With the production of Electrosteel Steels coming to a stand-still due to dearth of raw material, the Kolkata bench of the National Company Law Tribunal (NCLT) has directed Odisha government’s director of mines to allow the insolvent company to procure iron ore and coking coal from the neighbouring state. The order follows an application filed by Dhaivat Anjaria, the Resolution Professional (RP) appointed to manage the steel maker, seeking a direction to the director of mines not to withhold permission to the company to procure, store and transport iron ore and coking coal from its jurisdiction for its Bokaro plant in Jharkhand during the insolvency resolution process. In his submission before the bench on February 28, Anjaria’s counsel Joy Saha had said, “The concerned authority (Director of Mines) has stopped the supply of raw material. Unless the iron ore and other raw materials are given, nothing can be done. Now, the production has stopped.” Saha had said if the company would not be allowed to lift the raw materials then it could not be kept as a “going concern”. “If the furnace (at the plant) stops functioning, it would be the death knell for the company,” he had said, adding that to re-start the furnace it would require crores of rupees.
Passing an order on the application, justice Jinan KR said, “The first respondent (director of mines) is directed not to withdraw permission already given to the corporate debtor and to ensure that status quo as on 21/07/2017 when the moratorium was declared, shall continue till the CIRP period expires.” Notably, the NCLT on July 21 had admitted State Bank of India’s petition against Electrosteel Steels. The company, which owes lenders Rs 11,309 crore, was referred to the bankruptcy court under Section 7 of the Insolvency and Bankruptcy Code (IBC) following a nudge from the Reserve Bank of India. For the debt-laden steel maker, the corporate insolvency resolution process will expire on April 17, 2018. “…withholding permission to the corporate debtor from procuring the essential material which is iron ore while moratorium is in force is quite illegal,” Justice Jinan observed in the order, pronounced on March 9.
The tribunal has reserved its order on Renaissance Steel’s petitions on the issue of eligibility of Vedanta and Tata Steel to bid for Electrosteel Steels. Renaissance Steel moved the tribunal, asking it to prevent the RP from proceeding on further negotiations with Vedanta, the highest bidder, till the issue of eligibility of the Anil Agarwal-led company and Tata Steel, the other contender, is determined. Abhishek Dalmia-led Renaissance Steel, a rival bidder, alleged that the resolution applicants Vedanta and Tata Steel are not eligible to bid for the Kolkata-based insolvent steel maker as per Section 29A of the IBC.
Appearing before the tribunal on Thursday, RP’s counsel Anindya Mitra, said, “The resolution professional has come to a decision that both Vedanta and Tata Steel are not ineligible under the norms of the IBC.” Counsels representing Renaissance Steel questioned the RP’s decision.