NCLAT (17.02.2020) in JSW Steel Ltd. Vs. Mahender Kumar Khandelwal & Ors. [Company Appeal (AT) (Insolvency) No. 957 of 2019] deliberated & ordered on the following issues;
Whether after approval of a ‘Resolution Plan’ under Section 31 of the Insolvency and Bankruptcy Code, 2016, is it open to the Directorate of Enforcement to attach the assets of the ‘Corporate Debtor’ on the alleged ground of money laundering by erstwhile Promoters.
Persons/ Authorities empowered to decide whether a ‘Resolution Applicant’ is ineligible being ‘related party’ in terms of Section 29A or not
Distribution of profit during the ‘Corporate Insolvency Resolution Process’.
Distribution of monies to be recovered on account of the Identified Transaction
Interim management of the ‘Corporate Debtor’ until the implementation of the ‘Resolution Plan’.
Can a Successful Resolution Applicant’ be asked to face with undecided claims after the Resolution Plan’ submitted by him and accepted by the ‘Committee of Creditors’
Whether ‘JSW Steel Limited” is to be treated as promoter of ‘Nova Iron Steel’.
Excerpts of the order;
In the ‘Corporate Insolvency Resolution Process’ of ‘Bhushan Power & Steel Limited’- (‘Corporate Debtor’), the ‘Resolution Plan’ submitted by ‘JSW Steel Limited’ (‘Resolution Applicant’) has been approved by the Adjudicating Authority (National Company Law Tribunal), Principal Bench, New Delhi by impugned Judgment dated 5th September, 2019 with certain conditions. After the approval of plan when Monitoring Committee was monitoring the change of management, on 10th October, 2019, the Directorate of Enforcement of Central Government attached assets of ‘Bhushan Power & Steel Limited’- (‘Corporate Debtor’) under Section 5 of the ‘Prevention of Money Laundering Act, 2002’.
# 2. ‘JSW Steel Limited’ is ‘Successful Resolution Applicant’, in its appeal has sought for setting aside/ modification of conditions imposed in paragraph 128 sub paras (e), (f), (g), (i), (j), (k) of the impugned order dated 5th September, 2019. It has also raised objection and challenged the jurisdiction of Directorate of Enforcement to attach the properties of the ‘Bhushan Power & Steel Limited’- (‘Corporate Debtor’), after change of hands.
# 3. In view of such development, one of the questions raised is whether after approval of a ‘Resolution Plan’ under Section 31 of the Insolvency and Bankruptcy Code, 2016, is it open to the Directorate of Enforcement to attach the assets of the ‘Corporate Debtor’ on the alleged ground of money laundering by erstwhile Promoters.
JSW Steel Limited
# 6. On 14th October, 2019, when the appeal preferred by ‘JSW Steel Limited’ was taken up, learned counsel for the parties brought to our notice that the Deputy Director of the Directorate of Enforcement, New Delhi by order dated 10th October, 2019 attached part of the assets of the ‘Corporate Debtor’ (Bhushan Power & Steel Limited).
# 8. Taking into consideration the fact that the ‘Directorate of Enforcement’, has taken stand contrary to the stand taken by the Government of India, this Appellate Tribunal stayed the order of attachment dated 10th October, 2019 passed by the Deputy Director, ‘Directorate of Enforcement’ with regard to part property of the ‘Corporate Debtor’ (Bhushan Power & Steel Limited). Further, direction was issued not to give effect to the ‘Resolution Plan’ and impugned order dated 5thSeptember, 2019, so far it relates to the payment of the creditors, was stayed.
# 10. The matter was adjourned and finally the Hon’ble the President of India promulgated an Ordinance making further amendment in the ‘Insolvency and Bankruptcy Code, 2016’, published in the Gazette of India extraordinary Part II- Section 1, dated 28th December, 2019, to resolve the issue.
