New Delhi: The National Company Law Appellate Tribunal (NCLAT) on Friday ruled that second round bids put in by Russia’s VTB Capital-backed Numetal and Anil Agarwal’s Vedanta for acquisition of debt-ridden Essar Steel are valid but that of ArcelorMittal is contingent upon the company clearing ₹ 7,000 crore dues of Uttam Galva and KSS within three days.
“The person shall be eligible to submit a ‘resolution plan’ if such person makes payment of all overdue amounts with interest thereon and charges relating to non-performing asset accounts before submission of ‘resolution plan’," ruled a two-judge NCLAT bench headed by Justice S.J. Mukhopadhyay.
ArcelorMittal’s first bid was rejected as it held shares in loan defaulting companies Uttam Galva Steels and KSS Petron.
“An early decision should be taken by the ‘committee of creditors’ and on approval of the ‘resolution plan’, the ‘resolution professional’ will place it immediately before the adjudicating authority who in its turn will pass order under Section 31 in accordance with law," said the tribunal.
The winner would immediately deposit the payment upfront, it said.
The committee of creditors is expected to meet next week to decide on the bids. The appellate tribunal in its judgement allowed the lenders to further negotiate bids for Essar Steel.
“Taking into consideration the fact that a long period has taken due to pendency of the case before the adjudicating authority and thereafter, before this appellate tribunal, we direct the adjudicating authority to exclude the period the appeal was pending before this appellate tribunal— from 26th April 2018 till today (7th September 2018) for the purpose of counting the total period of 270 days," the bench directed.
The judgement comes almost around two months after the appellate tribunal reserved its decision on the matter after hearing petitions filed by resolution applicants, Numetal and ArcelorMittal, challenging their disqualification in the first round of bids.
“We note today’s NCLAT judgement and await the full order, which we will review before determining our next steps," said Arcelor Mittal.
The company had challenged its disqualification on grounds that it had exited Uttam Galva before submitting a bid for Essar Steel on 12 February.
Essar Steel has a debt of ₹ 49,000 crore and was referred to National Company Law Tribunal in June 2017. After the two firms were disqualified by the resolution professional under Section 29A of the Insolvency and Bankruptcy 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 grounds that Rewant Ruia, son of Essar Steel promoter Ravi Ruia, is a beneficiary of a trust that backed Aurora Enterprises, which held 25% in Numetal. VTB is the largest investor with a 40% stake.