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| Photo Credit: PTI
The Enforcement Directorate (ED) has restituted assets worth ₹4,025 crore to JSW, a Successful Resolution Applicant in the matter of the erstwhile Bhushan Power and Steel Limited (BPSL) under the Corporate Insolvency Resolution Process (CIRP) of the Insolvency and Bankruptcy Code (IBC).
The assets were provisionally attached by the ED under Section 5 of Prevention of Money Laundering Act as the erstwhile promoters of BPSL had cheated lending banks and siphoned off funds for private investments.
The ED’s probe is based on a First Information Report dated April 5, 2019 registered by the Central Bureau of Investigation, which alleged that BPSL had cheated banks of about ₹47,204 crore. As alleged, BPSL and its promoters diverted bank funds to private investments in the form of shares and properties. The books of accounts were fudged to show fake expenses/purchases/capital assets, and thereby bank funds were taken out in the form of cash.
“The cash was brought into the books of various beneficially owned companies — held through employees/ dummy directors — and the same was utilised for investments in the form of shares and immovable properties. The ED had attached properties (land, building, machinery, etc.) worth ₹4,025 crore on October 10, 2019,” the agency said.
The main promoter, Sanjay Singal, was arrested by the ED on November 22, 2019, and the prosecution complaint was filed against him and other key employees on January 17, 2020. The case is pending trial.
The agency attached further assets worth ₹427 crore held by various entities, which were beneficially owned by Mr. Singal. The prosecution complaint against such beneficially owned entities is to be filed and the said assets may also be restored to the banks, it said.
The creditor banks had initiated the CIRP under the IBC, and JSW was the Successful Resolution Applicant for an amount of about ₹19,350 crore.
“As against the outstanding loans of ₹47,204 crore, banks were getting merely about ₹19,350 crore. The Resolution plan though was approved on September 5, 2019, by the National Company Law Tribunal, the same was under challenge by JSW and others. The ED had attached properties amounting to ₹4,025 crore…so as to restitute the same to the victims (which in the present case were banks),” the ED said.
The resolution plan was finally approved by the National Company Law Appellate Tribunal on February 17, 2020. The committee of creditors (victim banks) challenged the attachment order of the ED before the Supreme Court. The ED had also challenged the NCLAT order before the Supreme Court on various issues. Since the banks…challenged the attachment order of the ED and wanted the properties to be restored to JSW, the ED took a pragmatic view and decided to restitute the properties to the SRA, it said.
In this regard, the agency filed an affidavit before the Supreme Court, where it was accepted, and on December 11, the restitution of assets was ordered.
“On the issues of the powers of ED to attach property of corporate debtors under CIRP, interpretation of Section 32A (2) of IBC or any other connected issues, the Hon’ble Supreme Court has not expressed any opinion and has left the issues open,” the agency said.
Published – December 14, 2024 12:15 pm IST