The Supreme Court Tuesday said it would tomorrow hear a plea of ArcelorMittal challenging an NCLAT order asking it to pay by today Rs 7,000 crore to become eligible to bid for Essar Steel for which it has made an offer of Rs 42,000 crore.
A bench of Chief Justice Dipak Misra and Justice A M Khanwilkar and D Y Chandrachud said, “we will hear the matter tomorrow”. The matter came up before the apex court a day after steel tycoon L N Mittal-promoted group made a bid of Rs 42,000 crore for Essar Steel.
ArcelorMittal has moved the apex court challenging the NCLAT order of September 7 by which it had held as eligible the second bid of NuMetal, a consortium of Russia’s VTB-JSW, for Essar Steel. The National Company Law Appellate Tribunal (NCLAT) had asked ArcelorMittal to clear the stigma of defaulter by clearing the dues of its subsidiaries.
The NCLAT had last Friday ruled that NuMetal’s second bid for Essar Steel is eligible but the same by ArcelorMittal will qualify only if it clears the Rs 7,000 crore dues of firms it was previously associated within three days. NuMetal and ArcelorMittal had in February submitted separate bids to takeover Essar Steel, which lenders were auctioning, to recover their Rs 49,000 crore defaulted loans.
The Committee of Creditors (CoC) had, however, disqualified both the bids saying their promoters were tied to companies which were bank loan defaulters and hence ineligible under Section 29A of the Insolvency and Bankruptcy Code (IBC).
The second round of bids was called where JSW Steel joined NuMetal to put in a bid of Rs 37,000 crore, while Vedanta Ltd entered the fray as a third bidder. ArcelorMittal too had put in a bid.
The NCLAT held that the first round of bids were not eligible but NuMetal’s second bid submitted on March 29, after restructuring the shareholding, was eligible. It had asked ArcelorMittal to clear the dues of Uttam Galva Steel and KSS Petron by September 11 for its bid to be considered eligible. The Tribunal ordered the committee of Essar Steel creditors to get the highest value, including by negotiating with the eligible bidders expeditiously.
Both NuMetal and Essar Steel had initially moved the National Company Law Tribunal (NCLT)-Ahmedabad challenging the disqualification of the first round of bids. The NCLT had refused to give any relief to the bidders but asked the CoC to take another look at the bids before disqualifying them.
The NCLT order was challenged by both bidders in NCLAT. After the NCLT order, ArcelorMittal had offered to repay any outstanding loans owed by Uttam Galva Steels Ltd and KSS Petron. The steelmaker had placed Rs 7,000 crore in an escrow account, with the condition that the lenders disqualify Numetal’s bid.
On its part, Numetal offered to take out Rewant Ruia, scion of Essar Steel’s promoter Ruia family, from the company’s share holding. JSW Steel Ltd replaced Rewant Ruia on NuMetal and brought to table technical knowhow on managing a steel plant.
The NCLAT last week directed the lenders of the Essar Steel to expeditiously take a decision on the bids. It held that NuMetal was not related to promoters of Essar Steel and hence eligible for submitting a resolution plan for the company. However, in the case of ArcelorMittal, it had held that the company was connected to Uttam Galva and KSS Petron, which are classified by many banks as NPA. “The stigma would continue till the payment of all charges by ArcelorMittal,” the NCLAT had said and directed payment of dues within three days till September 11.