An operational creditor has filed an insolvency petition against Bhushan Steel claimimg a default of Rs. 17.79 crores.
Bhushan steel was recently taken over by Bamnipal Steel Limited, a wholly owned subsidiary of Tata Steel Limited. The takeover was successfully resolved as per the approved resolution plan.
This new application against Bhushan Steel was moved by Vistrat Real estate Private Limited in its capacity as an operational creditor.
The approved resolution plan submitted by Tata Steel mentions about a Memorandum of Lease (MoL) entered into between Bhushan steel and Vistrat. The MoL was entered into on May 1, 2015 and the CIRP was initiated on July 26, 2017.
According to the MoL, the lease rental to be paid by Bhushan to Vistrat was Rs. 6 crore per month but an independent valuer ascertained the sum of Rs. 6 crore to be much higher than the market value and accordingly assigned a value of Rs 5.61 crores. Further, the premises for which the MoL was created was vacated on September 10, 2018, following the completion of CIRP.
Interestingly it has been mentioned in the approved resolution plan that MoL was an “onerous transaction”. Also the resolution plan provides for no liability to related parties, associates and joint ventures.
On perusal of the facts NCLT found that Vistrat was a related party to Bhushan Steel and its erstwhile promoters. Thus, Bhushan Steel stand excluded of any liabilities to such a party.
NCLT observed Neeraj Singal and Brijbhushan Singal (erstwhile promoters) as the signatories to the MOA of Vistrat and its initial shareholders. The NCLT further noted that Singals were authorized to act on behalf of Vistrat though they were not directors of Vistrat at that time. The NCLT also observed that transfer of shares to other parties, Ritu Singal (wife of Neeraj Singal) tool place less than 2 years prior to the commencement of CIRP to Bhushan Steel.
Based on these observations, the NCLT concluded that Bhushan Steel has substantive control over Vistrat. The application was accordingly dismissed.
Courtesy/By: Sonali Tiwari
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02 Mar 2019
