Srei Infrastructure Finance has moved the Supreme Court against the order of the National Company Law Appellate Tribunal granting approval to ArcelorMittal’s resolution plan for Odisha Slurry Pipeline Infrastructure (OSPIL), which owns and operates a 253-km slurry pipeline. The pipeline is a critical ancillary unit of ArcelorMittal Nippon Steel India (erstwhile Essar Steel).
Srei Infra has alleged that the resolution plan (RP) of Arcelor Mittal India (AMI) was discriminatory in the manner of distribution between the similarly-situated secured and unsecured creditors. Srei further said it being a secured financial creditor was being treated differently to other similarly-situated creditors like banks.
A Bench led by Justice Ajay Rastogi has posted the matter for hearing on September 6.
Challenging the dismissal of its appeal by the NCLAT, SREI Infra questioned whether the revised RP of AMI deserved to be sanctioned on account of its failure to maximise the value of the assets of the corporate debtor.
The NCLAT has “adopted a blinkered approach of not looking at the issues raised in their true perspective, simply relying on the fact that the RP of AMI was approved by 100% vote of the CoC of OSPIL and the commercial wisdom of the CoC is beyond the purview of judicial review. The appellate tribunal has also failed to decide the issue of recovery of the right to use (RTU) charges from Essar (now ArcelorMittal Nippon Steel) or AMI on the ground that the issue is sub-judice before the Calcutta High Court, and yet approved the revised RP which provides for abatement of the title suit…, which would effectively render the proceedings before the HC infructuous,” the appeal stated.
Srei further alleged that the plan approved by the CoC had permitted abatement of a suit filed before the Sealdah Court wherein an order of status quo is subsisting relating to the transfer and alienation of the pipeline which is the only asset of the corporate debtor. The plan also failed to consider the usage charges receivable by the corporate debtor under the RTU Agreement from Arcelor Mittal Nippon Steel India.
The CoC approved the revised RP of ArcelorMittal by letting go of its opportunity to demand and receive Rs 1,800 crore that was payable by the erstwhile company pursuant to the approval of the ArcelorMittal’s RP in respect of Essar, the appeal stated.
OSPIL, which was set up as a wholly owned subsidiary of Essar, and a 253-km pipeline from Dabuna to Paradeep in Odisha were transferred to OSPIL in February 2015 for consideration of Rs 4,000 crore, free of encumbrance. The acquisition of the pipeline asset was financed by the lenders to OSPIL, including Srei. Most of the lenders to OSPIL were also lenders to Essar.
The insolvency proceedings were initiated against OSPIL at the behest of IDBI Bank. The AMI’s resolution plan for OSPIL was approved by the CoC in December 2019 and the National Company Law Tribunal (NCLT), Cuttack bench, upheld the approval in March 2020.