New Delhi: The National Company Law Appellate Tribunal (NCLAT) on Wednesday permitted Vedanta Ltd to make an upfront payment of Rs5,320 crore to the Committee of Creditors (CoC) of debt-ridden Electrosteel Steels India Ltd, according to its approved debt resolution plan.
However, the appellate tribunal reserved its verdict on Vedanta’s eligibility to submit a resolution plan under Section 29A of the Insolvency and Bankruptcy Code (IBC).
The National Company Law Appellate Tribunal (NCLAT) asked the parties to “act in terms of the (resolution) plan", which, effectively, vacated an earlier order passed by it asking Vedanta and its committee of creditors to maintain status quo in Electrosteel’s corporate insolvency resolution process.
Subsequently, if Vedanta’s bid is found to be in contravention of IBC, the lenders will revert the amount received, the appellate tribunal clarified.
A two-judge bench led by Justice S.J. Mukhopadhyaya was hearing an appeal by Renaissance Steel India Pvt. Ltd, one of the unsuccessful bidders for Electrosteel, against a 17 April order of National Company Law Tribunal’s (NCLT’s) Kolkata bench, approving Vedanta Ltd’s Rs5,320 crore resolution plan for Electrosteel.
Renaissance Steel had contended that Vedanta was ineligible to bid under Section 29A of the IBC as one of Vedanta’s affiliates in Zambia—a unit of its UK-based parent Vedanta Resources Plc—had been found guilty of violating certain environmental laws, punishable with two or more years in jail.
A similar objection was raised by Renaissance Steel against another bidder, Tata Steel Ltd, claiming that one of its UK subsidiaries had flouted the UK Health and Safety at Work Act, and fines were imposed on it.
Renaissance Steel’s appeal seeking Tata Steel’s ineligibility under the IBC is pending before the appellate tribunal.
State Bank of India’s insolvency plea against Electrosteel, which is one of the 12 initial NPA accounts identified by the Reserve Bank of India for resolution, was admitted by the Kolkata Bench of National Company Law Tribunal in July 2017.