New Delhi, Dec 16 (Agency) In a significant development, the Supreme Court has ordered the Enforcement Directorate (ED) to restore assets attached during the insolvency resolution process of Bhushan Power and Steel Ltd (BPSL) to JSW Steel, the successful bidder under the Insolvency and Bankruptcy Code (IBC). This comes after the ED decided not to pursue its appeal challenging JSW Steel’s takeover of Bhushan Power. A bench, comprising Justice Bela M Trivedi and Justice Satish Chandra Sharma, passed the order on December 11, following the ED’s submission that it would not contest the applicability of Section 32A of the IBC in this specific case. Section 32A provides immunity to corporate debtors and their assets from prosecution or attachment once a resolution plan has been approved under the IBC. The ED had attached assets worth Rs.4,025 crore of Bhushan Power under Section 5 of the Prevention of Money Laundering Act (PMLA), alleging that the company’s former promoters had defrauded banks and diverted funds.
However, Solicitor General Tushar Mehta, appearing for the ED, informed the Court on December 2 that the agency no longer sought to contest the application of Section 32A in the case. On December 11, the ED filed an affidavit agreeing to return the attached properties to JSW Steel, while retaining the right to continue investigations against the former promoters of Bhushan Power. Additionally, it refrained from addressing broader questions concerning the interpretation of Section 32A of the IBC or the powers of the ED under the PMLA. Bhushan Power entered into insolvency proceedings under the IBC after defaulting on debts, with JSW Steel emerging as the successful resolution applicant. The Committee of Creditors (CoC) approved JSW Steel’s resolution plan in September 2019, and the National Company Law Tribunal (NCLT) granted final approval. However, the ED opposed the resolution plan, arguing that its attachment rights under the PMLA remained unaffected. In February 2020, the National Company Law Appellate Tribunal (NCLAT) upheld the NCLT’s decision, vacating the ED’s attachment of Bhushan Power’s properties. The ED then appealed to the Supreme Court, contending that Section 32A of the IBC did not apply to this case, as the attachment predated the provision’s introduction. The Committee of Creditors was represented by Senior Advocates Dr. Abhishek Manu Singhvi and Sanjiv Sen, supported by Cyril Amarchand Mangaldas. Enforcement Directorate was represented by Solicitor General Tushar Mehta and advocate Zoheb Hossain. The Apex Court emphasized that its decision does not preclude the ED from investigating the promoters of Bhushan Power or pursuing similar cases in the future.