ArcelorMittal had acquired bankrupt Essar Steel last year, establishing a joint-venture with Japan’s Nippon Steel,called ArcelorMittal Nippon Steel India,under the CIRP following a long legal tussle.
India's current installed capacity is around 140 mtpa. The country aspires to have 300 mt installed capacity by 2030-31. India's per capital steel consumption is still around a third of the global average.
The Ahmedabad of the National Company Law Tribunal (NCLT) has directed ArcelorMittal India to pay corporate insolvency resolution process (CIRP) charge of Rs 1300 crore to Odisha Slurry Pipeline Infrastructure (OSPIL) as the Bench held that the subsidiary of the world’s largest steel maker had“contravened”the resolution plan for Essar Steel.
ArcelorMittal had acquired bankrupt Essar Steel last year, establishing a joint-venture with Japan’s Nippon Steel,called ArcelorMittal Nippon Steel India,under the CIRP following a long legal tussle. The resolution plan approved for Essar Steel was of around Rs 42,000 crore. The LN Mittal-led steel major had also took over debtladen OSPIL early this year for around Rs 2,350 crore as it is a critical infrastructure for Essar Steel India to procure iron ore.
Passing the order on November 10, justices MB Gosavi and VK Gupta of the Ahmedabad Bench of the NCLT said, “The usage charges for the use of subject Slurry Pipeline for running the corporate debtor ( Essar Steel) as going concern during the CIRP period of the corporate debtor are IRP costs.”
The Bench said such IRP costs had been duly considered and provided by the resolution applicant in the resolution plan,submitted and approved by the adjudicating authority.“The resolution applicant (corporate debtor) has contravened the provisions of such approved resolution plan by not making payment of such IRP costs.The resolution applicant (corporate debtor) is directed to make the payment of such IRP costs to OSPIL by December 15, 2020,”it added.
The Bench directed ArcelorMittal India to make payment of a sum of Rs 1300 crore being outstanding usage charges payable to OSPIL, failing which liquidation order of ArcelorMittal Nippon Steel India( Essar Steel) will be passed.
Under on the basis of an application moved by Srei Infrastructure Finance (SIFL) as a financial creditor of OSPIL. Srei contended that the Right to Use charges were payable by Essar Steel for the use of the pipeline belonging to OSPIL during the CIRP period of Essar Steel. The dispute concerned a Right to Use Agreement (RTU Agreement),which was entered into between Essar Steel India and OSPIL in April 2015. OSPIL’s only source of income was the lease rentals.With the company defaulting in meeting its repayment obligations to the lenders, IDBI Bank had taken it to the NCLT under Section 7 of the Insolvency and Bankruptcy Code (IBC).
Notably, India Growth Opportunities Fund (IGOF), a scheme of Srei Multiple Asset Investment Trust (SMAIT), owned around 69% equity stake in OSPIL,while rest was held by EssarSteel .At the NCLT, Srei Infrastructure Finance was represented by senior advocates Rashesh Sanjanwala and Ratnanko Banerjee, and advocate Rishav Banerjee.