New Delhi: The National Company Law Appellate Tribunal (NCLAT) on Wednesday reserved its order on cross petitions filed by Numetal Ltd and ArcelorMittal India Ltd, the two disqualified bidders for debt-laden Essar Steel Ltd. The hearing on the matter ended on Wednesday.

Both the companies have been 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.

A two-judge NCLAT bench headed by justice S.J. Mukhopadhyay also asked both the disqualified bidders to file written submissions, if any, by Monday.

ArcelorMittal, in its plea, had challenged its disqualification on grounds that it had exited Uttam Galva before submitting a bid for Essar Steel on 12 February.

ArcelorMittal’s sale of its shareholding in Uttam Galva was legally completed on 7 February, said lawyer Abhishek Manu Singhvi, appearing for ArcelorMittal.

ArcelorMittal’s promotership of Uttam Galva arose from a contract called a co-promotion agreement, according to Singhvi. “Under this agreement, the moment your shareholding comes to zero you automatically cease to be a promoter. The promoter status started with a contract in 2009 and ended with the termination of that contract on 7 February 2018. Furthermore, there is nothing in the Companies Act or Sebi (Securities and Exchange Board of India) regulations that requires permission or approval to cease being a promoter," Singhvi contended.

He also said that ArcelorMittal is willing to clear the 7,000 crore dues of Uttam Galva and KSS Petron if its first bid is found ineligible.

On Monday, Mukul Rohatgi, appearing for Numetal, had said that the sale of shares of Uttam Galva on 7 February was meaningless as it needed orders of BSE or NSE, which happened in March.

Earlier, ArcelorMittal Netherlands BV had offered to settle its debt and had transferred 7,000 crore in an escrow account maintained by State Bank of India (SBI), so that it was eligible to bid for the debt-laden steel company. SBI leads a consortium of lenders to Essar Steel.

“ArcelorMittal, with our partner Nippon Steel and Sumitomo Metal, continues to believe that we are not only eligible to bid for Essar Steel but we are also the best qualified... In February, we offered a competitive resolution plan for Essar Steel that set out a positive future for the bankrupt company," ArcelorMittal said on Wednesday.

Backed by Russia’s VTB Capital, Numetal had also challenged an order that allowed ArcelorMittal to settle the bank dues of its associate firms to bid for Essar Steel.

Essar Steel has debts of 49,000 crore and was referred to the NCLT in June 2017. After the two companies were disqualified by the resolution professional, they had filed appeals before the tribunal.

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