Ex-promoter of Bhushan Power moves NCLT to enforce SC's liquidation order

Top court has rejected JSW Steel's resolution plan to acquire Bhushan Power and Steel four years after takeover was completed

Bhushan Power & Steel’s former promoter, Sanjay Singhal, has filed a plea with the National Company Law Tribunal (NCLT) in New Delhi seeking enforcement of the Supreme Court’s recent order directing the company’s liquidation.

 

In an application dated May 6th, Singhal asked the NCLT to take on record the SC order and give necessary directions to appoint a liquidator. Business Standard has seen the petition.

 

The top court had ruled that prior resolution efforts were invalid due to JSW Steel’s ineligibility under Section 29A of the Insolvency and Bankruptcy Code.

 

The move revives years long insolvency litigation over the steelmaker, once pursued by JSW Steel in a stalled acquisition effort.

 

 

Bhushan Power owes lenders over ₹47,200 crore and was among the first 12 companies which were sent for debt resolution by the Reserve Bank of India in 2017 under the Insolvency and Bankruptcy Code, 2016.

 

With this, the stage is set for a long legal battle in the SC in which the lenders, and the JSW Steel are expected to fight for their interest.

 

In its order, the SC had said JSW Steel had not disclosed a joint venture with an entity linked to BPSL’s former promoters, a fact that went un-flagged by the resolution professional.

 

The court held that Khandelwal failed in his statutory duties under Section 25 of the IBC, including verifying the eligibility of the resolution applicant under Section 29A.

 

Section 29A of the Insolvency and Bankruptcy Code (IBC) disqualifies former promoters and their related parties of the corporate debtor, as well as certain other individuals, from participating in the revival of a distressed company.

 

“It is pertinent to note that in the 14th meeting of the committee of creditors (CoC), it was specifically brought to the notice of the CoC by the legal counsel of the Resolution Professional that the resolution plan of the JSW was subject to the compliance of Section 29A. However, in the later meetings there was no clarity made as to whether the JSW had subsequently complied with the said requirement or not. Even if it is believed that JSW had filed an affidavit with regard to its eligibility to submit the Resolution Plan, there is nothing on record to show as to whether such affidavit was verified by the resolution professional as he was obliged to do so,” the court said in its order.

 

The apex court said any suppression of material facts-- whether missed or ignored-- can compromise the integrity of the insolvency process. The RP’s inaction, it noted, misled the Committee of Creditors (CoC) and the NCLT, ultimately affecting the interests of creditors. 

 

The case file

 

> SC directs liquidation of Bhushan Power Steel Ltd

> JSW Steel ineligible due to Section 29A issues

> BPSL owes lenders over ₹47,200 crore debt

> Apex court said JSW Steel had not disclosed a JV with an entity linked to BPSL’s former promoters