Events and Updates

Title: Arguments conclude in Essar Steel case NCLT reserves order

Posted on: 7th April 2018

In the last lap of arguments today, Numetal and ArcelorMittal, both in the race to acquire the bankrupt Essar Steel, once again tried to convince the tribunal over their disqualification by the resolution professional (RP), claiming that rules have been followed before submitting their bids.

The Ahmedabad bench of the NCLT has reserved its order after the arguments from all the parties concluded today in the Essar Steel bankruptcy case.
In the last lap of arguments today, Numetal and ArcelorMittal, both in the race to acquire the bankrupt Essar Steel, once again tried to convince the tribunal over their disqualification by the resolution professional (RP), claiming that rules have been followed before submitting their bids.

After taking into consideration the views of both the bidders, the tribunal, comprising adjudicating authority Manorama Kumari and Harihar Prakash Chaturvedi, has kept its order reserved for a future date.

The bench indicated that it may pronounce the order on April 12.

Numetal and ArcelorMittal has knocked the doors of NCLT over their disqualification in the first round of bidding claiming that rules have been followed before submitting bids.

Appearing for Numetal, senior counsel Mihir Thakor today said his client has challenged RP's decision of disqualifying Numetal from the first round of bidding because "there was no impropriety in restructuring Numetal".

At one point, Thakor even admitted that Numetal was formed by the promoters of the Essar Steel itself "with the purpose of submitting the resolution plan to acquire Essar Steel".

Yesterday, RP's lawyer Darius Khambata had told the bench that Numetal's bid was rejected because Essar Steel promoter Ravi Ruia's son Rewant Ruia was, in some way or other, in control of Numetal through Aurora Trusts.

He said such arrangement was in violation of the section 29 (A) of the Insolvency and Bankruptcy Code(IBC).

Responding to that charge, Thakor today said Numetal had undergone substantial structural changes as far as Rewant's role in Numetal is concerned.

"It was originally intended to be a promoter's company before the introduction of section 29(A). But then, it ceases to be a promoter's company. Thus, just because it was a promoter's company in the past, it should not be disqualified", argued Thakor.

Putting his final arguments, senior counsel Abhishek Manu Singhvi, who appeared for ArcelorMittal, said Numetal's demand that Mittals should first pay up the debt of Uttam Galva, an NPA firm, "is a classic case of diversion and deflection".

Singvi said while on one side Numetal questions the non-payment of debt on Uttam Galva, on the other side "Ruias themselves brought Essar Steel to its kneels by making it an NPA".

The case pertains to the lenders disqualifying ArcelorMittal and Numetal -- the only two bidders for the crippled 10-million tonne Essar Steel at Hazira in Gujarat that owes more than Rs 45,000 crore to over 30 banks -- citing technical issues on March 23 which primarily means their ownership structure.

These companies challenged the lenders' decision at the NCLT soon after they were disqualified. Following this, the NCLT allowed rebid till April 2, ArcelorMittal along with Nippon of Japan, Anil Agarwal's Vedanta and Numetal along with JSW Steel have put in bids.

These two bids were from the beginning questioned by the resolution professional and others as the promoters of both these firms were defaulters in other firms -- the Ruias in Essar Steel and the Mittals in Uttam Galva.