# 11. The preamble of Ordinance making further amendment in the ‘Insolvency and Bankruptcy Code, 2016’ reads as follows:
“WHEREAS a need was felt to give the highest priority in repayment to last mile funding to corporate debtors to present insolvency in case the company goes into corporate insolvency resolution process or liquidation, to provide immunity against prosecution of the corporate debtor, to prevent action against the property of such corporate debtor and the successful resolution applicant subject to fulfilment of certain conditions and to fill the critical gaps in the corporate insolvency framework, it has become necessary to amend certain provisions of the Insolvency and Bankruptcy Code, 2016; . . . . . .
# 12. After Section 32 of the Principal Act, the following section has been inserted which came into force at once:
“32A. (1) Notwithstanding anything to the contrary contained in this Code or any other law for the time being in force, the liability of a corporate debtor for an offence committed prior to the commencement of the corporate insolvency resolution process shall cease, and the corporate debtor shall not be prosecuted for such an offence from the date the resolution plan has been approved by the Adjudicating Authority under section 31, if the resolution plan results in the change in the management or control of the corporate debtor to a person who was not- . . . . . . . .
# 13. On 13th January, 2020, this Appellate Tribunal issued notice to ‘Directorate of Enforcement’ and the Central Government through the Secretary, Ministry of Corporate Affairs, inter alia, directed:
“The Directorate of Enforcement and the Central Government through the Secretary, Ministry of Corporate Affairs on behalf of the Serious Fraud Investigation Office and the Central Bureau of Investigation are allowed to file additional reply affidavit by 20th January, 2020 stating therein as to whether ‘JSW Steel Limited’, whose plan has been approved, are covered by the newly inserted Section 32A of the Insolvency and Bankruptcy Code, 2016. In case, the answer is in negative, they will enclose the evidence in support of their stand after serving a copy of the same on the learned counsel for ‘JSW Steel Limited’ and other Appellants.”
# 14. The Union of India through Regional Director, Northern Region, Ministry of Corporate Affairs, has taken specific plea that ‘JSW Steel Limited’ (Resolution Applicant) does satisfy the conditions prescribed under Section 32A and cannot be held to be ineligible in terms of Section 32A (2) (i) as quoted hereunder: . . ., ,
# 15. The Central Bureau of Investigation has appeared, which is making investigation, has not alleged any act of money laundering or other acts against ‘JSW Steel Limited’ or its management.
# 16. The Serious Fraud Investigation Office is under the control of the Ministry of Corporate Affairs has also not pleaded anything against ‘JSW Steel Limited’ or its management.
# 17. Mr. Sanjay Shorey, Director (Legal and Prosecution), Ministry of Corporate Affairs, appearing on behalf of ‘Union of India’ submitted that ‘JSW Steel Limited’ has not been held to be ‘related party’ by the ‘Resolution Professional’ or the ‘Committee of Creditors’ or the ‘Adjudicating Authority’.
# 19. According to Directorate of Enforcement, it is incumbent on the ‘Successful Resolution Applicant’ to make a self-declaration that whether the benefit of sub-sections (1) & (2) of Section 32A would be available to it upon fulfilment of the conditions laid down therein; and whether the‘Successful Resolution Applicant’ was a promoter or in the managementor in the control of the ‘Corporate Debtor’ or a related party. Therefore,this Appellate Tribunal should call for such a declaration by way of an affidavit from the ‘Resolution Applicant’ i.e. ‘JSW Steel Limited’.
# 20. Aforesaid stand taken by the Directorate of Enforcement cannot be accepted, in absence of any mandate under Section 32A that the ‘Successful Resolution Applicant’ after approval of the plan is required to give any such declaration as to whether the benefit of Section 32A will be applicable to them or not. Only the competent authority can decide such issue if any such allegation is levelled.
# 21. The next plea taken by the Directorate of Enforcement is that Section 32A introduced w.e.f. 28th December, 2019 is prospective and would not apply to ‘Resolution Plan’ which has already been approved under Section 31 of the ‘I&B Code’. It was submitted that the ‘Resolution Plan’ was approved on 5th September, 2019 and Section 32A has come into force on 28th December, 2019.
