National Company Law Appellate Tribunal has on January 23, 2020 adjourned the matter of Bhushan Power and Steel Ltd.’s sale to JSW Steel under the insolvency process and has given the Central Bureau of Investigation (CBI), the corporate affairs ministry and the Enforcement Directorate (ED) a last chance to address the question whether JSW Steel should be held liable for prosecution of offences committed by the erstwhile management of the debt-ridden Bhushan Power and Steel (BPSL). JSW was a successful resolution applicant for BPSL. 

ED had stalled the implementation of JSW Steel’s resolution plan on October 10, 2019 by attaching the assets of BPSL worth over Rs. 4,025 crores, in connection with its money laundering probe linked to an alleged bank loan fraud by its former promoters of BPSL.

Following is an excerpt from the judgment; 

“By way of a last chance, we will give the corporate affairs ministry, ED, and CBI (opportunity) to address as to why the appeal may not be disposed of in terms of Section 32A as inserted by Section 10 of Insolvency and Bankruptcy Code amendment ordinance 2019.”

Interestingly, the new IBC amendment which was passed by the UnionGovernment in December, 2019 makes the new management of a company acquired under IBC immune from the offences committed by the former management if the new management is not a related party to the former management or under suspicion of being complicit in an offence committed by previous management.

Author: Parth Thummar