fund diversion via complex financial structures. The ED has since attached assets across India, including a ₹486 crore mansion in New Delhi in January this year. The case against Sanjay Singal and others remains under trial in a New Delhi court.