Electrosteel bidding: IRP defends decision to allow Vedanta offer
The IRP and Electrosteel Steel lenders rejected the allegation that Vedanta was ineligible to bid because its affiliate was found guilty of criminal misconduct eight years ago and paid a fine as punishment
Mumbai: The resolution professional, or administrator, for Electrosteel Steels Ltd on Wednesday told the Kolkata bench of the National Company Law Tribunal (NCLT) that he and the company’s lenders had rejected the allegation that Vedanta Ltd was ineligible to bid because an affiliate of the company was found guilty of criminal misconduct eight years ago and paid a fine as punishment.
Lawyers for the resolution professional wondered whether a company could be declared ineligible to bid for stressed assets under the Insolvency and Bankruptcy Code (IBC) for an offence it admitted to long ago.
They said Vedanta had offered to pay Rs5,320 crore for Electrosteel Steels’ yet-to-be-completed 2.5 million tonne steel plant, at least Rs2,000 crore more than Renaissance Steel India Pvt. Ltd, which has filed separate petitions with the Kolkata bench of the NCLT—alleging that both Vedanta and Tata Steel Ltd, the second highest bidder, were ineligible to bid under section 29A of IBC.
Renaissance Steel has alleged that Konkola Copper Mines, a company controlled by UK-based Vedanta Resources, had been found guilty of flouting pollution norms in Zambia. Konkola Copper Mines had pleaded guilty to four charges brought against it by the Zambian authorities, and some of these offences were punishable with up to three years in jail.
Under section 29A of IBC, companies convicted of criminal misconduct punishable with two or more years in jail are barred from bidding for stressed assets.
In a separate petition, Renaissance Steel has alleged that Tata Steel UK Ltd, a subsidiary of the Indian steel maker, had been found guilty of violating the UK Health and Safety at Work Act. But both Tata Steel UK and the Vedanta affiliate were let off with fines.
Ratnanko Banerji, counsel for Renaissance Steel, argued that it did not matter that the criminal misconduct, which the Vedanta affiliate admitted to, dates back to 2010. Also, it is of no consequence that only a fine was imposed on Konkola Copper Mines.
The offence it committed was also punishable with up to three years in jail, he argued.
The bench didn’t immediately pass a verdict on the eligibility of Vedanta to bid for stressed assets under IBC. The matter is to be heard on 11 April.
The petition alleging Tata Steel’s ineligibility to bid was not heard on Wednesday.
The administrator of Electrosteel Steels has less than two weeks to finalize a resolution plan for the indebted firm within the statutory 270-day window for completion of the process, failing which the company may be ordered to be liquidated.
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