NCLAT okays ArcelorMittal resolution plan for Odisha Slurry Pipeline Infra

Tribunal dismissing a raft of appeals including those filed by SREI entities

The National Company Law Appellate Tribunal (NCLAT) has approved ArcelorMittal's resolution plan for Odisha Slurry Pipeline Infrastructure (OSPIL) dismissing a raft of appeals including those filed by SREI entities.

OSPIL owns and operates a 253-km slurry pipeline – a critical ancillary unit of Essar Steel, now ArcelorMittal Nippon Steel India (AM/NS India). Early December 2019, ArcelorMittal India Private Ltd's (AMIPL) resolution plan for OSPIL under the insolvency law was approved by the Committee of Creditors (CoC) and by the National Company Law Tribunal (NCLT) Cuttack bench in March 2020.

However, the plan was challenged in NCLAT by SREI Infrastructure Finance as a financial creditor as well as SREI Multiple Asset Investment Trust (SMAIT). A scheme of SMAIT, India Growth Opportunities Fund (IGOF) held 69 per cent equity in OSPIL (the balance was with Essar Steel).

In the appeal filed by SIFL, the NCLAT said, “Having held that the plan approved by the CoC by a vote of 100 per cent in its meeting and approved by the Adjudicating Authority, in toto, we do not find any infirmity or illegality in the order passed by the Adjudicating Authority approving the Resolution Plan.”

The order was passed by NCLAT on January 18 and uploaded today (Thursday).

SIFL’s main contention was that the plan discriminates in the matter of distribution of money between similarly placed financial creditors, negates personal guarantee of promoter provided to it and permits abatement of title suit pending before Sealdah Court, Kolkata.

It also contended that the plan failed to consider the user charges that were due and payable by Essar Steel to OSPIL.  

The slurry pipeline was leased to Essar and the user charges captured in the right to use (RTU) agreement. The pipeline connects AM/NS India iron ore beneficiation plant in Dabuna with the 12 million tonne pellet plant in Paradip.

As far as the grievance regarding distribution of money was concerned, the appellate tribunal said that it had not come across any discrimination made to the appellant with regard to its payment and treatment on par with the other secured creditors. SIFL was made an upfront payment of the entire principal sum of Rs 321.6 crore.

SMAIT in its appeal had raised that AMIPL was ineligible under Section 29A as Essar was a 30.2 per cent shareholder in OSPIL. However, the NCLAT observed that AMIPL’s resolution plan for OSPIL was approved by the CoC prior to taking over management control of Essar. Therefore, it cannot be treated or classified as a connected person.

On December 16, 2019, ArcelorMittal jointly with Nippon Steel had acquired Essar in a Rs 42,000 crore deal under the Insolvency and Bankruptcy Code (IBC) and renamed ArcelorMittal Nippon Steel India (AM/NS India). The resolution plan for OSPIL was approved on December 6, 2019.

In conclusion, the order said that the appellant (SMAIT) has not made out any case and a futile exercise in filing this appeal.

The NCLAT also dismissed an appeal filed by the Government of India, GST & Central Tax, regarding claims as an operational creditor. An appeal by the IDBI Bank against admitting SIFL as a financial creditor was dismissed as well.

BOX: Odisha Slurry Pipeline Infrastructure Ltd

Asset: 253-km slurry pipeline connects AM/NS India’s iron ore beneficiation plant in Dabuna with 12-million-tonne pellet plant in Paradip

Resolution amount: Rs 2,358 crore