The Supreme Court on Thursday struck a reconciliatory note in the ArcelorMittal-Numetal spat over the auction of distressed Essar Steel by giving both prospective bidders a fortnight to pay off their dues and re-submit their resolution plans.
A Bench of Justices Rohinton Nariman and Indu Malhotra, in a judgment, said that once the NPAs are cleared, both companies would get eight weeks to submit fresh resolution plans.
With this, the Supreme Court modified the National Company Law Appellate Tribunal (NCLAT) which ordered Mittal to pay his dues before bidding but cleared the Russian VTB Bank-backed Numetal group to place its bid. Now both companies have to clear their NPAs.
The Bench gave both companies this fresh opportunity after the Committee of Creditors urged the apex court to exercise its extraordinary constitutional powers under Article 142 of the Constitution.
The Supreme Court’s judgment is based on an appeal by ArcellorMittal against the NCLAT decision of September 7, allowing rival Numetal to place second round bids worth ₹37000 crore for Essar Steel while ordering the Luxembourg-based Mittal to first clear the ₹7000 crore dues of its previously associated subsidiaries in order to qualify to bid.
Senior advocate Harish Salve, for ArcellorMittal, had said his client’s appeal posed a “serious challenge” against the NCLAT decision.
Senior advocate Mukul Rohatgi, for Numetal, had countered that ArcellorMittal should be “completely disqualified” from bidding.
The tribunal had held that Numetal’s ₹37,000 crore in second-round bid for Essar Steel was valid.
NCLAT had however held that ArcelorMittal should first remove the “stigma of defaulter” attached to it because of its previous 29% stake in Uttam Galva Steel and KSS Petron.
The appellate tribunal had also asked lenders, who are auctioning Essar Steel to recover over ₹49,000 crore of unpaid loans, to consider second round of bids by Numetal and Vedanta.
Numetal and steel tycoon Lakshmi Mittal-led ArcelorMittal had, in February, submitted separate bids to takeover Essar Steel. The Committee of Creditors (CoC), however, had disqualified both bids saying their promoters were tied to companies which were bank loan defaulters and ineligible under Section 29A of the Insolvency and Bankruptcy Code.
Numetal’s bid was found specifically ineligible as the firm was 25% owned by Rewant Ruia, scion of Essar Steel’s promoter Ruia family. Mr. Ruia however left the firm before the second round of bid was submitted in March. The second round of bids was called as JSW Steel joined Numetal to put in a bid of ₹37,000 crore for Essar Steel.