Numetal on Tuesday told the Supreme Court that its rival bidder ArcelorMittal’s act of selling shares in Uttam Galva a day ahead of its bid was a ‘subterfuge’ to overcome its disqualification in submitting its resolution plan for the bankrupt Essar Steel and the “taint of disqualification” is still attached to it.
“Instead of clearing the dues, ArcelorMittal chose to divest its stake a day before submission of its bid on February 12. To get over the bar, you sold a share for Rs 1 (of Uttam Galva) which you bought for Rs 120… Same thing happened for KSS Petron. This is a pattern which is well-established,” senior counsel Mukul Rohatgi told a bench led by Justice RF Nariman.
“The taint of disqualification that it didn’t clear Rs 7,000-crore liability towards Uttam Galva and KSS was attached to it on August 2 when it submitted its bid. You were liable for Uttam Galva as a promoter.
Crystallisation of taint of one year is complete and the disqualification is attached to you as you could not sell share like this. Manner of sale was clandestine and was to just overcome disqualification. It was not accidental but was done to circumvent the law,” Rohatgi said.
Law doesn’t say you sell the shares, it says you pay the debt and if this is allowed as a valid excuse, then no one will pay, he said, adding that “you owed the debt of the defaulting company to start with and it is difficult to say that you are not in the management”.
He asserted that from the resolution professional to NCLT to NCLAT all had erred in giving time for payment of dues, which they still chose not to pay. Numetal said that there was no such taint attached to it. The court will resume hearing on Wednesday.