New Delhi: The National Company Law Appellate Tribunal (NCLAT) on Friday ruled that Numetal's second bid for insolvent Essar Steel was eligible, and asked ArcelorMittal to first clear its dues by September 11 to turn eligible. The appellate tribunal directed the Committee of Creditors (CoC), lenders of Essar Steel, to expedite its negotiation with eligible bidders to get the best value for the stressed asset. Apart from Numetal, Anil Agarwal-led Vedanta Resources is also an eligible bidder, which joined the race in the second round of bidding.
The NCLAT's approval of Numetal's second bid has set aside its earlier Ahmedabad Bench order that had ruled that second round of bidding was "prima facie invalid". Numetal had filed its second bid on March 29.
ArcelorMittal has been asked to clear its dues related to Uttam Galva and KSS Petron, of which it was a promoter when these turned non-performing assets (NPA).
The Lakshmi Mittal-company needs to pay about Rs 7,000 crore in three working days by Tuesday to become eligible, as per the NCLAT ruling.
The world's largest steelmaker had made a conditional deposit of Rs 7,000 crore in its own current account saying it was ready to deposit the amount in the non-performing accounts of Uttam Galva and KSS Petron if its bid was successful.
However, the tribunal ruled conditional offer to pay the overdues was not acceptable and actual transfer of money had to be done before its resolution plan is considered.
Section 29A of the Insolvency and Bankruptcy Code (IBC) disqualifies a promoter of NPA from submitting a resolution plan. The same rule had earlier barred Numetal from being an eligible bidder as it had a stake from a family member of insolvent Essar Steel.
Rewant Ruia, son of Essar Steel promoter Ravi Ruia, had 25 per cent stake in Numetal through his 100 per cent-owned Aurora Enterprises Ltd (AEL) at the time of first round of bidding and Numetal was seen as a proxy for Ruias.
However, Rewant Ruia (AEL) has fully divested his stake in Numetal and JSW Steel is now a part of the Numetal consortium.
"As on March 29, 2018, as the AEL was not the shareholder of Numetal Ltd and all the three shareholders aforesaid being eligible, we hold that Numetal Ltd in respect of Resolution Plan dated March 29, 2018, is eligible," the bankruptcy court ruled.
The NCLAT has allowed the CoC to deduct the litigation period between April 26 and September 7 from the resolution period that gives 270 days to resolve a case after which the company is considered for liquidation.
"We note today's (Friday) NCLAT judgement and await the full order, which we will review before determining our next steps," ArcelorMittal said in a statement on the verdict by the two-member bench headed by Chairman Justice SJ Mukhopadhaya.
The CoC is now expected to hold a meeting soon to proceed on the resolution process for beleaguered Essar Steel unless any of the parties challenges NCLAT's verdict.
Though the second round of bids are yet to be opened, officials say Numetal's bid for Essar Steel is about Rs 37,000 crore and that of ArcelorMittal is about Rs 38,500 crore.
The financial creditors claim on bankrupt Essar Steel is to the tune of Rs 49,800 crore.