The National Company Law Appellate Tribunal (NCLAT) on Monday dismissed an appeal filed by Neeraj Singal and Brij Bhushan Singal, erstwhile promoters of Bhushan Steel, challenging the October 29, 2021, order of the National Company Law Tribunal (NCLT) that directed the promoter group to sell their 2.5 crore shares at Rs 2 apiece to Tata Steel, which acquired the company through the insolvency route in May 2018.
“We do not find any error in the judgment of the adjudicating authority allowing the application filed by respondent (erstwhile promoters) while holding that erstwhile promoters have to sell their shares to the applicant (Tata Steel) at Rs 2 per share,” a three-member NCLAT bench, headed by chairperson justice Ashok Bhushan said in its order.
“In view of the foregoing, we do not find any merit in this appeal, the appeal is dismissed. No order as to costs,” the bench added.
Bhushan Steel owed Rs 59,000 crore to the creditors. On an application filed by SBI, corporate insolvency resolution process against the company begun in 2017. The NCLT approved Tata Steel’s Rs 35,000 crore resolution plan for the company in May 2018.
On May 18, 2018 Bamnipal Steel, a Tata Steel subsidiary, had issued a letter to the erstwhile promoters calling upon them to sell equity shares by them. The Singals neither replied nor sold their shares.
Tata Steel on September 12, 2018 filed an application before the NCLT seeking direction to the Singals to transfer the shares. The NCLT on October 29, 2021 allowed the application and asked the Singals to sell the shares at Rs 2 apiece.
Tata Steel, which acquired Bhushan Steel through the insolvency route had on the closing day subscribed to 72.65% equity shares of the corporate debtor as per the resolution plan. Tata Steel/ Bamnipal Steel was required to hold 75% equity shares of the corporate debtor on the closing day.
Hence, in addition to the subscription of 72.65% equity shares, the remaining 2.35% equity shares held by the erstwhile promoters were to be sold by the Singals at Rs 2 per share. It is these shares which the Singals did not sell to Tata Steel and challenged the NCLT order in the NCLAT.
