Facing allegations of bagging Monnet Ispat through backdoor, JSW Group Chairman Sajjan Jindal said section 29A-c of the Insolvency & Bankruptcy Code (IBC) shows the immaturity of the new bankruptcy laws and hoped that it may be dropped as the system matures.
Saying that no other country has such a provision (section 29A-c) in their bankruptcy laws, Jindal said, "probably this won't last very long...as the country matures, as the bankruptcy system matures, this will go away."
It can be noted that government amended the IBC code in December inserting section 29A-c that allows a defaulting promoter to bid for the same asset through NCLT if he/she clears outstanding arrears and makes the account standard.
This amendment was made after criticism that the original IBC didn't debar the defaulted promoter to bid for the same asset through the NCLT process.
The point on 29A-c is that if somebody is a defaulter and he comes back and buys the same asset for 40 or 30 percent of the value, then it becomes very difficult to justify. So 29A was introduced, Jindal said, adding a lot of churning will take place, but eventually the result will be very good. Right now we are going through a churning process.
It can be noted that last month, a JSW Steel in association with Aion Capital became the highest bidder for the bankrupt Monnet Ispat, whose promoters are related to the Jindal family.
While the committee of creditors of Monnet Ispat & Energy has approved the resolution plan submitted by JSW Steel, which was the only bidder, NCLT is yet to approve the same as there has been criticism that this is a backdoor entry as Jindal's sister Seema is married to Monnet Ispat's current promoter Sandeep Jajodia with ArcelorMittal saying it was a mockery of the law.
Jindal had earlier said if a defaulting promoter tries to cure himself by selling his shares then that is a mockery of the law, hinting at ArcelorMittal's exit from Uttam Galva, an NPA itself, to bid for Essar Steel.
The same relationship made JSW Steel ineligible to bid for Bhushan Steel.
ArcelorMittal and JSW Steel are fighting over the bidding for Essar Steel where JSW has joined Numetal to bid, while ArcelorMittal is bidding along with Nippon Steel. Vedanta had also emerged as a third bidder in the rebid. NCLT had last month these would not be considered.
JSW Steel has an installed capacity of 18 million tonne and its Vijayanagar plant in Karnataka is the largest single location steel facility in the country with a capacity of 12MT.
On the 60MT Nanar Refinery, proposed to be set by the state-run refiners and is facing opposition from the villagers and BJP's alliance partner Shiv Sena, Jindal said if it get materialised it will be good for the development of the region as it will create plenty of jobs for the local people who now come to Mumbai for work.