NCLAT asks Tata Steel if it would pay Bhushan Steel's GST, income tax dues

The company law appellate tribunal on Wednesday asked Tata Steel if it will clear the statutory dues like income tax and GST of Bhushan Steel, a company it had acquired in the insolvency proceedings earlier this month.

The National Company Law Appellate Tribunal (NCLAT), hearing appeals against the acquisition filed by Bhushan Steel's founding Singal family and the firm's operational creditor Larsen and Toubro, asked Tata Steel to submit a statement of statutory dues of the company.

The two-member bench headed by NCLAT Chairman, Justice S J Mukhopadhaya also asked the Resolution Professional, which oversaw the auction of Bhushan Steel, to state how much would L&T get from Rs 5.32 billion offered to all the operational creditors.

Bhushan Steel owed its lenders about Rs 560 billion and was among the 12 big loan defaulters identified by the Reserve Bank of India last year to undergo insolvency under the new bankruptcy law.

Tata Steel offered Rs 352 billion in cash to acquire Bhushan Steel. It would pay another Rs 12 billion over next 12 months to creditors and convert the remaining debt owed to banks to equity.

After the entire exercise, Tata would hold 75 per cent stake and banks would get 12.27 per cent. Singal family would be left with 2.5 per cent and the remaining 10 per cent would be public holding.

While L&T wants to recover its Rs 9.56 billion dues, Singal family has made a Rs 285.92 billion counter-offer.

During the proceedings, senior advocate Abhishek Manu Singhvi opposed the Rs 285.92 billion offer by Neeraj Singal. "This Rs 285.92 billion offer in 14 years is a spoiler," he said.

Meanwhile, senior advocate S Ganesh appearing for Singal submitted that Tata Steel was ineligible to bid for Bhushan Steel under section 29 A of IBC.

The section mandates that a person convicted for any offence punishable with imprisonment for two years or more is ineligible for submitting a resolution plan. Tata Steel UK, a foreign subsidiary of Tata Steel, was fined by an English Court in February 2018, he added.

The appellate tribunal has listed the matter on July 3 for next hearing.

Neeraj Singal and L&T had filed appeals challenging May 15 order of the National Company Law Tribunal (NCLT) that had approved Tata Steel's bid for Bhushan Steel.

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