NCLAT directs status quo in Electrosteel sale case

The National Company Law Appellate Tribunal (NCLAT) today directed that status quo be maintained in the case pertaining to the sale of debt ridden Electrosteel Steels to Vedanta Ltd.

NCLAT direction came over a petition filed by Renaissance Steel which saw its resolution application being rejected by the Committee of Creditors (CoC) of Electrosteel Steels.

A two member bench of the tribunal headed by Chairman Justice S J Mukhopadhaya admitted Renaissance Steel's plea and issued notices to Vedanta and its lenders.

In the pendency of the appeal, the parties and the adjudicating authority will maintain status quo, the tribunal said.

The appellate tribunal has directed them to file their replies with 10 days and the matter to be listed on May 17.

Counsel appearing for Renaissance submitted before NCLAT that Vedanta is not eligible to bid for Electrosteel under section 29 A of the Insolvency & Bankruptcy Code.

According to the counsel the Renaissance bid was higher than the Rs 5,320 crore bid accepted the CoC of Electrosteel Steel.

Last month, the Kolkata bench of the National Company Law Tribunal (NCLT) had cleared Vedanta's Rs 5,320-crore resolution plan for Electrosteel, rejecting objections by Renaissance Steel.

Electrosteel Steels owes lenders more than Rs 13,000 crore, of which about Rs 5,000 crore is to State Bank of India alone.

Renaissance Steel, which was one of the resolution applicants for Electrosteel Steels, had contested that Vedanta and Tatas were not eligible to bid.

Electrosteel operates an integrated steel manufacturing facility near Bokaro, Jharkhand which has a capacity of 1.5 million tonnes per annum.

The Reserve Bank of India had in June last year identified 12 large corporate accounts for insolvency resolution, including that of Electrosteel Steels.