NCLT clears way for ₹5,431 crore recovery in Bhushan Power fraud

The National Company Law Tribunal (NCLT) has given the green light to the Serious Fraud Investigation Office (SFIO) to pursue recovery of ₹5,431 crore in the Bhushan Power and Steel fraud case, dismissing challenges raised by former company promoters.

In its order, the tribunal ruled that the initiation of insolvency resolution proceedings does not act as a bar to conducting parallel recovery proceedings in fraud cases. The NCLT directed the SFIO to provide detailed documentation specifying the role and culpability of each respondent in the matter, a move expected to strengthen the agency's prosecution strategy.

The decision marks a significant development in one of India's high-profile corporate fraud investigations. Bhushan Power and Steel, once a major player in the steel sector, had faced allegations of financial irregularities and mismanagement under its former promoter leadership. The company had subsequently gone into insolvency proceedings, with former promoters arguing that the ongoing insolvency process should shield them from parallel recovery actions.

The tribunal's order affirms that fraud investigations can proceed independently of insolvency resolutions, ensuring that accountability is pursued through multiple legal channels. The SFIO is now expected to file detailed submissions outlining each respondent's involvement in the alleged fraud, paving the way for potential asset recovery and prosecution proceedings.