The National Company Law Appellate Tribunal (NCLAT) on Tuesday directed Numetal Ltd and ArcelorMittal India Ltd, which were disqualified under Section 29(A) of the Insolvency and Bankruptcy Code (IBC) to bid for Essar Steel Ltd, to file written submissions by Friday, stating why their applications should be considered.
A two-judge NCLAT bench headed by Justice S.J. Mukhopadhyay was hearing cross petitions filed by the two disqualified bidders. Section 29(A) of the IBC prohibits related parties of defaulting firms from participating in the resolution process.
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). When the resolution professional invited second round of bids, along with the two bidders from the first round, Vedanta, too, submitted its bid for the debt-ridden company.
ArcelorMittal, in its petition, had challenged its disqualification on the grounds that it had exited Uttam Galva before submitting a bid for Essar Steel on 12 February.
In the case of Numetal, one of the promoters of the special purpose vehicle, Rewant Ruia was the son of Ravi Ruia, one of the original promoters of Essar Steel. This had led to disqualification of Numetal in round one. Rewant Ruia is also beneficiary of a trust that backed Aurora Enterprises Ltd, which in turn held about 25% stake in Numetal during round one of bidding for Essar Steel.
Appearing for Numetal, advocate Mihir Thakore assured the court that Aurora Enterprises will cease to be a part of Numetal. “AEL would not be in management or corporate debtor in future,” he said. Numetal is 40% owned by Russia’s VTB group and 25% by a trust where Rewant Ruia is a trustee.
Essar Steel has a debt of ₹49,000 crore and was referred to the NCLT in June 2017. After the two companies were disqualified by the resolution professional, they had filed appeals before the tribunal. The matter will be heard next on Wednesday.
Source: July 17, 2018, Livemint