Title: JSW Steel to seek immunity from Bhushan Power and Steel 'fraud deals'
“We want a neat and clean company, and we don’t want any confusion,” Jindal told.
MUMBAI: JSW SteelNSE 0.22 % chairman Sajjan Jindal said his company will approach a higher court to seek immunity against claims arising from alleged money-laundering frauds at Bhushan Power and Steel (BPSL), a steelmaker in administration that Jindal has offered to buy for Rs 19,700 crore.
“We want a neat and clean company, and we don’t want any confusion,” Jindal told ET.
“We as a resolution applicant had offered this value under certain conditions. The NCLT order has modified the plan in ways that can have an impact on the viability of the plan,” Jindal said. “We will go for judicial intervention to make sure our conditions are approved.”
Jindal said the company will either seek clarifications from the NCLT or challenge the order in the appellate tribunal (NCLAT). The company will file an appeal before the end of next week.
There are two clauses in the NCLT September 5 order that have not gone down well with the steelmaker.
First, the court has refused to grant JSW Steel immunity from claims arising from money-laundering frauds reported by Punjab National Bank and Allahabad Bank in the last few months. A total of more than Rs 5,580 crore worth of loans taken by the company have been declared fraudulent by the two banks collectively.
The Delhi High Court’s April ruling held the money-laundering law above the bankruptcy law. So, JSW Steel is worried that the assets of the acquired company may get attached as “proceeds of crime”, which will affect its health after JSW Steel has taken it over. Second, profits generated by the company during the insolvency process that could have been used as working capital by JSW Steel have been ordered to be distributed among the financial creditors on a pro rata basis.
However, the order does say that criminal investigations going on against the ex-promoters will not come in the way of implementing the Rs 19,700-crore bid for the company. This refers to the case filed by the Serious Fraud Investigations Office (SFIO) against ex-promoter Neeraj Singhal and a number of bankers for their alleged role in siphoning off funds from BPSL. Jindal also remained unperturbed about the timing of the 3.5-million tonne company’s acquisition, even though he said he is disappointed it has taken so long and the time advantage of a good market has been lost.
“The steel business is cyclical in nature. We are not so time-sensitive,” Jindal said.