India’s financial fraud agency said on Saturday assets worth 40.25 billion rupees ($567.60 million) of Bhushan Power & Steel Limited were connected with a money-laundering probe, a move that could scupper the debt-ridden firm’s sale to JSW Steel Ltd (JSTL.NS).
The Enforcement Directorate said on Twitter that Bhushan Power’s land, building, plant and machinery were among the assets now associated with an ongoing banking fraud investigation into the firm’s former owners.
In a statement late on Saturday, JSW Steel said the agency’s move “vindicates” its position to seek legal immunity against the seizure of Bhushan Power’s assets.
JSW Steel, which has the largest steel capacity in India, received the go-ahead last month from the National Company Law Tribunal to buy Bhushan Power in a deal that would give it access to steel and power plants in eastern India, where its rivals are stronger.
But the tribunal order did not provide JSW Steel legal immunity from the probe into Bhushan Steel. JSW has appealed to a higher court against that court order.
A source close to the development told Reuters on Saturday that JSW Steel was prepared to go to the highest court in the country to secure that immunity.
“Anything which happened in past should not come to haunt the new company management later and hence it has sought immunity from future litigations,” said the source, requesting anonymity.
Saturday’s order means Bhushan Steel’s assets could be at risk and may hinder the sale to JSW Steel.
Bhushan Power runs a 3.5 million tonne steel plant in eastern India’s Odisha state, as well as a 500 megawatt power plant for internal use.