Latest news with #Section32A
Time of India
24-05-2025
- Business
- Time of India
Co accused in NSEL scam discharged under IBC clause granting immunity
Mumbai: Dunar Foods Ltd, an accused in the 2016 NSEL scam case involving alleged cheating and siphoning of funds, has been discharged from criminal proceedings. The court's decision was based on Section 32A of the Insolvency and Bankruptcy Code (IBC), which grants immunity to corporate debtors once a resolution plan is approved and management changes hands. In a recent order, special judge V P Desai referred to citations and said it was crystal clear that once the resolution plan forwarded by Resolution Professional is accepted by the NCLT, immunity cannot be denied to the corporate debtor. "The provision of section 32A is not to shield the wrongdoers. The extinguishment of the criminal liability of the corporate debtor is apparently important to the new management to make a clean break with the past and start on a clean slate. It must also not overlook the principle that the provision is part of an economic measure," the judge said. The judge further said that, thus, though it can be gathered that the company was involved in the offence committed by the prime accused, Surender Gupta in conspiracy along with others, as the resolution plan is accepted by NCLT, there is immunity to the corporate debtor. "Therefore, in view of section 32A (1) of IBC, as the corporate debtor cannot be liable for criminal proceedings committed prior to commencement of the Corporate Insolvency Resolution Process, M/s Dunar Foods Ltd needs to be discharged," the judge said. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like One of the Most Successful Investors of All Time, Warren Buffett, Recommends: 5 Books for Turning... Blinkist: Warren Buffett's Reading List Click Here Undo The CBI alleged a conspiracy was hatched between 2007 and 2013 to defraud M/s PEC Ltd of approximately Rs 120 crore through fraudulent agro-commodity trades on the NSEL platform, with Dunar Foods Ltd identified as a major beneficiary. However, Dunar Foods Ltd sought discharge, arguing its financial creditor, State Bank of India, initiated insolvency proceedings. A resolution plan was approved by the National Company Law Tribunal on Nov 26, 2019, leading to a change in the company's management with a man being appointed as the Successful Resolution Applicant. The defence submitted that the new management, having paid the entire amount along with interest under the approved resolution plan, should not face ongoing criminal proceedings due to the protection offered by Section 32A of IBC. They cited several Supreme Court and high court judgments, emphasizing on the principle of a "fresh slate" for successful resolution applicants, preventing them from being burdened by pre-existing claims. The CBI opposed the plea, submitting allegations of fraudulent transactions and the company's alleged role as beneficiary of misappropriated funds. But the court noted CBI's arguments did not specifically address the applicability of Section 32A of IBC. The judge said the resolution plan for Dunar Foods Ltd was approved on Nov 26, 2019, and the company's criminal liability ceased from that date. Get the latest lifestyle updates on Times of India, along with Brother's Day wishes , messages and quotes !
Business Upturn
02-05-2025
- Business
- Business Upturn
JSW Steel Share Price: What went wrong and why did Supeme Court reject resolution for Bhushan Power and Steel? Explained
Shares of JSW Steel Ltd fell over 5.6% to ₹971.40 on Thursday after the Supreme Court of India struck down its ₹20,000 crore resolution plan for Bhushan Power and Steel Ltd (BPSL), terming it 'illegal' and directing liquidation of the bankrupt company. The verdict has come as a major setback for JSW and the financial creditors involved in the case. Why did the Supreme Court reject the plan? The top court cited two key reasons for invalidating the resolution: Mode of Payment: The court noted that JSW's proposal to complete the acquisition using a mix of equity and optionally convertible debentures was in violation of the IBC, which mandates that the resolution must be executed strictly via equity. Delay in Implementation: JSW failed to implement the resolution plan within the stipulated time frame as prescribed under the Insolvency and Bankruptcy Code (IBC), leading to a breach of procedural compliance. Background of the Case JSW had offered a total of ₹19,350 crore to financial creditors, implying a haircut of nearly 60%. It also proposed to pay ₹350 crore to operational creditors, whose total admitted claims stood at ₹733 crore. However, complications arose due to investigations against BPSL's former promoters, who were accused of diverting ₹4,025 crore in bank loans. The Enforcement Directorate (ED), in October 2019, attached BPSL assets worth ₹4,025 crore under the Prevention of Money Laundering Act, citing them as proceeds of crime. Although JSW's resolution plan was previously cleared by both the NCLT and NCLAT, the ED challenged the plan, arguing that JSW was a 'related party' and could not claim immunity under Section 32A of the IBC. The Supreme Court ultimately sided with the ED, ordering liquidation. What now? With the Supreme Court ordering liquidation, the chances of financial recovery for lenders have diminished significantly. The decision also raises concerns for other IBC bidders on procedural compliance and potential delays. This judgment sets a strong precedent around how courts view timeliness and structure of payment under resolution plans, and could impact investor confidence in distressed asset acquisitions. Aditya Bhagchandani serves as the Senior Editor and Writer at Business Upturn, where he leads coverage across the Business, Finance, Corporate, and Stock Market segments. With a keen eye for detail and a commitment to journalistic integrity, he not only contributes insightful articles but also oversees editorial direction for the reporting team.
