Tata Steel approaches SC in Bhushan Steel case as Rs 1,000 crore at stake

12 Jul 2023 , 11:18 AM

Tata Steel, which acquired bankrupt Bhushan Steel in 2018, has petitioned the Supreme Court to overturn a Delhi High Court order regarding an avoidance application.

According to two lawyers familiar with the development, the division bench ruled that Tata Steel cannot benefit from the amounts received and that the benefits of approximately Rs 1,000 crore should be allocated to the creditors.

Tata Steel is appealing the Delhi High Court’s January 13 order, which instructed the National Company Law Tribunal (NCLT) to proceed with the hearing of the avoidance application but stated that the amount recovered may be distributed among the secured creditors in accordance with law as determined by the NCLT.

The Supreme Court’s decision, in this case, will have far-reaching consequences for the resolution process and the treatment of avoidance transactions in insolvency cases, such as Srei, which is undergoing in-court restructuring and has reported fraudulent transactions totaling Rs 13,000 crore.

As per a report from the Insolvency and Bankruptcy Board of India, 777 applications for avoidance transactions aggregating to Rs 2.2 lakh crore have been filed with various levels of insolvency tribunals until March 2022.

The Supreme Court heard the case on Friday, and the next hearing could be in 6-8 weeks, according to a lawyer.

At around 11.10 AM, Tata Steel was trading 0.26% lower at Rs 114.85, against the previous close of Rs 115.15 on NSE.

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