Renaissance Steel moves NCLT against Electrosteel Steels bids
Abhishek Dalmia’s Renaissance Steel says Tata Steel and Vedanta are not eligible to bid for Electrosteel Steels’s assets as they are guilty of criminal misconduct punishable with two or more years in jail
Kolkata: Abhishek Dalmia’s Renaissance Steel India Pvt. Ltd on Thursday approached the Kolkata bench of the National Company Law Tribunal (NCLT) alleging Tata Steel Ltd and Vedanta Ltd are not eligible to bid for the assets of Electrosteel Steels Ltd, which are being auctioned under the Insolvency and Bankruptcy Code (IBC).
In two separate petitions, Renaissance Steel said both Tata Steel and Vedanta group were found guilty of criminal misconduct punishable with two or more years in jail.
So, under Section 29A of IBC, they are barred from bidding for stressed assets being sold under insolvency resolution.
The petitions have been admitted for further hearing, said Debanjan Mandal, partner, Fox and Mandal, the law firm representing Renaissance.
Renaissance Steel has alleged that Tata Steel UK Ltd, a subsidiary of the Indian steel maker, had pleaded guilty several times to violating the UK Health and Safety at Work Act.
“Tata Steel UK has faced multiple prosecutions, and has been convicted on each occasion,” said the petition opposing Tata Steel’s bid, adding that the offences were punishable on conviction by up to two years in jail. But the UK authorities only imposed fines.
Tata Steel declined to comment. A spokesperson for Vedanta didn’t respond to an email seeking comments till press time.
The development comes a day after Tata Steel emerged the top bidder for Bhushan Steel, India’s top auto-grade steel maker.
That bid, too, could also suffer if Renaissance Steel’s objection to its bid for Electrosteel Steels is upheld in court.
Electrosteel Steels, which owes at least Rs11,000 crore, was taken to NCLT by State Bank of India.
Resolution professional Dhaivat Anjaria was not immediately available for comments.
In the second petition, Renaissance Steel said a subsidiary of Vedanta Resources Plc, the UK-based holding company, had violated pollution norms in Zambia, and was found guilty of criminal misconduct.
Konkola Copper Mines of the Vedanta group, which runs mining operations in Zambia, had in 2010 pleaded guilty to four charges brought against it under pollution laws.
Some of these offences were punishable with imprisonment of up to three years, Renaissance Steel said.
Renaissance Steel claimed in its petition that the resolution professional for Electrosteel Steels had accepted the “undertaking of eligibility” provided by the bidders at “face value”, and that he was “duty bound to examine the issue of eligibility” before receiving bids.
Enough information is available in the public domain which questions the eligibility of both the companies, Renaissance Steel said.
The key question facing the company law tribunal is whether Renaissance Steel could file objections at this stage, said a corporate lawyer in Kolkata, who asked not to be identified.
Though the bids have been received for the company’s assets, the resolution professional and the creditors have not yet picked any bid as successful, said this person.
The company law tribunal may itself decide or ask the resolution professional to determine if the two bidders are eligible to bid, he added.