The resolution professional handling the Essar Steel case today informed the NCLT that Numetal and ArcelorMittal were rightly disqualified from the bidding to acquire the steel firm, even as bankers said the law permits them to invite more bids to get the best price.
While the resolution professional's (RP) counsel Darius Khambatta maintained that the decision to disqualify both the bidders from the first round under section 29 of the IBC was "fair and legal", Numetal's counsel Mukul Rohatgi reiterated that the rival bidder ArcelorMittal should be barred "forever".
Following a heated debate and lengthy hearing here today, the tribunal, comprising adjudicating authority Manorama Kumari and Harihar Prakash Chaturvedi, posted the matter for further hearing tomorrow.
Numetal and ArcelorMittal has knocked the doors of the NCLT over their disqualification in the first round of bidding that ended on February 12 claiming that rules have been followed before submitting their bids.
While arguing about the disqualification of Numetal from the first round of bidding, Khambatta maintained the decision of RP was "fair and legal".
He argued that since Numetal was formed just before submitting the resolution plan, it is evident that it was formed for that purpose only.
Khambatta also pointed out two different views taken by Numetal about its structure. "When suited, they said it is a body corporate. But, when suited, for the purpose of bidding, they said it is a joint venture and its shareholders have the strength to run Essar Steel."
"Thus, it is not open to Numetal
to contend that the RP can't look at the shareholders when determining the issue of eligibility under section 29A," he told the tribunal.
He further said Essar Steel promoter Ravi Ruia's son Rewant Ruia was, in some way or other, in control of Numetal through Aurora Trusts with 25 per cent stake, which Khambatta said is in violation of the Section 29A.
"If Ravi Ruia is working in consort with Rewant, then how can you say RP's decision is wrong?" he asked.
Defending ArcelorMittal's disqualification, Khambatta said since the company's Netherlands arm was the promoter of Uttam Galva, which is an NPA now owing over Rs 6,000 crore to the lenders, at the time of first round of bidding, "they have been disqualified by the RP as per the law" said Khambatta.
Appearing for Numetal, senior counsel Mukul Rohatgi stressed that ArcelorMittal's disqualification should continue "forever", till they pay for two of their NPA firms -- Uttam Galva and KSS Petron. The world's largest steel maker had owned 29 per cent in the bankrupt Uttam Galva rill last month.
He also demanded that they should be barred from taking part in future bidding, if any, until they clear the dues of both the firms.
On the other side, senior counsel Soli Cooper, appearing for the committee of creditors said the banks have all the rights to invite more bids if it is not satisfied with the current bidders.
"If I (CoC) want third round of bids, then I am allowed to do so. Many things are at stake here. The whole idea is to get the best possible price (for Essar Steel). No one has the right to say CoC should not extend the date of inviting bids," said Cooper.
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.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)