NEW DELHI, November 1, 2026: The National Company Law Tribunal (NCLT) has ruled that the Serious Fraud Investigation Office (SFIO) can proceed with its petition seeking recovery of about ₹5,431 crore allegedly diverted from Bhushan Power & Steel Ltd (BPSL), rejecting eight applications that challenged whether the case could be heard. The decision keeps the recovery claim alive; it does not establish that fraud occurred or determine the liability of any respondent.
In an order dated October 30, the NCLT’s Principal Bench in New Delhi held that the petition was maintainable, that the tribunal had territorial jurisdiction and that the Central Government had validly authorised the proceedings under the Companies Act, 2013, according to reports by Business Standard and News Vibes of India. The case names 76 respondents, including former promoters, associated companies and individuals.
The tribunal has directed the SFIO to file, within four weeks, a consolidated statement identifying the role it attributes to each respondent, the transactions concerned and the relevant portions of its investigation report. The respondents have also been given four weeks to reply on the merits. The matter is listed for further hearing on November 26.
The immediate significance of the order is procedural. The tribunal has decided that the SFIO’s petition can be examined on its merits, rejecting preliminary objections that would have prevented the recovery claim from proceeding. It has not ruled that the respondents committed fraud, that the full ₹5,431 crore is recoverable, or that each person named in the petition is responsible for the alleged transactions.
The distinction matters because the case involves allegations about a network of transactions over several years and a large group of respondents. The SFIO must now set out the specific conduct it attributes to each person or entity, and the respondents will have an opportunity to answer those allegations. Any eventual finding of liability will depend on the evidence and subsequent orders, not on the maintainability ruling alone.
Business Standard reported that the SFIO’s petition seeks personal liability for at least ₹5,431 crore, plus interest, over alleged fraudulent conduct that the agency says harmed creditors and other stakeholders. The agency’s investigation reportedly traces the alleged diversion through associated companies and individuals from 2009-10 onwards. Those are claims advanced by the investigating agency, not findings of fact made in the present order.
The tribunal rejected the argument that approval of BPSL’s resolution plan under the Insolvency and Bankruptcy Code (IBC) automatically brought all proceedings concerning historical financial wrongdoing to an end. It held that Section 32A of the IBC does not provide blanket protection to former directors or third parties against proceedings seeking the return of property allegedly diverted to them.
Section 32A is designed to provide conditional protection to a corporate debtor from prosecution for certain offences committed before insolvency resolution, when a qualifying change in management or control has taken place. The provision also addresses action against the corporate debtor’s property. But the statutory text expressly distinguishes that property from property belonging to other people, and it does not generally prevent action against a person who is outside the qualifying resolution process or who allegedly received diverted assets.
The NCLT’s reported reasoning rests on that distinction. A resolution plan can provide a route for a distressed company to continue as a going concern under new ownership, while claims about the conduct of former management or alleged recipients of assets may still require adjudication. Treating those questions separately avoids assuming that a change in control settles every dispute about the company’s past.
That boundary is important for insolvency law. A successful resolution applicant needs a predictable framework and protection against inheriting every historic liability of the previous management. At the same time, creditors, investigators and other stakeholders may argue that a corporate restructuring should not turn allegedly diverted assets held by former insiders or third parties into untouchable property. The tribunal’s order allows that second question to be tested in this case, while leaving the facts and individual liabilities unresolved.
The SFIO’s petition was filed in April 2023 under Sections 241, 242, 246 and 339 of the Companies Act, according to Business Standard. Those provisions form part of the law governing oppression and mismanagement, the powers available to the tribunal in such proceedings, related applications and liability for fraudulent conduct of business. The NCLT reportedly accepted that disgorgement—the return of gains alleged to have been obtained wrongfully—can be pursued as a civil and equitable remedy under Sections 241 and 242, read with the other relevant provisions.
The tribunal also rejected objections based on the age of the alleged transactions. Its reported interpretation was that the law’s reference to conduct that “is being conducted” can encompass past transactions where their adverse effects are said to continue, including where allegedly diverted money or property remains with beneficiaries. This does not mean that every old transaction is automatically actionable; the petition still has to meet the legal tests and prove the facts relied on.
Other objections reportedly concerned territorial jurisdiction, pending proceedings before the Delhi High Court, limitation and parallel recovery processes under the IBC. The tribunal held that the registered office of the company whose affairs are under scrutiny determines the relevant NCLT bench’s territorial jurisdiction. It also said that amounts recovered in other proceedings for the same transactions would be credited so that no respondent is made to pay twice.
That last safeguard is significant in a case where overlapping legal routes may concern the same underlying transactions. Civil recovery, insolvency proceedings and any separate criminal process have different purposes and standards, but they can create practical questions about coordination. A credit for sums already recovered can help prevent duplicate recovery without deciding whether the SFIO’s allegations are correct.
BPSL was among the large corporate borrowers taken into insolvency proceedings after the IBC came into force. The Supreme Court’s September 2025 judgment in Kalyani Transco v. M/s Bhushan Power and Steel Ltd. recounts the company’s insolvency process, the claims admitted from creditors and the litigation over the resolution plan submitted by JSW Steel. That judgment restored the resolution plan after the Court reconsidered its earlier decision directing liquidation.
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The resolution process and the present SFIO recovery petition address related history but different legal questions. The insolvency case dealt with whether the approved plan could stand and how the company should be resolved. The SFIO petition concerns allegations that money or assets were diverted through transactions involving former promoters and associated parties, and whether recovery can be pursued from those alleged beneficiaries. The latest NCLT order does not itself reopen the Supreme Court’s resolution-plan decision.
For lenders and other creditors, the potential recovery matters because successful resolution does not necessarily mean every claim arising from past conduct has been settled. But the amount sought by the SFIO should not be treated as money already recovered or as a final measure of creditor loss. The case still requires evidence, responses from the respondents and a decision on the merits.
The dispute also sits within a wider policy tension. India’s insolvency framework aims to rescue viable businesses, preserve value and provide a time-bound process for creditors. Investigations into alleged fraud aim to establish accountability and, where the law permits, recover assets. If these goals are applied without clear boundaries, businesses may face uncertainty after a resolution plan is implemented; if protections are read too broadly, allegations of past diversion may become harder to pursue against those who allegedly benefited. Courts and tribunals must apply the statutory protections to the particular facts and parties involved.
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The next stage is expected to sharpen the allegations. The SFIO has four weeks to produce a consolidated statement setting out the role attributed to each of the 76 respondents, the transactions involved and the relevant parts of its investigation report. The respondents have four weeks to submit replies on the merits. The tribunal has also continued interim directions, including those relating to preservation of assets, until further orders.
Those filings should help clarify which transactions are in dispute, what evidence the agency relies on and how it connects each respondent to the alleged diversion. The public record may also show how the parties address the relationship between this petition and any parallel proceedings, and how the tribunal will account for sums recovered elsewhere. The matter is scheduled to return to the NCLT on November 26, although future listings and directions remain subject to the tribunal’s orders.
Until then, the central caveat remains: maintainability is not a finding of fraud. The SFIO must establish the allegations and the individual role of each respondent, while the respondents are entitled to contest the evidence and legal basis of the claim. The ₹5,431 crore figure is the amount the agency is seeking to recover, not a sum the tribunal has ordered all respondents to pay at this stage.
For the broader corporate sector, the case will be watched for how the tribunal draws the line between the protection offered to a resolved company and proceedings against former insiders or third parties who are alleged to have received assets improperly. The outcome could clarify the practical reach of Section 32A and the use of disgorgement under company law. Those questions will be answered only through subsequent findings on the evidence and the law.