ED searches resolution professional of BPSL, probes ‘irregularities’ in ties

JSW Steel’s Rs 19,700-crore bid to acquire Bhushan Power & Steel (BPSL) is again in trouble as the resolution professional (RP) of the latter has come under the Enforcement Directorate’s (ED’s) scanner.

On Wednesday, the federal agency carried out an extensive search operation at four locations belonging to the RP and a former director of the debt-ridden steel company.

Sources say certain irregularities in the dealings with BPSL have triggered the searches on the RP and some close associates.

Confirming the development, an official said the three premises at Delhi and one at Gurugram have been covered so far in connection with the ongoing money laundering probe against the beleaguered steel firm.

Last year, the ED attached assets worth over Rs 4,000 crore of BPSL for alleged bank loan fraud by the company’s former owners.

The BPSL case is in the final leg of hearings in the Supreme Court. The ED had filed an appeal against a National Company Law Appellate Tribunal order that ordered the agency to release assets of BPSL attached under the Prevention of Money Laundering Act.

The attachment order came about seven months after JSW Steel was declared a successful resolution applicant for the debt-laden BPSL.

JSW Steel was seeking immunity under Section 32A of the insolvency law, which provides immunity to the corporate debtor. However, the ED was objecting to the applicability of Section 32A of the insolvency law to the JSW-Bhushan deal on two counts.

Primarily, JSW Steel’s resolution plan was approved by the National Company Law Tribunal in October 2019, prior to the introduction of Section 32A. Second, JSW Steel and BPSL are associates in the joint venture firm Rohne Coal Company, which disqualifies the resolution applicant from the purview of Section 32A, being a related party.