Business Upturn
02-05-2025
- Business
- Business Upturn
JSW Steel share price nosedives 5% after Supreme Court rejects resolution plan for Bhushan Power and Steel
Shares of JSW Steel Ltd fell sharply by over 5.6% to ₹971.40 in Thursday's trading session after the Supreme Court of India rejected its nearly ₹20,000 crore resolution plan for Bhushan Power and Steel Ltd (BPSL). The apex court also directed the liquidation of the company, declaring the resolution plan as illegal and improperly accepted by the Committee of Creditors (CoC). What triggered the fall? The judgment comes nearly four years after JSW Steel's bid was cleared by both the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT). The deal, however, was contested by the Enforcement Directorate (ED), which argued that JSW was a 'related party' to BPSL and thus not entitled to clean slate immunity under Section 32A of the Insolvency and Bankruptcy Code (IBC). Despite support from multiple government bodies—including the Ministry of Corporate Affairs, the Serious Fraud Investigation Office (SFIO), the CoC, and the resolution professional—the Supreme Court sided with the ED's objection and rejected the takeover plan. Impact and Outlook: The Supreme Court's decision is a major blow to JSW Steel and its investors, who had long awaited closure on the deal. It also affects BPSL's lenders who were counting on recoveries from the resolution. Legal experts believe the ruling sets a strong precedent in India's insolvency law landscape and raises new challenges for future resolution applicants, especially regarding Section 32A protections. The liquidation process for BPSL is now expected to begin shortly, ending one of the most contentious insolvency battles under the IBC. Disclaimer: The information provided is for informational purposes only and should not be considered financial or investment advice. Stock market investments are subject to market risks. Always conduct your own research or consult a financial advisor before making investment decisions. Aditya Bhagchandani serves as the Senior Editor and Writer at Business Upturn, where he leads coverage across the Business, Finance, Corporate, and Stock Market segments. With a keen eye for detail and a commitment to journalistic integrity, he not only contributes insightful articles but also oversees editorial direction for the reporting team.
Time of India
02-05-2025
- Business
- Time of India
Big blow: SC rejects JSW Steel's Bhushan Power and Steel resolution plan
In a big setback, the Supreme Court on Friday rejected JSW Steel 's resolution plan for Bhushan Power and Steel , and further ordered ordered the liquidation of the steelmaker. The top court said that the resolution plan of JSW was illegal and should not have been accepted by committee of creditors. During the hearing, the apex court said that the intentions of JSW Steel were 'malafide and dishonest' as it took undue advantage of pending ED proceedings and did not implement the resolution plan for two years which frustrated the objective of IBC. Following the Supreme Court's order, the shares of JSW Steel were trading in the red at ₹970.50, down 5.76 per cent. The NCLAT had on February 17, 2020 upheld the NCLT's decision and ruled that JSW Steel (the successful resolution applicant) cannot be held responsible for the alleged misdeeds of the past promoters at any stage. The Enforcement Directorate had in 2020 moved the Supreme Court seeking stay on the National Company Law Appellate Tribunal's order that approved the JSW Steel's bid for BPSL under the new amendment (under Section 32(A) to the IBC) that provides immunity to the new owners from ongoing criminal proceedings against the erstwhile promoters of the company. The ED had alleged that BPSL and JSW Steel were associated as shareholders holding 24.09 per cent and 49 per cent equity, respectively, in a joint venture Rohne Coal Company. Therefore, JSW is a related party of the corporate debtor, the protection under Section 32A will not be available to it, it had stated. JSW had offered to pay ₹19,350 crore to the financial creditors as part of its resolution plan, which was a near 60 per cent haircut for the lenders. Apart from this, JSW had offered to pay operational creditors a sum of Rs 350 crore against their admitted claims of ₹733 crore. In the 'Corporate Insolvency Resolution Process' of 'Bhushan Power & Steel Limited', the 'Resolution Plan' submitted by 'JSW Steel Limited' was approved by National Company Law Tribunal on September 5, 2019 with certain conditions.
Business Upturn
02-05-2025
- Business
- Business Upturn
JSW Steel shares fall over 5% after Supreme Court rejects Rs 20,000 crore Bhushan Power resolution plan
Shares of JSW Steel Ltd fell sharply by over 5.6% to ₹971.40 in Thursday's trading session after the Supreme Court of India rejected its ₹20,000 crore resolution plan for Bhushan Power and Steel Ltd (BPSL). The apex court also directed the liquidation of the company, declaring the resolution plan as illegal and improperly accepted by the Committee of Creditors (CoC). What triggered the fall? The judgment comes nearly four years after JSW Steel's bid was cleared by both the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT). The deal, however, was contested by the Enforcement Directorate (ED), which argued that JSW was a 'related party' to BPSL and thus not entitled to clean slate immunity under Section 32A of the Insolvency and Bankruptcy Code (IBC). Despite support from multiple government bodies—including the Ministry of Corporate Affairs, the Serious Fraud Investigation Office (SFIO), the CoC, and the resolution professional—the Supreme Court sided with the ED's objection and rejected the takeover plan. Impact and Outlook: The Supreme Court's decision is a major blow to JSW Steel and its investors, who had long awaited closure on the deal. It also affects BPSL's lenders who were counting on recoveries from the resolution. Legal experts believe the ruling sets a strong precedent in India's insolvency law landscape and raises new challenges for future resolution applicants, especially regarding Section 32A protections. The liquidation process for BPSL is now expected to begin shortly, ending one of the most contentious insolvency battles under the IBC. Disclaimer: The information provided is for informational purposes only and should not be considered financial or investment advice. Stock market investments are subject to market risks. Always conduct your own research or consult a financial advisor before making investment decisions. Aditya Bhagchandani serves as the Senior Editor and Writer at Business Upturn, where he leads coverage across the Business, Finance, Corporate, and Stock Market segments. With a keen eye for detail and a commitment to journalistic integrity, he not only contributes insightful articles but also oversees editorial direction for the reporting team.
