Apex court to settle law to minimise NCLT, NCLAT interference

By: |
New Delhi | Published: September 20, 2018 5:01:11 AM

The apex court’s observation came during a hearing on the appeals of ArcelorMittal and Numetal which have challenged the eligibility of each other to bid for Essar Steel following an order of the NCLAT.

The court will resume hearing on September 25.

The Supreme Court on Wednesday observed that it will settle the law so as to avoid any interference by the National Company Law Tribunal (NCLT) and its appellate body National Company Law Appellate Tribunal (NCLAT) at every stage of the resolution process of a bankrupt company.

The apex court’s observation came during a hearing on the appeals of ArcelorMittal and Numetal which have challenged the eligibility of each other to bid for Essar Steel following an order of the NCLAT.

A bench led by Justice RF Nariman said that any interference by the “NCLT should come only at the post-CoC (committee of creditors) stage. It has to be stopped. We have to lay down the law with regard to at what stage an adjudicating authority can come in. Lenders can’t be left hanging and at the same time we will have to give a chance to the company so that it doesn’t liquidate”.

“We wish to streamline the process,” it said, adding that the resolution professional, which can’t examine the promoters issue, must send the proposals after seeing that they are in order to CoC, which should evaluate accordingly for the best value from the eligible bidders and will also look at Section 29(a) provision”.

“We have to have some intermediate way. Law is flexible enough to take care of the amended provision. You don’t follow it strictly, otherwise it will destroy the object of the IBC,” Justice Nariman told senior counsel Mukul Rohatgi, appearing for Russian Bank VTB-promoted Numetal. The observation came on Rohatgi’s submission that the amendment is prospective and is not clarificatory. He said that ArcelorMittal could not have bid as it was guilty on the date when it submitted its bid. “You just walked out two days before the bid,” he said.

Hearing the same petitions on September 13, the SC bench had observed that the NCLTs and the appellate tribunal should not entertain petitions by the concerned parties at every stage of the resolution process in insolvency cases, as it delays the entire process. it had observed that the tribunals should only come into the picture when the entire matter has been settled by the concerned resolution professional and the committee of creditors.

The NCLAT order had approved the eligibility of the second round of bid put in by Numetal but said that ArcelorMittal first needed to clear dues of Rs 7,000 crore of firms it was previously associated with by September 11 to be eligible to bid.

The court will resume hearing on September 25.

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