# 22. The plea taken by the Directorate of Enforcement is fit to be rejected for the following reasons.
# 25. Attachment of assets of the ‘Corporate Debtor’ which is under change of the hands whose order of attachment was passed on 10th October, 2019 i.e. after one month seven days under Section 5 of the ‘Prevention of Money Laundering Act, 2002’.
# 26. As contradictory plea was taken by two Departments of the Central Government, time was allowed to resolve the issue. Only thereafter, after deliberation by the Central Government, the Ordinance has been issued on 28th December, 2019 inserting Section 32A. The preamble suggests that a need was felt to give the highest priority in repayment to last mile funding to corporate debtors to present insolvency in case the company goes into corporate insolvency resolution process or liquidation, to provide immunity against prosecution of the corporate debtor, to prevent action against the property of such corporate debtor and the successful resolution applicant subject to fulfilment of certain conditions and to fill the critical gaps in the corporate insolvency framework, it has become necessary to amend certain provisions of the Insolvency and Bankruptcy Code, 2016.
# 27. After the approval of the ‘Resolution Plan’, as the attachment order was passed by the Deputy Directorate of Enforcement, we left the matter to the Central Government to decide as to whether to provide immunity against the prosecution to the ‘Corporate Debtor’ or to take action against the ‘Corporate Debtor’ and the ‘Successful Resolution Applicant’. The Ordinance having issued pursuant to direction of this Appellate Tribunal to the Central Government which on deliberation resulted into issuance of Ordinance, we hold that Section 32A will be applicable to the present case- ‘JSW Steel Limited’.
# 28. Learned counsel for the ‘Directorate of Enforcement’ submitted that ‘JSW Steel Limited’ (‘Successful Resolution Applicant’) is a ‘related party’ and, therefore, even if Section 32A is applied in the present case, related party including associate company of the Promoter/ Corporate Debtor is not eligible.
# 29. Reliance has been placed on the definition of ‘related party’ as defined under Section 5(24),
# 32. It is stated that during the course of PMLA investigation, it has come to notice that M/s. ‘Bhushan Power & Steel Limited’- (‘Corporate Debtor’) and ‘M/s. JSW Steel Limited’ are associated as shareholders holding 24.09% and 49% equity respectively in a Joint venture company namely ‘M/s. Rohne Coal Company Private Limited’.
# 33. Further, as per the updated information filed with Ministry of Corporate Affairs in Annual Return 2018-19, the company was formed in 2008 and is still in operation.
# 38. A person cannot be held to be ineligible till it is shown that it comes within any of the disqualifications under clauses (a) to (j) of Section 29A.
# 39. It is not the case that ‘JSW Steel Limited’ filed plan in concert with any person who is ineligible in terms of any of the clauses (a) to (j) of Section 29A. It is only alleged that ‘JSW Steel Limited’ is a ‘related party’ of erstwhile Promoter of the ‘Corporate Debtor’.
# 41. Upon a perusal of Section 32A (1) (a) of the ‘I&B Code’ read with the aforesaid definition, it is ex facie evident that the ‘JSW Steel Limited’ is not an associate company/ related party of the ‘Corporate Debtor’. While ‘Rohne Coal Company Private Limited’ is an ‘associate company’ of the ‘Corporate Debtor’ as well as of the ‘JSW Steel Limited’, but by virtue of both having investment in such downstream joint venture company i.e. ‘Rohne Coal Company Private Limited’, the ‘JSW Steel Limited’ and the ‘Corporate Debtor’ do not become related parties of each other.
# 42. The Directorate of Enforcement is interpretation that Section 32A of the ‘I&B Code’ is prospective in nature and the benefit of such provision cannot be claimed by the Appellant is wrong and misplaced.
