New Delhi: ArcelorMittal India Ltd. on Tuesday reiterated that the eligibility of its resolution plan should be judged on the date of submission. The company, despite not considering itself a promoter of Uttam Galva Steels Ltd. or KSS Petron Pvt Ltd, sold its shareholdings in both the companies before submitting its resolution plan for Essar Steel, said senior advocate Harish Salve, appearing for ArcelorMittal on Tuesday.
“Arcelor Mittal is not a shareholder in Uttam Galva from 7 February and not a shareholder of KSS Petron from 9 February," said Salve, during his arguments.
ArcelorMittal, in its petition, had challenged its disqualification on the grounds that it had exited Uttam Galva before submitting a bid for Essar Steel on 12 February.
According to Salve, ArcelorMittal submitted bids for Essar Steel because “there is a good asset on offer and acquiring and turning around a company is our core expertise."
During the hearing of the cross petitions filed by the two disqualified bidders(ArcelorMittal and Numetal Ltd.), a two-judge NCLAT bench headed by justice S.J. Mukhopadhyay sought an explanation on submission of ₹ 7,000 crore by ArcelorMittal, to which he responded that the company obliged to NCLT Ahmedabad bench’s order so that its bid gets accepted.
ArcelorMittal Netherlands BV, had offered to settle its debt and had transferred ₹ 7,000 crore into an escrow account maintained by the State Bank of India (SBI), to become eligible to bid for the debt-laden steel company. SBI leads a consortium of lenders to Essar Steel.
On 19 April, NCLT ruled that ArcelorMittal and Numetal must clear debts in defaulting companies where they hold stakes before bidding for Essar Steel.
Salve reinforced the arguments on ArcelorMittal’s eligibility made by lawyer Abhishek Manu Singhvi, also appearing for ArcelorMittal on Monday.
“ArcelorMittal has always maintained it is eligible to submit a resolution plan for Essar Steel as we were never promoters of either Uttam Galva or KSS Petron. We were passive shareholders without management or board control or representation. Furthermore, at the time of submitting our comprehensive resolution plan for ESIL, we were no longer shareholders in either company," said a spokesperson of ArcelorMittal.
Essar Steel has a debt of ₹ 49,000 crore and was referred to the NCLT in June 2017. After the two companies were disqualified by the resolution professional under Section 29(a) of the insolvency code, which prohibits related parties of defaulting firms from participating in the resolution process, the two firms had filed appeals before the tribunal.
Numetal was disqualified on the ground that Rewant Ruia, son of Essar Steel promoter Ravi Ruia, is a beneficiary of a trust that backed Aurora Enterprises, which in turn held a 25% stake in Numetal. VTB is the largest shareholder with a 40% stake. The matter will next be heard on Wednesday.