Contends preferred bidder ArcelorMittal was, in contrary to undertaking given to the SC, actually making Rs 39,500-crore upfront payment and not Rs 42,000 crore.
Standard Chartered Bank (SCB), which has been allocated only 1.7% of its Rs 3,187 crore of admitted claim from the lenders of the Essar steel under the NCLT-approved resolution plan, on Monday submitted that the committee of creditors (CoC) of a firm undergoing resolution process does not have the authority to decide on the distribution of the receivables from the resolution applicant.
Arguing before the National Company Law Appellate Tribunal (NCLAT), SCB’s counsel Kapil Sibal also contended that Essar Steel’s preferred bidder ArcelorMittal was, in contrary to the undertaking given to the Supreme Court, actually making Rs 39,500 crore upfront payment and not Rs 42,000 crore. The remaining Rs 2,500 crore is being used to buy Odisha Slurry Pipeline, which is a separate company.
Sibal said the adjudicating authority (National Company Law Tribunal) has the power to decide on the distribution of funds in case of any discrimination.
“The CoC has no right to have a say on distribution. This is outside the jurisdiction of the CoC. The mandate goes to the adjudicating authoirty,” Sibal said, adding that the jurisdiction of the CoC is either to accept a resolution plan or reject that.
Without commenting on Sibal’s contention, the two-member NCLAT bench, headed by its chairperson justice SJ Mukhopadaya, said it would look into whether fund distribution comes under the ambit of the CoC. The bench would also check whether the extant fund distribution plan was given by the preferred bidder ArcelorMittal or the CoC redesigned it afterwards.
Sibal alleged that the acceptance of Rs 39,500 crore as the bid amount by a core committee of the CoC is a brazen idea and such private negotiations should not have been undertaken as this is against the interest of other stakeholders’ concern assets of a different company altogether.
SCB also argued that profits made by Essar Steel during the insolvency period were being misappropriated by ArcelorMittal. Such funds are otherwise required to be distributed amongst creditors.
Earlier, during the day, resolution professional’s counsel submitted before the NCLAT that during the insolvency period from August 2017 till March 2019, Essar Steel has earned Rs 4,229 crore earnings before interest tax depreciation and amortisation (Ebitda).