# 43. A plain reading of Section 32A(1) and (2) clearly suggests that the Directorate of Enforcement/ other investigating agencies do not have the powers to attach assets of a ‘Corporate Debtor’, once the ‘Resolution Plan’ stands approved and the criminal investigations against the ‘Corporate Debtor’ stands abated. Section 32A of the ‘I&B Code’ does not in any manner suggest that the benefit provided thereunder is only for such resolution plans which are yet to be approved. Further, there is no basis to make distinction between a resolution applicant whose plan has been approved post or prior to the promulgation of the Ordinance.
# 44. Further, even prior to the passing of the Ordinance, the 3rd Respondent i.e. Union of India through Ministry of Corporate Affairs in its ‘Affidavit in Reply’ dated 10th October, 2019, had categorically stated that:
8). In light of the above, the ED while conducting investigation under PMLA is free to deal with or attach the personal assets of the erstwhile promoters and other accused persons, acquired through crime proceeds and not the assets of the Corporate Debtor which have been financed by creditors and acquired by a bona fide third party Resolution Applicant through the statutory process supervised and approved by the Adjudicating Authority under the IBC. In so far as a Resolution Applicant is concerned, they would not be in wrongful enjoyment of any proceeds of crime after acquisition of the Corporate Debtor and its assets, as a Resolution Applicant would be a bona fide assets acquired through a legal process. Therefore, upon an acquisition under a CIR Process by a Resolution Applicant, the Corporate Debtor and its assets are not derived or obtained through proceeds of crime under the Prevention of Money Laundering Act, 2002 (“PMLA”) and need not be subject to attachment by the ED after approval of Resolution Plan by the Adjudicating Authorities.” (Emphasis supplied)
# 50. The allegation is that in a joint venture Company namely— ‘M/s. Rohne Coal Company Private Limited’, ‘Bhushan Power and Steel Limited’ and ‘JSW Steel Limited’ are holding 24.09% and 49% equity respectively.
# 51. ‘JSW Steel Limited’ has taken specific plea that it is not a ‘related party’ of erstwhile ‘Bhushan Power and Steel Limited’- (‘Corporate Debtor’) and placed on record the following facts:
# 54. The Notification of Government of India through Ministry of Coal dated 9th April, 2017 shows that ‘JSW Steel Limited’ in its individual capacity applied for allocation of ‘Rohne Coking Coal Block’ in its favour. However, there being more applicants, the Central Government contemplated to make joint allocation of Rohne coking coal block in favour of ‘M/s. JSW Steel Ltd.’, ‘M./s. Bhushan Power & Steel Ltd.’ and ‘M/s. Jai Balaji Sponge Ltd.’ for meeting their proportionate share of requirement of coal,
# 56. There was a compulsion on the part of ‘JSW Steel Limited’ for allocation of Rohne Coking Coal Block though it applied for individual allotment, because of mandate of the Central Government. They had to share jointly with the two others including ‘M./s. Bhushan Power & Steel Ltd.’ and ‘M/s. Jai Balaji Sponge Ltd.’ for meeting their proportionate share of requirement of coal.
# 57. We hold that where a party for the purpose of its business, if mandated by the Central Government to join hands together and are forced to form a consortium or as joint associate, such person (‘Resolution Applicant’) cannot be held ineligible in terms of Section 32A (1) (a) on the ground of ‘related party’.
# 61. The ‘Resolution Professional’ and the ‘Committee of Creditors’ vide their joint additional reply dated 22nd January, 2020 filed before this Appellate Tribunal, have yet again certified that the Appellant- ‘JSW Steel Limited’ and the ‘Corporate Debtor’ are not related parties.
# 62. The question arises as to who are the Competent Authorities to decide ineligibility of the ‘Resolution Applicant’ under Section 29A or 32A (1) (a) and to find out whether it comes within the meaning of ‘related party’ for the purpose of ineligibility.
# 63. As per Section 30(1), the ‘Resolution Applicant’ while submitting ‘Resolution Plan’ has to file an Affidavit stating clearly that he is eligible or not eligible under Section 29A.
