ArcelotMittal and Numetal seek to oust each other disqualification from the bidding

Two bidders for Essar Steel, ArcelorMittal and Numetal, on Wednesday sought disqualification of each other from the process to take control of Essar Steel, which is under bankruptcy proceedings before the National Company Law Tribunal.

The NCLT bench will continue to hear the case on Thursday and directed that no bid be opened till the tribunal decided on the matter. Both ArcelorMittal and Numetal have challenged each other’s legitimacy in participating in the second round of bidding held on April 2.

Former Attorney General of India and senior counsel Mukul Rohtagi, appearing for Numetal, told the tribunal though the resolution professional had disqualified ArcelorMittal from round one of bidding, there were stronger grounds to disqualify the firm from further participating in the process.

He said that according to the Insolvency and Bankruptcy Code, ArcelorMittal could only participate in the bid for Essar Steel after the promoters have paid off debt in firms such as Uttam Galva where insolvency proceedings are under way.

‘Debt must be paid off’

Uttam Galva has bank debt of about ₹6,000 crore. ArcelorMittal had earlier been ‘declassified’ as promoter of the that company, as per a stock exchange filing. “They [ArcelorMittal promoters] did not pay [back the] debt when they bid for round one and they have not cleared it even in round two bidding,” Mr. Rohtagi said.

In a counter affidavit, the ArcelorMittal group lawyer Abhishek Manu Singhvi contended that Numetal was ineligible to participate in the bid despite making changes in its shareholding pattern.

One of the promoters of Aurora Enterprises (AEL) that held 25% in Numetal was Rewant Ruia, son of Ravi Ruia, who is one of the original promoters of Essar Steel. This had led to disqualification of Numetal in round one. A senior official in JSW Steel had earlier confirmed to The Hindu that in round two, JSW Steel had bought out Rewant Ruia’s stake in the consortium before the second round of bidding. Russia’s VTB is the largest shareholder in Numetal with about 40% stake.

Mr. Singhvi also said the earnest money deposited by Numetal in the initial bidding round was from AEL. “The entire earnest money deposit of ₹500 crore was funded by AEL and not by the other shareholders/constituents of Numetal,” he told the tribunal.