Delhi High Court quashes ED proceedings against Bhushan Power and Steel

The Delhi High Court has quashed the Enforcement Directorate (ED) proceedings against Bhushan Power and Steel Limited (BPSL), citing the 'clean slate theory' under Section 32A of the Insolvency and Bankruptcy Code.

 

This section restricts the liability of the corporate debtor (the entity against which the insolvency process has been initiated) for offences committed before the commencement of the insolvency process.

 

The court, however, stressed that former promoters and directors would still be held responsible for offences committed prior to the insolvency proceedings.

 

In 2017, the National Company Law Tribunal (NCLT) admitted an insolvency petition against BPSL filed by Punjab National Bank (PNB). During the insolvency process, JSW Steel emerged as the successful resolution applicant, and its resolution plan was conditionally approved by the NCLT on September 5, 2019. However, the ED had launched a money laundering investigation and provisionally attached BPSL’s assets on October 10, 2019.