# 64. As per Section 30(3), the ‘Resolution Professional’ shall present to the ‘Committee of Creditors for its approval such ‘Resolution Plans’ which confirm the conditions referred to in sub-section (2). It is only thereafter the ‘Committee of Creditors’ is empowered to find out whether the ‘Resolution Applicant’ is ineligible under Section 29A:
# 65. It is only thereafter under Section 31, the Adjudicating Authority is to satisfy that the ‘Resolution Plan’ as approved by the ‘Committee of Creditors’ under sub-section (4) of Section 30 meets the requirements as referred to in sub-section (2) of Section 30.
# 66. The aforesaid provisions show that the following persons/ Authorities are empowered to decide whether a ‘Resolution Applicant’ is ineligible being ‘related party’ in terms of Section 29A or not:
(i) The ‘Resolution Professional’ in terms of Section 30(1) is to find out whether such statement has been made or not;
(ii) The ‘Committee of Creditors’ is empowered to decide whether the ‘Resolution Applicant’ is ineligible in terms of Section 29A. Thereby the ‘Committee of Creditors’ is also required to decide whether it is related party to the ‘Corporate Debtor’ or not.
(iii) The Adjudicating Authority while passing order under Section 31 can find out whether the ‘Resolution Applicant’ fulfils the conditions under Section 30(2) which includes Section 30(2) (e) and in terms of Section 29A can decide whether the ‘Resolution Applicant’ is a ‘related party’ to the ‘Corporate Debtor’.
# 70. However, on the direction of the Central Government, if a person is asked to join hands with others for compliance of such direction a person cannot be held to be ineligible on the ground of ‘related party’.
# 71. In view of the aforesaid discussion, we declare the attachment of assets of the ‘Corporate Debtor’ by the Directorate of Enforcement pursuant to order dated 10th October, 2019 as illegal and without jurisdiction.
# 117. The grievance of the Appellant- ‘JSW Steel Limited’, as noticed earlier, is against part of the conditions imposed in paragraph 128 sub paras (e), (f), (g), (i), (j), (k) of the impugned order dated 5th September, 2019. With respect to the specific conditions imposed in para 128 sub paras (e), (f), (g) and (i), there exists no lis between the parties as appears from record placed by the Appellant and the ‘Committee of Creditors’. Reliance has been placed on the decision of the Hon’ble Supreme Court in “Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta & Ors.─2019 SCC OnLine SC 1478”.
# 119. In view of the findings as detailed above, we hold that the assets of the ‘Corporate Debtor’ (‘Bhushan Power & Steel Limited’) of which ‘JSW Steel Limited’ is a ‘Successful Resolution Applicant’ is immune from attachment by the Directorate of Enforcement.
# 123. On merit, we have also held that the conditions as stipulated in Section 32A (1) (b) and ineligibility under Section 29A is not attracted. Therefore, the relief to the extent sought for by ‘JSW Steel Limited’ is allowed.
# 127. We accordingly, set aside the part of the conditions as made in Paragraph 128 (j) of the impugned order dated 5th September, 2019 which relates to distribution of profit during the ‘Corporate Insolvency Resolution Process’. The Monitoring Committee with the help of the Resolution Professional’ will now go through the RPF issued in terms of Section 25 of the ‘I&B Code’ and as consented to by the ‘Resolution Applicant’ (‘JSW Steel Limited’) will make distribution of profit accordingly. The condition imposed at paragraph 128 (j) stands substituted with the aforesaid observations.
# 128. It is pleaded that there is ambiguity regarding List A which is mandatory part of the ‘Resolution Plan’. Paragraph 128 (g) of the impugned order reads as follows:
“(e) Various reliefs sought from the statutory authorities under the Income Tax Act, 1961, Ministry of Corporate Affairs, Department of Registration and Stamps, Reserve Bank of India and others are also disposed of. We do not feel persuaded to accept the prayer made in the resolution plan yet the resolution plan applicant may file appropriate applications before the competent authorities which would be considered in accordance with law because it would not be competent for the Adjudicating Authority-NCLT to enter into any such area for granting relaxation, concession or waiver is wholly within the domain of competent authorities.”
