Aastha Thakur
Published on: 03 October 2022 at 20:56 IST
The Apex Court while hearing the appeal held that after the company is acquired by another entity the promoter of an insolvent firm cannot hold residual stakes in the company after it has been acquired by another entity under IBC.
The appeal was heard by division bench comprising of Justices MR Shah and Justice Krishna Murari, uphold the decisions of the National Company Law Tribunal (NCLAT) and the National Company Law Appellate Tribunal in this case.
The appellant, promoters Neeraj Singal and other party were holding 2.35 percent shares in the Bhushan Steels company even after Tata Steel acquired 72.65 percent shares during the resolution process under the IBC.
The SC in its order, strictly forbids the appellants to continue in the company in any capacity, except as shareholders as held by the NCLAT.
The acquired company, Bharat Steel was under debt of about ~56,000 crore towards lenders in 2017. Same year, Reserve Bank of India put its name as among the 12 big loan defaulters to undergo insolvency.
In the bid, TATA Steel offer was approved by the NCLAT for Bhushan Steel. Although, one of the promoters challenged the TATA’s bid before the NCLAT on ground that TATA Steel was disqualified from the bid as its already facing trial proceedings in the UK.
The NCLAT rejected this contention, stating that, “It does not attract the disability under Section 29A of the IBC. We also hold that ‘Tata Steel Limited’ is eligible to file the resolution plan,”
Further NCLAT said that the Tatas’ resolution plan was fair and equitable to all lenders.
Agreeing with the orders passed by the NCLAT and NCLT, SC added that if appeal is accepted then, the resolution plan given under IBC act shall not be doable at all.
Hence, SC dismissed the appeal filed.