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Reach consensus on Bhushan Power assets, NCLAT asks ED, MCA

The Ministry of Corporate Affairs and the Enforcement Directorate have locked horns over attachment-of-assets issue of Bhushan Power and Steel. While ED claims its right to do so under PMLA, the ministry (MCA) asserts that the case is under IBC.

, ET Bureau|
Updated: Oct 26, 2019, 07.29 AM IST
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The NCLAT had directed the ED to release BPSL properties attached by the agency on the JSW Steel plea
NEW DELHI: The National Company Law Appellate Tribunal (NCLAT) has asked the Enforcement Directorate (ED) and the Ministry of Corporate Affairs (MCA) to arrive at a consensus on the government’s view regarding the attachment of assets belonging to Bhushan Power and Steel Ltd (BPSL) by the ED. The seizure has stalled BPSL’s bankruptcy resolution process under which JSW Steel was set to take it over.

A three-member NCLAT bench said Friday that any claim on the assets of BPSL by the ED would be treated as operational debt under the Insolvency and Bankruptcy Code. “It will be desirable to discuss and settle this matter,” said the bench headed by justice SJ Mukhopadhaya, referring to getting the government’s view on the issue. NCLAT will next hear the case on November 18.

The ED had, earlier this month, attached BPSL’s land, buildings, plant and machinery in Odisha worth more than Rs 4,000 crore in a case related to the alleged diversion of bank funds. The MCA has opposed the seizure, which has led to a delay in payments to creditors of the company under a Rs 19,700-crore insolvency resolution plan proposed by JSW Steel.

Clearing-Hurdles


Finance and corporate affairs minister Nirmala Sitharaman said on Thursday that she was in talks with both the revenue secretary and the corporate affairs secretary to resolve the issue.

“We are applying our minds to it … Let us see how we can resolve it,” Sitharaman said. “The government has recognised that there is an issue.”

NCLAT had directed the ED to release the BPSL assets to the resolution professional in charge of the bankruptcy process on October 14.

At that time the tribunal told the agency that such actions undermined the IBC, a cornerstone of the strategy to repair bank finances.

“You are going to kill the economy of the country… (You are) playing with fire,” Mukhopadhyaya had said. “No outsider will come and purchase (distressed companies)… IBC cannot be annulled in this manner. Money laundering is by an individual.”

However, the ED contended that the NCLAT doesn’t have the jurisdiction to tell the agency what to do as the assets were attached under the Prevention of Money Laundering Act (PMLA). In its reply filed before the NCLAT, the ED argued that the validity of the attachment of BPSL’s assets could only be reviewed by the adjudicating authority under PMLA. The ED submitted that “there is no power under the IBC to interfere with a provisional attachment order passed.”

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