Supreme Court reserves verdict on cross-appeals for Essar Steel bid

SC reserves verdict on appeals of NuMetal, ArcelorMittal on eligibility to bid for Essar Steel

The Supreme Court on Wednesday reserved its verdict on cross-appeals of Russia's VTB Bank-promoted firm NuMetal and steel and mining major ArcelorMittal challenging the NCLAT order on the eligibility of the latter to bid for Essar Steel.

National Company Law Appellate Tribunal (NCLAT) had ruled that NuMetal's second bid for Essar Steel was eligible, but the same by ArcelorMittal would qualify only if it cleared the Rs 70 billion dues of the two firms it was previously associated with.

While ArcelorMittal had challenged the order asking it to pay Rs 70 billion to become eligible for the bidding, NuMetal had alleged that NCLAT had "wrongly" applied legal provisions to enable its rival bidder to pay the dues of two debt-ridden firms even after it had bid for Essar Steel.

A bench of Justices R F Nariman and Indu Malhotra reserved its verdict after counsel for all the parties, including the Committee of Creditors (CoC), concluded their arguments which continued for eight days.

Senior advocate Mukul Rohatgi, appearing for NuMetal, said that its second bid was higher than ArcelorMittal's and moreover, it had already said the company would match the offer of its rival bidder.

The court, however, said it would only decide the eligibility aspect and the other financial issues would be discussed by the CoC.
 

Rohatgi said Vedanta, the third bidder, was not serious and has not appeared anywhere and there cannot be a situation where there was only one bidder.

Senior advocate Gopal Subramaniam, who represented the CoC, said that debt-ridden Essar Steel, whose resolution process has begun, is a valuable asset and it did not want it to go for liquidation.

The counsel for CoC sought eight weeks after the date of judgement to complete the negotiations and the bidding process for Essar Steel.

"I am not appearing for Ruias. Numetal has nothing to do with Ruias," Rohatgi said, adding that NuMetal has made it clear by filing an affidavit before the Resolution Professional that it would not sell Essar Steel back to Ruias if it emerges a winner.

Moreover, VTB Bank was not barred by laws like SEBI like anywhere in the world, nor the new company Numetal is a corporate debtor anywhere, he said.

Earlier, the CoC had said the apex court will have to lift the "corporate veil" to test the eligibility of ArcelorMittal and NuMetal, which are bidding for Essar Steel, to ascertain the persons behind them.

Rohatgi had said the two brothers of L N Mittal, Pramod and Vinod Mittal, have been associated with firms which were declared non-performing assets (NPAs).

ArcelorMittal had said that NuMetal was not eligible to bid for Essar Steel on several grounds, including that it was a "shell company" created by a firm in which Essar group promoters had majority shares.

NCLAT had ruled that NuMetal's second bid for Essar Steel was eligible but the same by ArcelorMittal will qualify only if it cleared the Rs 70 billion dues of the two firms, Uttam Galva and KSS Petron, it was previously associated with.