The National Company Law Appellate Tribunal (NCLAT) on Monday refused to stay Tata Steel’s acquisition of debt-laden Bhushan Steel under the corporate insolvency resolution process though it admitted promoter Neeraj Singal’s plea challenging the entire resolution process and the sale.
Singal, who had around 22% stake in the company as on March-end, also said that Tata Steel was not eligible to bid under section 29 (A) (d) of the Insolvency and Bankruptcy Code (IBC) that bars a company convicted for any offense punishable with imprisonment for two years and more. He alleged that Tata Steel UK attracts disqualification as it has been found guilty on two counts, by a February 2 order, under the Health and Safety at Work Act, 1974.
“Tata Steel is not eligible to be a resolution applicant,” senior counsel UK Chaudhary, appearing on behalf of Singal, said, adding that no notice was given to the company promoters when CoC was approving the resolution plan and even after approving the plan.
A two-member bench, headed by NCLAT chairman Justice SJ Mukhopadhaya, issued notices to Tata Steel, the resolution professional and committee of creditors (CoC) of the company, and asked them to reply within a week. The matter is scheduled to be heard next on May 30. The appellate tribunal said that the ongoing resolution process for the company would be subject to the final outcome of the case.
The National Company Law Tribunal (NCLT) had on May 15 approved Tata Steel’s resolution plan for Bhushan Steel. Tata Steel has offered to pay Rs 35,200 crore to the financial creditors and Rs 1,200 crore to the operational creditors of Bhushan Steel, which owes Rs 56,080 crore to its financial creditors and Rs 1,332 crore to operational creditors, respectively. Tata Steel will also offer 12.27% equity to the financial creditors. This would go up to 13.43% in the event Sebi does not allow the erstwhile existing promoter group shareholding to be counted towards public shareholding.
Meanwhile, Larsen and Toubro (L&T) has also moved the appellate tribunal, challenging the May 15 order that dismissed its plea of according higher priority to loan recovery. The tribunal also imposed a fine of `1 lakh on it. Being a supplier of goods and services, L&T was bracketed as an “operational creditor”, but the company to fall under the “secured credtor” category.
Senior counsel Mukul Rohatgi, appearing on behalf of L&T, said that though Bhushan Steel owed `900 crore to the engineering firm, there has been nothing for it in the resolution plan. L&T’s plea will be heard on Tuesday.