The Supreme Court is likely to deliver on Thursday its verdict on cross-appeals of Russia's VTB Bank-promoted NuMetal and steel and mining major ArcelorMittal challenging the NCLAT order on eligibility of the latter to bid for Essar Steel.
The Supreme Court is likely to deliver on Thursday its verdict on cross-appeals of Russia’s VTB Bank-promoted NuMetal and steel and mining major ArcelorMittal challenging the NCLAT order on eligibility of the latter to bid for Essar Steel. A bench comprising Justices R F Nariman and Indu Malhotra had reserved its verdict on September 27 after counsels for all the parties, including the Committee of Creditors (CoC), concluded their arguments that had continued for eight days.
National Company Law Appellate Tribunal (NCLAT) had ruled that NuMetal’s second bid for Essar Steel was eligible, but the same by ArcelorMittal would qualify only if it cleared the Rs 7,000 crore dues of the two firms it was previously associated with.
While ArcelorMittal had challenged the order asking it to pay Rs 7,000 crore to become eligible for the bidding, NuMetal had alleged that NCLAT had “wrongly” applied legal provisions to enable its rival bidder to pay the dues of two debt-ridden firms even after it had bid for Essar Steel. The bench is also expected to deal with the ways to prevent delays in insolvency resolution of debt-ridden firms due to continued adjudications at NCLT and NCLAT and had observed that all delays “must stop”.
It had taken note of the fact that the Insolvency and Bankruptcy Code provided for time-bound disposal of the resolution process meant to revive a company, but delays and several rounds of intervention by authorities like National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) defeated the purpose of the statute.
Earlier, senior advocate Mukul Rohatgi, appearing for NuMetal, had said that its second bid was higher than ArcelorMittal’s and moreover, it had already said the company would match the offer of its rival bidder. The court, however, had said it would only decide the eligibility aspect and the other financial issues would be discussed by the CoC. Rohatgi had also said that Vedanta, the third bidder, was not serious and has not appeared anywhere and there cannot be a situation where there was only one bidder.
Senior advocate Gopal Subramaniam, who represented the CoC, had said that debt-ridden Essar Steel, whose resolution process has begun, is a valuable asset and it did not want it to go for liquidation. The counsel for CoC had sought eight weeks after the date of judgement to complete the negotiations and the bidding process for Essar Steel. The CoC had said the apex court will have to lift the “corporate veil” to test the eligibility of ArcelorMittal and NuMetal, which are bidding for Essar Steel, to ascertain the persons behind them.
ArcelorMittal had said that NuMetal was not eligible to bid for Essar Steel on several grounds, including that it was a “shell company” created by a firm in which Essar group promoters had majority shares.
NCLAT had ruled that NuMetal’s second bid for Essar Steel was eligible but the same by ArcelorMittal will qualify only if it cleared the Rs 7,000 crore dues of the two firms, Uttam Galva and KSS Petron, it was previously associated with.