Essar Steel auction: SC to hear ArcelorMittal's plea against NCLAT tomorrow

Supreme Court of India

The Supreme Court on Tuesday agreed to hear a plea of Arcelor Mittal tomorrow seeking extension of time for payment of Rs 70 billion as ordered by NCLAT last week for its bid to become eligible for Essar Steel.

The apex court refused urgent hearing for ArcelorMittal's plea for payment of Rs 70 billion by today for its second bid to become eligible.

A bench of Chief Justice Dipak Misra and Justices A M Khanwilkar and D Y Chandrachud said, "We will hear the plea tomorrow".

The National Company Law Appellate Tribunal (NCLAT) had last Friday pronounced judgement, saying Russia's VTB Group-backed Numetal's second bid was eligible and asked ArcelorMittal to clear dues of its other subsidiaries to remove the stigma of defaulter by September 11 to become eligible.

Anil Aggrawal's Vedanta is a third qualified bidder for Essar Steel whose lenders have initiated insolvency proceedings for recovery of around Rs 490 billion dues.

ArcelorMittal had yesterday moved the apex court challenging the NCLAT order which held that Numetal's Rs 370 billion in second-round bid for Essar Steel was valid.

NCLAT had also asked the rival bidder ArcelorMittal to clear Rs 70 billion dues of its previously associated firms to qualify for the acquisition.

The appellate tribunal, on September 7, had asked lenders, who are auctioning Essar Steel to recover over Rs 490 billion of unpaid loans, to consider the second round bids of Numetal and Vedanta.

ArcelorMittal's bid will be considered if it pays dues by September 11, it had said.

For ArcelorMittal India (AMI), which was the only other bidder besides Numetal in round-1, the NCLAT held that it needs to remove the "stigma of defaulter" attached to it because of its previous 29 per cent stake in Uttam Galva Steel and KSS Petron.

The NCLAT held that the first round of bid by Russia's VTB Group-backed Numetal in February was ineligible as the firm was 25 per cent owned by Rewant Ruia, scion of Essar Steel's promoter Ruia family. But, he exited the firm before the second round of bid was submitted in March, making Numetal eligible.

NuMetal and steel tycoon Lakshmi Mittal-led ArcelorMittal had in February submitted separate bids to takeover Essar Steel. The Committee of Creditors (CoC), however, disqualified both bids saying their promoters were tied to companies, which were bank loan defaulters and so ineligible under Section 29A of the Insolvency and Bankruptcy Code.

The second round of bids was called where JSW Steel joined NuMetal to put in a bid of Rs 370 billion, while Vedanta Ltd entered the fray as a third bidder. AMI too put in a bid.

Both NuMetal and Essar Steel had challenged disqualification of the first round of bids in the Ahmedabad-bench of the National Company Law Tribunal (NCLT), which did not give any relief to bidders but has asked the CoC to take another look at bids before disqualifying them. CoC sought a second round of bids by April 2.

The NCLT order was challenged by both bidders in NCLAT. After the NCLT order, AMI had offered to repay any outstanding loans owed by Uttam Galva Steels Ltd, where it held promoter stake, and KSS Petron. The steelmaker had placed Rs 70 billion in an escrow account, with the condition that lenders disqualify Numetal's bid.

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