In a fresh twist in Essar Steel's insolvency saga, one of the shareholders of Essar Steel Asia Holdings Limited, on Tuesday approached the National Company Law Appellate Tribunal (NCLAT) with a plea that ArcelorMittal India Limited’s bid for the Essar Steel be rejected as the company hid certain crucial facts regarding its shareholding in companies, which have since turned into non-performing assets (NPAs). The NCLAT has admitted the plea for hearing and sought ArcelorMittal’s response to it.

In its plea before the NCLAT, Essar Steel Asia Holding, which holds 72 per cent shares of Essar Steel, alleged that ArcelorMittal’s promoter Lakshmi Mittal “misled the courts” by declaring that he had completely exited from the Indian businesses of his family despite the fact that he was still a promoter of GPI Textiles, Balasore Alloys and Gontermann Piepers. These firms, Essar Steel Asia Holding said in the plea, are run by Mittal’s brothers Pramod and Vinod Mittal, and have been classified as NPAs by banks.

In its plea, Essar Steel Asia Holding also challenged an affidavit filed on October 17, 2018 by Sanjay Sharma, on behalf of Lakshmi Mittal and ArcelorMittal, which said that neither Mittal personally, nor ArcelorMittal as a company, had any shareholding in any of the companies where his brothers, Pramod and Vinod were promoters.

Since Lakshmi Mittal was still a promoter in the companies which have been declared NPA, Essar Steel Asia Holdings’ petition said, his company should be declared ineligible to submit a bid under Section 29 (A) of the Insolvency and Bankruptcy Code (IBC). Section 29 (A) of IBC bars related parties, and companies which have NPA accounts from bidding for other companies under insolvency.

Essar Steel Asia Holdings claimed that as late as September 30, 2018 Mittal was the co-promoter of a company called Navoday Consultants Ltd along with his brothers Pramod and Vinod. Navoday, the petition claims, was in turn a promoter of GPI Textiles, Balasore Alloys and Gontermann Piepers.

The petition, a spokesperson for ArcelorMittal said, was “latest in a long line of frivolous attempts by the defaulting promoters of Essar Steel to distract from the central fact that Indian lenders have declared ArcelorMittal as the most credible owner of Essar Steel”.

“Allegations regarding ArcelorMittal’s ineligibility on account of companies associated with Mr Mittal’s brothers have already been raised by the promoters of Essar Steel before the Supreme Court, which refused to even entertain such assertions. The latest allegations of Essar Steel promoters are yet another attempt to subvert the directions of the Supreme Court and the IBC, a critical government legislation. Their assertions are irrelevant, misleading and will be rebutted in the strongest possible terms,” the spokesperson said.

The NCLAT had on March 18 given a conditional go-ahead to ArcelorMittal’s Rs 42,000-crore resolution plan for debt-laden Essar Steel. A two-member bench said the implementation would be subject to the final outcome of the various pending appeals. The financial and operational creditors of the company can be given the funds according to the resolution plan, a two member-bench, led by Justice S J Mukhopadhaya, had said.

While the appellate tribunal had said it would look into the issue of equitable distribution of funds to all financial and operational creditors, it had refused to stay the resolution process. In case the NCLAT found any discrepancies in distribution of funds, it would ask the respective parties to refund part of the money they had already recdeived, the bench said.

ArcelorMittal's offer provides financial creditors Rs 41,987 crore out of their total claimed dues of Rs 49,395 crore. Operational creditors, under the plan, have been allotted only Rs 214 crore against their claim of Rs 4,976 crore. Former Essar Steel promoters, on the other hand, had challenged the National Company Law Tribunal (NCLT) Ahmedabad’s order, claiming the ArcelorMittal’s plan should be rejected as their offer of Rs 54,389 crore was much higher.

The former promoters have also claimed that in case their plan is implemented, neither financial, nor operational creditors will have to take any haircut on their dues.