ALSO READInsolvency: Tata Steel, 3 others submit resolution plans for Electrosteel Insolvency resolution: Tatas, Vedanta defend bids for Electrosteel Race to take over Essar Steel: Resolution professional opens bid Insolvency resolution: Top 5 steel firms need to pay Rs 29,000 cr to bid Electrosteel: NCLT asks Tata, Vedanta and IRP to file counter plea
The Kolkata bench of the National Company Law Tribunal (NCLT) has directed the resolution professionals (RPs) for Electrosteel Steels to provide reasons for the eligibility of bidders Tata Steel and Vedanta in three days. The decision of the RPs has been challenged by Renaissance Steel India.
Renaissance will have three days to file objections. Then, the RPs will have to place before the committee of creditors (CoC) their decision, along with the objections.
Also a bidder for Electrosteel, Renaissance had challenged the eligibility of the other bidders under Section 29(A) of the Insolvency and Bankruptcy Code (IBC). According to it, Tata Steel UK was guilty of an industrial accident and Konkola Copper Mines, a subsidiary of Vedanta, was guilty of pollution in Zambia. Thus both were ineligible to bid for the stressed asset.
Sources said the Electrosteel case was testing one of the clauses of Section 29(A): Whether a conviction outside India’s jurisdiction would be valid. A decision against the bidders in this case might have a bearing on other cases.
For instance, in Bhushan Steel, the employees have moved the NCLT against Tata Steel’s bid, formally announced as the highest. The objections are the same as those raised in this case. The Delhi bench of the NCLT has asked the CoC to consider the objections raised by the employees and communicate them to the tribunal.
Tata Steel, however, is not the highest bidder for Electrosteel. Sources said in the last CoC meeting, Vedanta got the highest score among the four bidders. It has not been declared as the highest bidder yet. Discussions were on with PwC and legal advisors.
There are four bidders for Electrosteel: Vedanta, Tata Steel, Renaissance Steel India, and Edelweiss Alternative Assets Advisors. The company owes banks about Rs 103 billion.