National Company Law Appellate Tribunal (NCLAT) on Friday asked the Enforcement Directorate to file a final affidavit containing developments related to attachment of Bhushan Power & Steel Ltd assets. A two-member NCLAT bench headed by Chairperson Justice S J Mukhopadhaya also asked the ED to clarify about its role after the attachment of assets of Bhushan Power and Steel Ltd (BPSL).
The appellate tribunal was hearing a batch of petitions, including one filed by JSW Steel, against the attachment of BPSL assets. “ED would file the final affidavit giving the developments, which have taken place,” the tribunal said. The NCLAT has directed to list the matter on December 12 for the next hearing. It would hear the BPSL case along with other matters, which involves a similar issue.
The ED and Ministry of Corporate Affairs (MCA) are at loggerheads over the attachment of the assets of the debt-ridden firm by the former over the money allegedly siphoned off by the erstwhile promoters of BPSL, which is presently going through insolvency resolution process. The ED comes under the Finance Ministry. At present, Nirmala Sitharaman is holding both finance and corporate affairs portfolios. While the ED is of the opinion that it can attach the property of BPSL under the Prevention of Money Laundering Act (PMLA), the MCA has been maintaining that the ED cannot do so as proceedings under the Insolvency & Bankruptcy Code was on.
Earlier, on October 25, the NCLAT had asked both organisations, which are presently headed by Sitharaman, to settle the matter adding that there was no question of amendment of laws. “It is desirable if the two wings/ departments of the central government sit together and settle the issue,” it said. On October 10, the ED had attached assets worth over Rs 4,025 crore of debt-ridden BPSL in connection with its money laundering probe linked to an alleged bank loan fraud by its former promoters of BPSL.
JSW Steel, which has emerged as a successful bidder for BPSL with its bid of Rs 19,700 crore, filed an appeal against ED’s move before the NCLAT, which had on October 14 directed them to be immediately released in favour of the resolution professional of the debt-ridden firm. Earlier, on October 14, the NCLAT had directed the ED to release BPSL properties attached by the agency on the JSW Steel plea, alleging siphoning off of funds by its erstwhile promoters. On this, the ED filed an affidavit before the NCLAT questioning its jurisdiction.
In the said affidavit, the ED told the appellate tribunal that it has no jurisdiction over the properties attached by the agency under the PMLA and asked it to vacate its earlier order and dismiss the appeal filed by JSW Steel. The validity of the attachment could be examined by an adjudicating authority only under the PMLA, and hence the NCLAT should vacate its order passed on October 14, directing it to release the assets of BPSL, the ED told the NCLAT.
“It is submitted that the provisional attachment order dated October 10, 2019 passed under Section 5 of PMLA Act is not amenable to the jurisdiction of this Hon’ble tribunal (NCLAT) and its validity can only be examined by the adjudicating authority under Section 8 of the PMLA,” the ED had said in an affidavit filed before the appellate court. “There is no power under the Insolvency and Bankruptcy Code (IBC) to interfere with a provisional attachment order passed,” it had said
Source: Financial Express, December 7, 2019