Essar Steel auction: SC to hear Arcelor’s plea tomorrow
The Supreme court refused an urgent hearing for ArcelorMittal’s plea for payment of Rs 7,000 crore by Tuesday for its second bid to become eligible
New Delhi:The Supreme Court on Tuesday agreed to hear a plea of Arcelor Mittal tomorrow seeking extension of time for the payment of Rs 7,000 crore as ordered by the NCLAT last week for its bid to become eligible for Essar Steel.
The apex court refused an urgent hearing for ArcelorMittal’s plea for payment of Rs 7,000 crore by Tuesday for its second bid to become eligible. A bench of Chief Justice Dipak Misra and Justices A M Khanwilkar and D Y Chandrachud said, “We will hear the plea tomorrow”.
The National Company Law Appellate Tribunal (NCLAT) had last Friday pronounced a judgement, saying Russia’s VTB Group-backed Numetal’s second bid was eligible, and asked ArcelorMittal to clear dues of its other subsidiaries to remove the stigma of ‘defaulter’ by September 11 to become eligible.
Anil Aggrawal’s Vedanta Ltd is the third qualified bidder for Essar Steel, whose lenders had initiated insolvency proceedings for recovery of around Rs 49,000 crore in dues.
ArcelorMittal had on Monday moved the apex court, challenging the NCLAT order, which held that Numetal’s Rs 37,000 crore in the second round of bidding for Essar Steel was valid. The NCLAT had also asked rival bidder ArcelorMittal to clear Rs 7,000 crore dues of its previously associated firms to qualify for the acquisition.
The appellate tribunal, on September 7, had asked lenders, who were auctioning Essar Steel to recover over Rs 49,000 crore of unpaid loans, to consider the second round bids of Numetal and Vedanta. ArcelorMittal’s bid will be considered if it pays dues by September 11.
For ArcelorMittal India, which was the only other bidder besides Numetal in the first round, the NCLAT held that it needed to remove the “stigma of defaulter” attached to it because of its previous 29% stake in Uttam Galva Steel and KSS Petron.
The NCLAT held that the first round of bid by Russia’s VTB Group-backed Numetal in February was ineligible since the firm was 25% owned by Rewant Ruia, scion of Essar Steel’s promoter Ruia family. But, he exited the firm before the second round of bids were submitted in March, making Numetal eligible.
Numetal and steel tycoon Lakshmi Mittal-led ArcelorMittal had in February submitted separate bids to takeover Essar Steel. The Committee of Creditors (CoC), however, disqualified both bids, saying their promoters were tied to companies, which were bank loan defaulters, and hence they were ineligible under Section 29A of the Insolvency and Bankruptcy Code.
The second round of bids was called where JSW Steel joined Numetal to put in a bid of Rs 37,000 crore, while Vedanta Ltd entered the fray as a third bidder. ArcelorMittal India, too, put in a bid. Both Numetal and Essar Steel had challenged disqualification of the first round of bids in the Ahmedabad Bench of the National Company Law Tribunal (NCLT), which did not give any relief to bidders, but asked the Committee of Creditors to take another look at bids before disqualifying them.
The Committee of Creditors sought a second round of bidding by April 2. The NCLT order was challenged by both bidders in the NCLAT. After the NCLT order, ArcelorMittal India had offered to repay any outstanding loans owed by Uttam Galva Steels Ltd, where it held promoter stake, and KSS Petron. The steelmaker had placed Rs 7,000 crore in an escrow account, with the condition that lenders disqualify Numetal’s bid.
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