GAIL India moves NCLT to recover Rs 9,942 crore Uttam Galva dues

Dispute arises as resolution professional accepted only Rs 167 crore of claims

A legal battle is brewing between Uttam Galva, the bankrupt steel firm, and GAIL India (GAIL), with the gas distribution company moving the National Company Law Tribunal for rejection of its dues worth Rs 9,942 crore by the company’s debt resolution professional.

GAIL moved the NCLT Mumbai Bench after the resolution professional accepted claims of only Rs 167 crore of its entire dues. According to court filings, GAIL submitted a claim as an operational creditor for Rs 9,942 crore under various gas sale agreements for Uttam Galva’s plants located in Raigad, Maharashtra.

Of this, an amount of Rs 167 crore was due as on the insolvency commencement date, October 1, 2020, and which was admitted by the resolution professional. The remaining dues of Rs 9,775 crore relates to liabilities that, according to GAIL, may arise in the future in the event that the gas sale agreements are not duly performed.

GAIL, therefore, filed an application before the NCLT, Mumbai, seeking a direction that its claim be admitted as an operational debt.

GAIL declined to comment on the issue.

According to Uttam Galva, GAIL’s balance amount is not a “claim” as defined under section 3(6) of the Insolvency and Bankruptcy Code, 2016, read with the relevant provisions of the gas sale agreements. Hence, the balance amount is not being admitted.

Among the secured lenders, the resolution professional accepted the entire Rs 6,476 crore claim made by ArcelorMittal India. The resolution professional also accepted the claim of Rs 1,446 crore made by ArcelorMittal Luxembourg Holdings. The LN Mittal-owned company had acquired the debt from Indian public sector banks to become eligible to bid for Essar Steel, another bankrupt company.

Among the company’s other creditors, the State Bank of India has claimed Rs 175 crore and Punjab National Bank claimed Rs 190 crore. The resolution professional has admitted claims of Rs 9,338 crore from all the secured creditors and Rs 2,194 crore from the operational creditors. ArcelorMittal has submitted an offer of Rs 4,000 crore to Uttam Galva’s lenders to take over the company. The matter is currently pending in the court.

ArcelorMittal declined to comment on this issue.