# 129. Section 1.12 of the Resolution Plan deals with:
(i) List ‘A’: certain items forming an integral part of the Resolution Plan, which were deemed to have been granted by virtue of approval of the Resolution Plan by the Adjudicating Authority, as they are in the nature of standard and ordinary implications of any resolution plan approved by an Adjudicatory Authority which is binding on stakeholders.
(ii) List ‘B’: reliefs, concessions and entitlements for which specific orders were sought from the Adjudicating Authority as part of approval of the Resolution Plan.
# 133. List A is the integral part of the Resolution, therefore, the following orders shall be deemed to have been granted by virtue of approval of the Resolution Plan:
(i) approving the Capital Reduction in the manner as contemplated under the Resolution Plan;
(ii) approving the Amalgamation in the manner as contemplated under the Resolution Plan;
(iii) the Existing Board shall stand vacated and be replaced by the Reconstituted Board;
(iv) All penalties, interest, delayed payment charges, any other liabilities for any non-compliance with statutory obligations including taxes, including delays in filing returns or payment of tax dues, against the Company shall stand settled in accordance with the provisions of this plan as approved by NCLT.
(v) All penalties, interest, delayed payment charges, any other liabilities for any non-compliance with applicable labour and employment Laws shall stand settled to the extent and in the manner provided in this Resolution Plan as approved by NCLT.
(vi) Any right of subrogation, reimbursement, or recompense against the Company under any corporate guarantee, letters of comfort or similar instruments, or any obligation provided by any promoter, affiliate or Related Party of the Company shall stand extinguished and become null and void as of the NCLT Approval Date.
(vii) Any right of any shareholder of the company under any shareholder agreement with the Company shall stand extinguished as of the NCLT Approval Date and such shareholder agreement shall stand terminated as of the NCLT Approval Date and no such shareholder shall be entitled to exercise any right including objecting to any amendment of the articles of association of the Company on and from the NCLT Approval Date.
# 136. Para 13 of the Addendum Letter stipulates that in the event that the Adjudicating Authority directed that monies were to be recovered on account of the Identified Transaction, only if the ‘Corporate Debtor’ had received such monies prior to the 3rd anniversary of the Effective Date, then the beneficiary of such monies would be the ‘Committee of Creditors’ on a prorate basis (after deduction of Pass Through Monies as defined in the Resolution Plan).
# 137. Therefore, Para 128(i) of the impugned order ought not to have modified the specific inter se understanding between the ‘Committee of Creditors’ and the Appellant on sharing of such proceeds, which has been recorded in Para 13 of the Addendum Letter and forms a part of the ‘Resolution Plan’. Further, since this is a matter which relates to a commercial understanding between the ‘Committee of Creditors’ and the Resolution Applicant as recorded in the ‘Resolution Plan’, in light of “Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta & Ors.─2019 SCC OnLine SC 1478”, such commercial understanding be given effect to, without any modification.
# 138. In light of the above, we set aside the condition stipulated in second part of para 128(i) of the impugned order, regarding monies recovered from tainted and other such transactions, as being contrary to the agreed position in terms of para 13 of the Addendum Letter, which forms a part of the ‘Resolution Plan’.
# 139. There is ambiguity regarding interim management mechanism.
Para 128(e) of the impugned order – “We also approve the appointment of Monitoring Agency from the date of this order until the closing date. Accordingly, the CoC and the RP would continue as Monitoring Agency”
Para 128(f) of the Impugned order : “The power of the Board of Directors of the Corporate Debtor shall remain suspended until the closing date”
# 142. However, in view of the observations of the Adjudicating Authority in para 128(e) of the impugned order, it is stated that the ‘Resolution Professional’ has interpreted that the ‘Resolution Plan’ has been modified to such extent. It is thus clarified that :
(i) The direction in para 128(f) of the impugned order that the existing Board of Directors shall remain suspended until the closing date is only to ensure that the previous suspended board of directors does not stand revived on account of the completion of the CIR Process, and does not interfere with the interim management mechanism in the Resolution Plan.
