The vacation bench of the high court had issued these directions after the principal bench of NCLT at New Delhi had reserved its judgment on a resolution plan for BPSL.
The Supreme Court on Wednesday paved the way for the Delhi bench of the National Company Law Tribunal (NCLT) to pronounce its orders on approval of JSW Steel’s Rs 19,350-crore bid for debt-ridden Bhushan Power and Steel (BPSL), which is under insolvency process. Expressing surprise on how the Punjab and Haryana High Court had intervened in the resolution process of BPSL, a bench led by Justice RF Nariman stayed the HC order that had asked the committee of creditors (CoC) and the NCLT to consider the objections raised by the former directors of the company before finalising any resolution plan.
“Acts like this must be frowned upon and dealt sternly,” Justice Nariman said, staying the HC’s April 18 order. It also issued notice to other parties in the case.
The vacation bench of the high court had issued these directions after the principal bench of NCLT at New Delhi had reserved its judgment on a resolution plan for BPSL. The HC had also said that any decision taken by the NCLT would be “kept inoperative for two weeks” so as to enable the suspended directors to challenge it in accordance with law.
The HC had passed the order on a plea by Ravi Parkash Goyal, a former director of Bhushan Power, who had alleged that he was not given any opportunity to present his stand before the CoC or the NCLT. He had also alleged that the copy of the resolution plan was not served to him.
Aggrieved by the HC order, the lenders had moved the National Company Law Appellate Tribunal, which expressed its reservation as to how HC had passed an ex-parte order and that too without issuing notice to the CoC and others.
The appellate tribunal had also observed that NCLT has the power to resolve matters relating to insolvency on merits and it should not be influenced by any other order except the decision of the appellate tribunal or the Supreme Court. However, at the same time, the NCLAT had refrained from expressing any opinion as to whether any high court can have supervisory jurisdiction in insolvency cases that too of a high court beyond its territorial jurisdiction.
Challenging the April 18 order of the Punjab and Haryana HC, CoC led by Punjab National Bank told the SC that the HC should have dismissed Verma’s petition as “premature” and “illegal”. Besides, the HC had failed to see that Verma was attempting to “misuse the court process by indulging in forum shopping,” it added. Solictor General Tushar Mehta, appearing for CoC, argued that this is gross abuse of process of law and the HC lacked the territorial jurisdiction to entertain the petition. He said that the registered office of the corporate debtor is in New Delhi and all the proceedings with respect to the CIR process are going on before NCLT, principal bench at New Delhi and before NCLAT since July 2017. “Verma is well aware of all the proceedings and has also participated in the meetings of the CoC and the proceedings at New Delhi. No part of the cause of action has risen in Chandigarh. Thus, it is clear that the HC did not have the territorial jurisdiction to entertain the petition and the impugned order deserves to be set aside on this ground alone,” CoC stated in its appeal.
JSW Steel had offered to pay Rs 19,350 crore to the financial creditors of the debt-ridden BPSL, implying a near 60% haircut for lenders. Apart from this, the Sajjan Jindal-promoted company has offered to pay operational creditors a sum of Rs 350 crore against their admitted claims of Rs 733 crore.
A clutch of 34 financial creditors have claimed Rs 47,303 crore from the company as on January 3, 2019, of which the resolution professional has admitted claims worth Rs 47,150 crore. Bhushan Power is one of the 12 large stressed accounts identified by the RBI for insolvency proceedings.