The National Company Law Appellate Tribunal in Jindal Steel Limited versus Mahendra Kumar Kahandelwal &Ors raised a major issue as follows,“whether after the approval of ‘Resolution Plan” as mentioned under the Section 31 of the Insolvency and Bankruptcy Code of 2016, is it open to the Directorate Enforcement to attach the assets of the ‘Corporate Debtor’ on the alleged ground of money laundering by erstwhile promoters?” The Union of India through Ministry of Corporate Affairs was asked to clean its stand because of the stand taken by the Directorate Enforcement that it has the power to seize assets of the ‘Corporate Debtor’ even after the approval of the Resolution Plan under the I&B Code. The following statement by the Union of Government was before the approval of Resolution Plan, “The provision of the Insolvency and Bankruptcy Code (Amendment) Act, 2019 by which Section 31(1) was amended, makes it amply clear that a resolution plan is binding on Central Government and all statutory authorities”. Further, it was added by the Government was if any Corporate Debtor is undergoing investigation by the Central Bureau of Investigation (CBI) Serious Fraud Investigation Officer (SFIO) and/or the Directorate of Enforcement (ED) such investigation shall be separate and independent of the Corporate Insolvency Resolution Process (CIRP) under the IBC and both can work simultaneously and independent of each other.
NCLAT opined that upon perusing Section 32A (1)(a) IBC, it was ex facie evident that JSW Steel Limited was not an associate company/ related party of the Corporate Debtor and was not ineligible.
The tribunal said,
“.. under both having investment in such downstream joint venture company i.e. ‘Rohne Coal Company Private Limited’, the ‘JSW Steel Limited’ and the ‘Corporate Debtor’ do not become related parties of each other… where a party for its business, if mandated by the Central Government to join hands together and are forced to form a consortium or as joint associate, such person (‘Resolution Applicant’) cannot be held ineligible in terms of Section 32A (1) (a) on the ground of ‘related party’.”
Authorities can take the following exercise as mentioned by NCLAT;
– The ‘Resolution Professional’ in terms of Section 30(1).
– The ‘Committee of Creditors’ in terms of Section 29A.
– The Adjudicating Authority while passing an order under Section 31.
- NCLAT rejected the appeal by Corporate Debtor’s promoter, Sanjay Singal.
- The NCLAT opined that upon perusing Section 32A (1)(a)IBC, it was ex facie evident that JSW Steel Limited was not an associate company/ related party of the Corporate Debtor and was not ineligible.
- The judgment was given by a two-member Bench of Chairperson, Justice Mukhopadhyay and Member (Judicial) Justice Bansi Lal.
- Investigative Agencies are free to proceed with the investigation or take action in accordance with the law against the promoters, etc of Bhushan Power and Steel.
- The Judgment passed by the Adjudicating Authority and this Appellate Tribunal will not come in the way of Enforcement Directorate or the Serious Fraud Investigative Office(SFIO) to proceed investigation or take action.
Edited by J. Madonna Jephi
Approved & Published – Sakshi Raje
- Bar & Bench, NCLAT upholds JSW Steel Resolution Plan for Bhushan Power & Steel, declares attachment of property by ED as illegal https://www.barandbench.com/news/litigation/nclat-upholds-jsw-steel-resolution-plan-for-bhushan-power-steel