Significant Recovery in Bhushan Steel Case

The Enforcement Directorate (ED) has successfully restituted properties worth Rs 4,025 crore to JSW, the successful resolution applicant of the former Bhushan Power and Steel Ltd, under the corporate insolvency resolution process of the Insolvency and Bankruptcy Code.

These assets were initially attached by the ED in 2019 following a money laundering investigation that revealed the previous promoters of Bhushan Power and Steel Ltd had defrauded banks and siphoned off funds amounting to Rs 47,204 crore for private investments. A Prevention of Money Laundering Act (PMLA) case was initiated based on a First Information Report (FIR) registered by the Central Bureau of Investigation (CBI).

The Investigation and Legal Proceedings

The ED's investigation uncovered that the accounts were manipulated to show fake expenses, purchases, and capital assets, thereby diverting bank funds in the form of cash. This cash was then channeled into the books of various beneficial owner companies, which were held through employees or dummy directors, and used for investments in shares and immovable properties.

After establishing the money trail of the laundered proceeds of crime, the ED attached properties including land, building, and machinery worth Rs 4,025 crore. The promoter, Sanjay Singal, was arrested on November 22, 2019, and a chargesheet was filed against him and the company in January 2020. Despite a special court taking cognizance of the case immediately, the trial has been pending for over four years due to repeated adjournments sought by the accused.

Further Actions and Restitution

Additionally, the ED attached assets worth Rs 427 crore held by various shell companies linked to the accused. A supplementary chargesheet is expected to be filed soon to commence the process of restitution of the remaining assets. The creditor banks initiated corporate resolution under the Insolvency and Bankruptcy Code, and JSW was the applicant seeking assets for an amount of about Rs 19,350 crore, against the outstanding loans of Rs 47,204 crore.

Through an affidavit filed before the Supreme Court, the ED requested the apex court to direct the handing over of the attached assets to JSW and consider it as restitution under PMLA. The Supreme Court accepted the ED affidavit and, on December 11, ordered the restitution of assets to JSW.