New Delhi: ArcelorMittal on Wednesday challenged in the Supreme Court the September 7, 2018, NCLAT order asking the company to clear its Rupees 7,000-crore debt owed to Uttam Galva (UG) and KSS Petron before it could bid for the ailing Essar Steel, insisting that no bank had ever made a claim against it and that its promoters had offered no personal guarantees for any company.
“We are a steel company. We want to enter India; we want to buy Essar Steel,” senior advocate Harish Salve told a bench comprising Justices RF Nariman and Indu Malhotra. Senior advocate Abhishek Manu Singhvi and lawyer Amit Bhandari will also argue tomorrow for Arcelor tomorrow. Salve contended that no bank had ever made any claim against the company. “Neither are we personal guarantors for anybody,” he said.
The NCLAT had asked ArcelorMittal to pay the dues to cross the hurdle posed by the IBC’s Section 29A, which bars any company related to a defaulting company to bid in the insolvency proceedings.
The committee of creditors (CoC), led by State Bank of India has also insisted that Arcelor square off the dues of UG and KSS Petron before it could bid for Essar Steel. The other bidder in the case is Numetal consortium. Senior advocate Mukul Rohatgi will be defending Numetal in the top court in its turn.
Salve questioned the credentials of Numetal to bid for Essar Steel, saying that the company was owned by the Ruias, promoters of ailing Essar which is under insolvency. Salve also objected to the double standards followed by the NCLAT in the case. Both sides have bid for Essar, with Arcelor bid standing on a higher footing than Numetal. But the NCLAT has asked Arcelor to pay its dues before its bid can be considered.
Salve argued that while Numetal had been allowed to bid after it restructured the company to meet the requirements of the law to keep out ineligible promoters from bidding, Arcelor hadn’t been allowed to do so despite changing its shareholding on the ground that the “stigma” would follow the company.
He pointed out that the promoter in this case was LN Mittal. Justice Nariman, at this point, observed that prime facie it seemed that the law had been wrongly applied in this case, but insisted on knowing why Arcelor was not keen on paying money, the deadline which was yesterday, but has since been extended.
Both, the committee of creditors and the RBI are keenly watching the case. Both sides are also expected to place their views before the Court.
Reacting to the developments, lawyer Simaranjeet Singh of law firm Athena Legal said that the amendment to the IBC code, barring any related parties to any defaulting company from bidding for an ailing company, was stringent. But there’s a dichotomy in the law. On one hand you want to recover the NPAs from someone, he said. So you have to let people bid, you can’t keep everyone out. “Otherwise you can do any debt resolution.”