In a major twist, the Ahmedabad Bench of the National Company Law Tribunal (NCLT) on Thursday asked the resolution professional (RP) and the committee of creditors (CoC) of Essar Steel to reconsider the first round of bids and review offers from ArcelorMittal and Numetal. The NCLT order rendered invalid the second round of bidding held on April 2. While Russia’s VTB-backed Numetal Mauritius and ArcelorMittal India were the only two bidders in the first round held on February 12, Vedanta, which had joined the race in the second round, will be out of the bidding process now. The fate of the other new entrant, JSW Steel, which had acquired a 25 per cent stake in Numetal from a Ruia family trust just before the second round of bidding, will depend on whether ArcelorMittal and Numetal are given a chance for rectification. Reading from the operative order, a two-judge Bench, comprising Harihar Prakash Chaturvedi and Manorama Kumari, observed that Essar Steel’s CoC and the appointed RP, Satish Kumar Gupta, “omitted to follow procedures” laid out in Sections 29(A)(c) and 30(4) of the Insolvency and Bankruptcy Code (IBC). “The RP and CoC’s decision to hold the second round of bids may sound prudent but is not legally sound. The RP and CoC are directed to reconsider their decision (to disqualify Numetal and ArcelorMittal),” the tribunal said. The NCLT Bench also excluded the period from March 20 to April 19, the day of the order, from the mandatory 270-day window of the insolvency process, as laid out by the IBC. With this, the deadline now stands extended by a month. Of the six participants submitting expression of interest (EoI) in October 2017, only Numetal and ArcelorMittal had submitted bids in the first round.
However, on March 20, Russia’s VTB-backed Numetal had moved the NCLT to reinforce its bid made on February 12. Later, with the CoC disqualifying both the bids under Section 29A, ArcerlorMittal too moved the tribunal to challenge the disqualification. The CoC had disqualified ArcelorMittal’s bid, stating that the company continued to be listed on the stock exchanges as a promoter of the defaulter Uttam Galva Steels, even though it had sold its shares, whereas Numetal’s bid was rejected because the defaulting company Essar Steel’s promoter family member Rewant Ruia’s offshore trust was holding 25 per cent shares in Numetal and as a result became the beneficiary. 