Mumbai: State Bank of India (SBI) on Friday said it has withdrawn the process of sale of Essar Steel debt to an asset reconstruction company (ARC) following an order by the National Company Law Appellate Tribunal (NCLAT).

“In view of the NCLAT order pronounced today, SBI withdraws the process of sale of debt of Essar Steel India Ltd and will proceed as per the order of the NCLAT," an SBI spokesperson said.

According to an SBI official who did not wish to be named, owing to the delay in resolution of Essar Steel, the lender had decided to offload its over 12,000-crore exposure to the distressed steelmaker. He added that the bank had decided to advertise in newspapers on Friday, its intent to sell the loan to an ARC but the advertisements were pulled out following a late-night decision to wait for the NCLAT order.

“The bank expects the insolvency resolution process to move ahead now and therefore it has decided to not sell its exposure," the official added.

Another public sector lender Bank of Baroda (BoB) is in the process of selling its domestic loan exposure in Essar Steel Ltd worth 1,200 crore to Hong Kong-based loan and bond trading firm SC Lowy.

The NCLAT on Friday said Numetal’s second bid is valid and added that ArcelorMittal must clear dues of Uttam Galva Steels Ltd and KSS Petron of more than 7,000 crore within three days be eligible for taking over Essar Steel. The appellate tribunal asked the committee of creditors (CoC) to consider both the plans after the payment is made by ArcelorMittal.

The appellate tribunal has also allowed lenders to further negotiate bids for Essar Steel. Essar Steel, which owes lenders 49,000 crore, was admitted to NCLT in August 2017. The company’s resolution has been stuck in last-minute litigation as both bidders Numetal and ArcelorMittal had approached the NCLAT. The resolution professionals had disqualified both bidders under Section 29A of the Insolvency and Bankruptcy Code (IBC) which bars defaulting promoters from bidding for their own firms.

Numetal was disqualified from bidding because Rewant Ruia, son of promoter Ravi Ruia, is a beneficiary of a trust that backed Aurora Enterprises, which in turn held a 25% stake in Numetal; VTB is the largest investor in Numetal with a 40% stake. Meanwhile, ArcelorMittal was disqualified because bank loans to its associate companies Uttam Galva Steels Ltd and KSS Petron had turned non-performing.