Electrosteel: NCLT asks Tata, Vedanta and IRP to file counter plea

The National Company Law Tribunal (NCLT) has asked Tata Steel, Vedanta, and the interim resolution professional (IRP) for Electrosteel Steels to file counter-submissions to the petition, moved by Renaissance Steel India, challenging the eligibility of Tata Steel and Vedanta. The process of negotiations with the bidders will continue.

 

The counter submissions have to be filed by March 15. Debanjan Mandal of Fox & Mandal, the legal firm representing Renaissance Steel, said, "After receiving the written responses of all the parties, their respective stands on the issue of eligibility which was raised by Renaissance can be understood." According to Renaissance Steel, Vedanta and Tata Steel are ineligible under Section 29A of the Insolvency and Bankruptcy Code (IBC).

 

Tata Steel said non-disclosure agreement did not permit any comments.

 

The government had introduced Section 29A, last year, to prevent defaulting promoters from re-acquiring their assets. One of the clauses of Section 29A says a person will not be eligible to submit a resolution plan, if such a person, or any other person acting jointly or in concert with such person has been convicted of any offence punishable with imprisonment up to two years or more.

 

Abhishek Dalmia, chairman of Renaissance Group, said that Tata Steel was guilty of an industrial accident in the UK. Similarly, Vedanta was guilty of environmental pollution in Zambia. Apart from Tata Steel and Vedanta, Renaissance Steel India, and Edelweiss Alternative Assets Advisors are the other two resolution applicants for Electrosteel Steels. Electrosteel Steels is one of the 12 companies mandated by the Reserve Bank of India (RBI) for debt resolution under the IBC. Electrosteel Steels owes banks Rs102.88 billion. Vedanta is said to be the H1 bidder for Electrosteel and Tata Steel the H2 bidder, though formally it is yet to be announced.  Tata Steel, however, is the highest bidder for Bhushan Steel.

 

Dalmia first apprised the IRP about Tata Steel and Vedanta's case on January 31. In February, the committee of creditors was informed. Not having received any response, Dalmia moved the NCLT on March 5, requesting not to allow the IRP to further negotiate with the H1 bidder till the eligibility of the resolution applicants is determined.