# 143. In so far as condition imposed by the Adjudicating Authority at paragraph 128 (k) of the impugned order is concerned, the matter requires consideration in view of the decision of the Hon’ble Supreme Court in “Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta & Ors.─2019 SCC OnLine SC 1478”. In the said case, the Hon’ble Supreme Court held:
“88. For the same reason, the impugned NCLAT judgment in holding that claims that may exist apart from those decided on merits by the resolution professional and by the Adjudicating Authority/Appellate Tribunal can now be decided by an appropriate forum in terms of Section 60(6) of the Code, also militates against the rationale of Section 31 of the Code. A successful resolution applicant cannot suddenly be faced with “undecided” claims after the resolution plan submitted by him has been accepted as this would amount to a hydra head popping up which would throw into uncertainty amounts payable by a prospective resolution applicant who successfully take over the business of the corporate debtor. All claims must be submitted to and decided by the resolution professional so that a prospective resolution applicant knows exactly what has to be paid in order that it may then take over and run the business of the corporate debtor. This the successful resolution applicant does on a fresh slate, as has been pointed out by us hereinabove. For these reasons, the NCLAT judgment must also be set aside on this count.”
# 144. Therefore, the conditions stipulated by the Adjudicating Authority at paragraph 128(k) of the impugned order being against the provisions of law, is set aside.
# 145. Learned counsel for the Appellant- ‘JSW Steel Limited’ submitted that ‘Bhushan Power & Steel Limited’- (‘Corporate Debtor’) has 25.6% shares in ‘Nova Iron Steel’ after approval of the plan, 25.6% of the shares of ‘Bhushan Power & Steel Limited’ now stands transferred in favour of the ‘Resolution Applicant’- ‘JSW Steel Limited’. After such transfer, the ‘Resolution Applicant’- ‘JSW Steel Limited’ cannot be treated as promoter of ‘Nova Iron Steel’. Such declaration was sought for but not clarified by the Adjudicating Authority. Therefore, we have made it clear.
# 147. Whether ‘Bhushan Power & Steel Limited’- (‘Corporate Debtor’) has 25.6% shareholding in ‘Nova Iron Steel’ is a question of fact. However, if there is any such share of ‘Bhushan Power & Steel Limited’- (‘Corporate Debtor’) in ‘Nova Iron Steel’, after approval of the plan and on acquisition of ‘Bhushan Power & Steel Limited’ by ‘JSW Steel Limited’, we hold:
(a) The Company on approval of the ‘Resolution Plan’ stand declassified as a promoter/ part of promoter group of any company or entity, including any subsidiaries or joint ventures or Associate Companies in which the ‘Corporate Debtor’ has made an investment including ‘Nova Iron Steel’ and shall not be required to follow any separate procedure for reclassification of the Company as ‘public shareholders’ of such companies.
(b) If the ‘Corporate Debtor’ has any right over ‘subsidiary companies’, ‘associate companies’, ‘joint venture companies’ of the ‘Corporate Debtor’, once ‘Successful Resolution Applicant’ (‘JSW Steel Limited’) takes over the ‘Corporate Debtor’, it will be open to the ‘Corporate Debtor’ to decide whether it will continue with such right of ‘subsidiary companies’, ‘associate companies’, ‘joint venture companies’ or any other companies in which ‘Corporate Debtor’ has share.
(c) It is further ordered that the company on approval of the ‘Resolution Plan’ shall stand declassified as promoter/ part of promoter/ group of promoter of any company or entity, including any ‘subsidiaries companies’, ‘associate companies’, ‘joint venture companies’ including ‘Nova Iron Steel’ in which ‘Corporate Debtor’ has made an investment and it is not required to follow any separate procedure for reclassification of the company as “shareholders of such companies”.
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