Essar Steel shareholder seeks ArcelorMittal's disqualification over ties with loan defaulting firms

A majority shareholder of Essar Steel Tuesday moved NCLAT seeking rejection of ArcelorMittal's Rs 42,000 crore bid to acquire the bankrupt steelmaker, alleging that its promoter Lakshmi Mittal hid his association with loan defaulting firms run by his brothers.

Seeking ArcelorMittal be declared ineligible to bid for Essar Steel, the petition cited Section 29A of the Insolvency and Bankruptcy Code (IBC) which bars promoters of defaulting companies from bidding for stressed assets.

The National Company Law Appellate Tribunal (NCLAT) agreed to hear the plea by Essar Steel Asia Holdings Ltd (ESAHL) and asked ArcelorMittal to respond to the plea. It fixed May 13 as the next date of hearing.

Essar Steel Asia Holdings Ltd (ESAHL) holds 72 per cent shares of Essar Steel.

The plea comes weeks after an insolvency court cleared ArcelorMittal's bid for Essar Steel, which was auctioned by lenders to recover unpaid loans.

It alleged that Mittal was a promoter of GPI Textiles Ltd, Balasore Alloys Ltd and Gontermann Piepers (India) Ltd - firms run by his brothers Pramod and Vinod Mittal that have been classified as non-performing assets (NPAs) or bad loans by banks.

Appearing for ESAHL, senior counsel Mukul Rohatgi said, "grossest violation was suppressed by Arcelor before CoC, NCLT, NCLAT and Supreme Court."
Reacting to the development, ArcelorMittal said, "This is the 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."