SC dismisses Bhushan Steel erstwhile promoters appeal against Tata Steel | The Financial Express

SC dismisses Bhushan Steel erstwhile promoters appeal against Tata Steel

On SBI’s petition, the NCLT had in 2017 initiated insolvency proceeding against Bhushan Steel which had a liability of Rs 59,000 crore towards lenders.

SC dismisses Bhushan Steel erstwhile promoters appeal against Tata Steel
Senior counsel AM Singhvi, appearing for Tata Steel, opposed the appeal, saying the attempt of Singals to continue their shareholding was not only in violation of the terms of the RP, but a serious impediment in the proper implementation of the approved RP. (IE)

The Supreme Court has rejected an appeal of the erstwhile promoters of Bhushan Steel, Neeraj Singal and Brij Bhushan Singal, who were seeking to retain their 2% shareholding in the company after its takeover by Tata Steel in May, 2018.

A Bench led by Justice MR Shah, while dismissing the Singals’ appeal, said that it was in complete agreement with the view taken by the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT). “If the submission on behalf of the appellants (Singals), as canvassed before the NCLAT and before this court is accepted in that case, according to us, the Resolution Plan shall not be workable at all.”

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Challenging the March 7 order of the NCLAT that directed the erstwhile promoter group to sell their 25 million shares at Rs 2 per share to the new owner, Singals, through senior counsel Harin P Raval, argued that the NCLT had in October last year erroneously held that the resolution plan (RP) does not allow for them to remain shareholders in any manner as they first of all should not have been given any place in the company at the time of approval of the RP.

Senior counsel AM Singhvi, appearing for Tata Steel, opposed the appeal, saying the attempt of Singals to continue their shareholding was not only in violation of the terms of the RP, but a serious impediment in the proper implementation of the approved RP.

On SBI’s petition, the NCLT had in 2017 initiated insolvency proceeding against Bhushan Steel which had a liability of Rs 59,000 crore towards lenders. The NCLT had approved Tata Steel’s Rs 35,000 crore resolution plan for the company in May 2018.

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Later, Bamnipal Steel, a Tata Steel company, had written to the erstwhile promoters calling upon them to sell equity shares by them. However, Singals didn’t respond, thus prompting Tata Steel, which had on the closing day subscribed to 72.65% equity shares of Bhushan Steel, to move NCLT for a direction to Singals to sell their 2.34% equity shares. Tata Steel/ Bamnipal Steel was required to hold 75% equity shares of the corporate debtor on the closing day.

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