New Delhi: “Given the number of accused, they don’t need a courtroom, they need a stadium for this.”
These were the words of senior counsel Vijay Aggarwal, who is representing a few of the accused in the Bhushan Power and Steel fraud case, after the Serious Fraud Investigation Office filed a 70,000 page chargesheet against 284 individuals.
The alleged Rs 3,805.15 crore scam was reported by Punjab National Bank (PNB) to the Reserve Bank of India last week. PNB said this was in compliance with regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, on the basis of forensic audit investigation findings and the CBI FIR.
PNB has alleged that Bhushan Power & Steel “misappropriated bank funds” and “manipulated books of accounts” to raise funds from a consortium of banks.
The CBI FIR was filed suo motu against the company and its directors, alleging fund diversion from the banking system.
More cumbersome than the 2G case
Speaking to ThePrint, Aggarwal drew parallels with the 2G case, where he was the counsel for the main accused, saying: “It was a two-lakh page chargesheet, but there were only 16 accused persons. It was a day-to-day trial and only one case. Despite having the most efficient sessions judge, the case took seven years to finish. So one can imagine how long this case will take.”
Advocate Arindam Ganguly, who is representing the accused in the Corporation Bank fraud case, said the chargesheet for his case was also hefty, running into 25 volumes. The cases were investigated by the CBI’s Economic Offences Wing.
Explaining the reason for such mammoth chargesheets, he said: “The chargesheet also contains statements of witnesses and opinions of experts. This is why chargesheets are voluminous in these cases, because there are a number of witnesses involved.”
Who will bear responsibility?
Bhushan Power and Steel was one of the top 12 defaulters referred for insolvency proceedings in 2017. It had defaulted on a Rs 47,700 crore loan.
During the insolvency proceedings, JSW Steel had emerged as the top bidder for the company, with a bid of Rs 19,300 crore. The resolution plan was placed before the National Company Law Tribunal, which reserved its judgment on 23 April.
However, the matter might now get complicated, thanks to the scam unearthed.
According to Bhumika Batra, partner at Crawford Bayley & Co., the liability for the fraud will be borne by the outgoing promoters of Bhushan Steel, and not by JSW Steel.
“The new owner of Bhushan Steel cannot take onus of the liabilities arising out of the fraud. The Insolvency Code also does not exempt you from fraud. In fact, IBC clearly provides the recourse in 69 and 70 in case of fraudulent activity prior to CIRP or during the CIRP respectively. However, the question before the NCLT will be to determine ‘when’ these activities or transactions took place – prior to or during the process.
It will also be important to see what was stated by the Resolution Professional during the CIRP to the bidders – as that will establish RP’s stand also to an extent.”
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