Bhushan Power & Steel case: NCLAT agrees to hear JSW Steel plea

The National Company Law Appellate Tribunal (NCLAT) agreed to hear JSW Steel’s plea seeking immunity from criminal proceedings in the ongoing fraud investigation against Bhushan Power & Steel (BPSL).

A three-member Bench of the NCLAT, headed by Chairperson Justice S J Mukhopadhaya, sought the Central Bureau of Investigation (CBI), Enforcement Directorate (ED), and the Ministry of Corporate Affairs’ (MCA), and the Serious Fraud Investigation Office (SFIO)’s responses. The case will be next heard on October 14.

JSW Steel, whose Rs 19,350-crore bid for BPSL, had been approved by the principal Bench of the National Company Law Tribunal (NCLT), was forced to move the appellate tribunal after the lower adjudicating authority remained silent on the issue. In its order, the NCLT had noted JSW Steel should move appropriate authorities to seek protection from the ongoing probe into the activities of BSPL.

BPSL is facing an investigation from different government agencies. Based on an FIR by the CBI and a forensic audit report, several banks had reported fraud. The combined amount reported as fraud by just Punjab National Bank (PNB) and Allahabad Bank was more than Rs 5,500 crore.

JSW Steel had, during a hearing in July, also expressed apprehension about the reports of fraud that had emerged at BSPL. The firm had, however, said it was not backing out of the bidding process. It had then sought forensic audit reports of banks, which had detected frauds at BSPL. In July, PNB and Allahabad Bank had reported that they had detected frauds of Rs 3,800 crore and Rs 1,774 crore, respectively, in debt-laden BSPL’s accounts. In its report to the RBI on July 7, PNB has detected a fraud of more than Rs 3,800 crore by BSPL, which had been done by the company by misappropriating bank funds. In its report to the RBI, PNB also alleged BSPL had manipulated its books of accounts to raise funds from consortium lender banks. A week later, on July 13, Allahabad Bank, too, said it had detected a fraud of Rs 1,774 crore by BSPL following the same modus operandi of misappropriating funds and manipulating books of accounts to raise funds from consortium lender banks.