Essar Steel bids case hearing on 17 May
NCLAT issued notices to a committee of Essar Steel creditors, the resolution professional running the auction of the company and the two bidders on the cross petitions
New Delhi: The National Company Law Appellate Tribunal (NCLAT) on Friday agreed to hear on 17 May cross petitions filed by disqualified Essar Steel Ltd bidders Numetal Ltd and ArcelorMittal India Ltd.
NCLAT issued notices to a committee of Essar Steel creditors, the resolution professional running the auction of the company and the two bidders on the cross petitions.
Numetal, backed by Russia’s VTB Capital, has challenged a company court order allowing rival ArcelorMittal to clear bank dues of associate companies so that it can become eligible to acquire Essar Steel. ArcelorMittal on the other hand has challenged its disqualification from bidding.
The cross petitions were mentioned before a bench of NCLAT which issued notices, replies and rejoinders to which are to be filed within a week.
Mukul Rohtagi, appearing for Numetal, argued that the Ahmedabad bench of the National Company Law Tribunal, which had disqualified ArcelorMittal from bidding to acquire Essar Steel on grounds that it was a promoter company of firms that had defaulted on payment of bank loans, had “erred” in permitting ArcelorMittal “to cure the ineligibility by making payment of the overdue amounts of Uttam Galva Steels Ltd and KSS Petron Pvt. Ltd” within 30 days. He sought the quashing of the NCLT order that directed the resolution professional and the committee of creditors of Essar Steel to “reconsider the resolution plan submitted by Arcelor Mittal India”.
ArcelorMittal in its petition challenged its disqualification on the grounds that it had exited Uttam Galva before submitting a bid for Essar Steel on 12 February.
Essar Steel had a debt of Rs49,000 crore and was referred to NCLT in June last year. After the two finalists for Essar Steel 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 NCLT.
On 19 April, NCLT dismissed the first round of bidding for Essar Steel on the ground that committee of creditors and the resolution professional did not follow the procedure prescribed under the insolvency code. However, it ruled that ArcelorMittal and Numetal must clear debts in defaulting companies where they hold stakes before bidding for Essar Steel again.
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 about 25% stake in Numetal. VTB is the largest shareholder with about 40% stake.
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