The two-member Ahmedabad bench of the National Company Law Tribunal reserved judgment on the maintainability of ESAHL’s plea following conclusion of arguments on the matter on Monday and is expected to give its judgment by January 31.
While the parties have agreed to give written submissions on their respective arguments, verbal arguments have concluded. The bench also invited interested entities seeking to be a party to the case by January 31, and is expected to take up other operational creditor applications on January 31.
As many as 31 operational creditors of Essar Steel moved the NCLT in five separate petitions urging that it direct the CoC to ensure full payment to them and take necessary steps to modify ArcelorMittal’s resolution plan for that. Alternatively, they urged the tribunal to direct the CoC to also consider the last minute offer of the Essar Steel promoters which promises to pay all creditors in full.
As part of its arguments on Monday, senior counsel Abhishek Manu Singhvi, appearing on behalf of ArcelorMittal, argued there is no right to redemption under IBC as sought by ESAHL under its plea for consideration of their settlement offer proposed ‘for and on behalf of Essar Steel’, suggesting Essar is trying to ambush the process.
At a previous hearing in December, the counsel to ESAHL had presented their counter argument to preliminary objection by the committee of creditors (CoC) and the resolution professional over maintainability of the Ruia’s last minute offer to pay Rs 54,389 crore for control of the company.
The right of redemption, which is what the ESAHL petition for consideration of the Ruia’s proposal is based on, comes from the Transfer of Property Act that allows the mortgagor to get his property back from the mortgagee following payment of the amount borrowed from him. Under Indian jurisprudence, special law supersedes general law. Here, IBC prevails over general law of property, several sources had earlier indicated to FE.
Niraj Kaushal, also representing ArcelorMittal, argued that by approaching NCLT, Essar was trying to subvert the bankruptcy process since the IBC Act gives only the resolution professional right to submit a resolution proposal for consideration of the court. Kaushal also pointed out that SC invoked Section 142 under special circumstances and for limited number of parties, adding Essar Asia was not one of them, also noting Essar has also not cleared related party corporate debt, which in case of NuMetal was Rs 80,000 crore.
Source: Financial Express, January 8, 2019