The National Company Law Appellate Tribunal (NCLAT) on Monday hinted at giving a chance to both Numetal Ltd and ArcelorMittal India Ltd, the resolution applicants who submitted bids for Essar Steel Ltd, to cure ineligibilities after which revised bids may be invited from the companies.
“If both are ineligible, we’ll see if both can be made eligible by giving some time,” a two-judge NCLAT bench headed by justice S.J. Mukhopadhyay said during the hearing of cross petitions filed by the two disqualified bidders.
The bench was responding to the resolution professional’s suggestion of opening the second round of bids, which is in a sealed envelope.
ArcelorMittal and Numetal had submitted the bids in the first round. However, their bids were declared ineligible under Section 29 A of the Insolvency and Bankruptcy Code (IBC). Following this, the resolution professional invited a second round of bids. Along with two bidders from the initial round, Vedanta too submitted a bid for the debt-laden firm in the second round.
ArcelorMittal and Numetal had moved the Ahmedabad bench of the National Company Law Tribunal (NCLT) challenging the ineligibility of their bids.
Mukul Rohatgi, appearing for Numetal, argued that the eligibility of the resolution plan submitted by ArcelorMittal India Ltd should not be judged on the date of submission of its plan, as Uttam Galva Steels Ltd was under ArcelorMittal’s control when it was declared a non-performing asset.
“Sale of shares of Uttam Galva on 7 February is meaningless as it needs orders of BSE or NSE, which happened in March,” said Rohatgi.
In the last hearing, senior advocate Harish Salve, appearing for ArcelorMittal, has said that it ceased to be a shareholder of Uttam Galva from 7 February and shareholder of KSS Petron from 9 February.
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. Essar Steel has a debt of ₹49,000 crore and was referred to NCLT in June 2017. After the two firms were disqualified by the resolution professional under Section 29A of IBC, 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 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 a 25% stake in Numetal. VTB is the largest investor with a 40% stake. The matter will next be heard on Wednesday.
Source: Livemint, July 16, 2018