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The National Company Law Appellate Tribunal (NCLAT) has put the sale of Bhushan Power and Steel to JSW Steel on hold and also asked the Enforcement Directorate (EC) to release the attached properties of Bhushan Power and Steel and not to attach any further properties without the Appellate tribunal’s permission.
A NCLAT bench whose chairman was Justice S Mukhopadhaya said that the Insolvency and Bankruptcy Code (IBC) would not function smoothly if these things happen. He also said that the Enforcement Directorate had no jurisdiction to attach properties of a corporate debtor on its own especially when a case is already pending with the Appellate Tribunal.
The Enforcement Directorate had attached certain properties of Bhushan Steel after finding them guilty in a money laundering case. The Appellate Tribunal said that ED cannot function on its own and has asked it to release whatever property of Bhushan Steel has been attached. Further he said that this is going to affect the very foundation of the Insolvency and Bankruptcy Code 2016.
The NCLAT has ordered that the case will be heard next on October 25, 2019. Till this time and till further orders of NCLAT, Bhushan Power and Steel shall not be sold to JSW Steel and the latter shall not make any payments with respect to the bid amount of 19,700 crore. Also, the order of the Enforcement Directorate (ED) attaching Bhushan Steel’s property is stayed till the next hearing.
The Ministry of Corporate Affairs (MCA) directed NCLAT to put a stay on the order of ED as ED does not have jurisdiction and power to order the attachment of properties under any circumstance. Also a money laundering is against an individual not a company, said NCLAT.
The NCLT had approved the Rs. 19,700 crore resolution plan for Bhushan Steel proposed by JSW Steel. JSW Steel also had challenged the NCLT’s order for the redistribution of the profits earned through the insolvency process of Bhushan Steel among the financial and operational creditors.
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