Bhushan Power insolvency: ED tells Supreme Court it might not press Section 32A IBC issue in appeal against JSW Steel's RP

In a significant development, the Enforcement Directorate (ED) recently told the Supreme Court that its appeal against JSW Steel's takeover of Bhushan Power and Steel might not be required to be argued in view of Section 32A of the Insolvency and Bankruptcy Code (IBC)..Section 32A was inserted in IBC with effect from December 2019 and it provides immunity to the corporate debtor and its assets from prosecution or attachment if a resolution plan of a company under insolvency is approved. This would mean attachment of properties by ED would also cease on the approval of a resolution planThe ED had previously argued that this immunity should not apply to the Bhushan Power case, as the asset attachment by the ED preceded the introduction of Section 32A. However, during the hearing of the matter on December 2, Solicitor General (SG) Tushar Mehta, appearing for ED, told the Supreme Court Bench of Justices Bela Trivedi and Satish Chandra Sharma that in view of Section 32A, the ED's appeal may not have to be argued, a departure from its previous stance."So far as we are concerned, now there is an amendment in the Act, Section 32A, which say those liabilities would not continue so far as the new successful resolution applicant is concerned. So my (ED's) appeal may not perhaps be required to be argued in view of Section 32A," the SG said.But there is a case which we have made out that this is a related party transaction and so hit by Section 29A (of IBC), Mehta added. He was referring to the fact that Bhushan Power and JSW Steel were related entities through their joint venture. This means that the resolution plan in focus may be hit by Section 29A of IBC, which deals with person not eligible to be a resolution applicant..Interestingly, ED had initially opposed JSW Steel's resolution plan, arguing that the assets attached under the Prevention of Money Laundering Act (PMLA) were tainted and that the benefit under Section 32A of the IBC will not accrue to JSW Steel.The National Company Law Tribunal (NCLT) had approved JSW Steel's resolution plan in September 2019.In February 2020, the National Company Law Appellate Tribunal (NCLAT) too had approved the plan and also vacated the attachment of Bhushan Power's properties by ED. The ED then approached the Supreme Court against the same contending that the benefit of Section 32A will not apply to this case. This argument has now been conceded by ED..Meanwhile, ED has also challenged a recent Bombay High Court ruling which had held that the NCLT has jurisdiction to lift attachments under the PMLA.That appeal by ED is pending before a Supreme Court Bench headed by Justice AS Oka which has stayed the High Court ruling. JSW Steel Ltd. was represented by Senior Advocates Neeraj Kishan Kaul and Gopal Jain, along with a team from Karanjawala & Co. comprising Nandini Gore (Senior Partner), Tahira Karanjawala (Partner), Swati Bharadwaj, Akarsh Sharma, Manvi Rastogi, and Sharanya Ghosh.