The government had last year introduced Section 29A in the Insolvency and Bankruptcy Code (IBC) to prevent defaulting promoters from re-acquiring their assets. One of the clauses 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.
The counsel for Tata Steel said on Thursday the sanction available to a UK court for breach of Section 2(1) of the Health and Safety at Work etc Act, 1974 was an unlimited fine and/or imprisonment for a term not exceeding two years. Section 29A of the IBC, however, mentioned “imprisonment up to two years or more”, he pointed out. The counsel for Vedanta said the resolution plan for Electrosteel was submitted by Vedanta Limited, which was an Indian company and not connected to Konkola Copper Mines.
The Renaissance counsel, however, said Vedanta Limited and Konkola Copper Mines had the same holding company, Vedanta Resources Plc.
Both Konkola Copper Mines and Tata Steel UK are outside India, and whether Section 29A would apply to them remains unclear. The NCLT bench has reserved its order.
The counsel for the resolution professional said an independent assessment of Tata Steel and Vedanta ’s eligibility was done and they were found to be eligible.
There were four resolution applicants for Electrosteel: Vedanta, Tata Steel, Renaissance Steel India, and Edelweiss Alternative Assets Advisors Pte. It is understood that Vedanta is the H1 bidder for Electrosteel and Tata Steel the H2. Electrosteel owes banks around Rs 102.88 billion and is among the Reserve Bank of India’s first list of defaulting companies.
Tata Steel, however, has been identified as the highest bidder for Bhushan Steel and the resolution plan will be considered by the committee of creditors for final approval. Sources of Bhushan Steel said the resolution professional for Bhushan Steel was likely to wait for the order in Electrosteel before going ahead for final approval from the committee. Apart from Tata Steel, Bhushan Steel had received bids from JSW Steel and employees of Bhushan Steel.