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ArcelorMittal, others bid for 2nd round of Essar Steel; hearing on Thursday

In the second round, apart from ArcelorMittal and Numetal, Vedanta is in the fray. Also, JSW is partnering Numetal

Vinay Umarji  |  Ahmedabad 

Essar Steel
Essar Steel

Legal counsels for (RP), the (CoC) and on Wednesday prayed for the second round of bids for Essar Steel to be opened at the earliest at the (NCLT) Ahmedabad bench.

The next hearing is slated for April 5, when the RP's legal counsel will make his arguments. The three parties prayed to the tribunal bench to allow the opening of bids after Khambatta makes his arguments. The prayer was made in the wake of the 270-day insolvency proceedings deadline ending on April 29.

In the first round too, there was a delay in deciding on the eligibility issue. The bids were submitted by and on February 12 and finally rejected on March 21 on grounds of eligibility under Section 29A, which prompted and to move the challenging the decision on eligibility. Applications were also filed by the two bidders challenging each other's eligibility. had also filed an application seeking a stay on the opening of bids which still continues.

In the second round, apart from ArcelorMittal and Numetal, is in the fray. Also, JSW is partnering Numetal.

On Wednesday, the two adjudicating members bench led by Harihar Prakash Chaturvedi and Manorama Kumari of Ahmedabad heard arguments multiple petitions and counter-affidavits filed by Numetal and ArcelorMittal.

Darius Khambatta, appearing for the RP, contended that if one were to overlook Numetal's shareholding constituents, then the latter could not rely on the net worth of its shareholders.

Khambatta was making the argument on the back of Numetal's earlier prayer of ignoring its shareholding constituents including Essar Steel promoter Ravi Ruia's son In order to qualify for the bids, Numetal is banking on the networth of its shareholders including Ltd (AEL) which holds a 25 per cent stake in it.

Representing Numetal, senior counsels and argued that ArcelorMittal couldn't absolve itself by merely selling off its shares in and KSS Petron, the two defaulting before participating in the bids but had to clear the debts to be rightly qualified to bid for Essar Steel.

Numetal also argued that with a 26 per cent stake in through KSS Global, ArcelorMittal, in effect, had control over the defaulter, thereby being disqualified under section 29A of the (IBC).

Section 29 (A) of disqualifies defaulting promoters from participating in the corporate insolvency process and the interim had last month disqualified bids by ArcelorMittal India and Numetal Mauritius for Essar Steel.

Dwarkadas, on the other hand, stated "Numetal is a body corporate and not a consortium. Hence, individuals cannot be taken into account unless they have management control. In this case, Rewant is not in control of Numetal and is only one of the shareholders of the entity."

In its counter-argument, ArcelorMittal's counsel Abhishek Manu Singhvi said that while it had severed ties with the defaulting and before the cut-off date of February 12, Numetal had failed to do so and hence should be disqualified.

Singhvi claimed that the original expression of interest submitted for Essar Steel by Numetal consisted mainly of Ltd and Essar Communications are the stakeholders. Singhvi also said that the Rs 5 billion earnest money deposited by Numetal during the initial bidding round was from

Singhvi said that the request for proposal (RFP) conditions require that permission of the be obtained for any change in the composition of the bidding consortium, particularly when there is an accompanying change in control. This was not done in the case of Numetal, especially when VTB came in as the largest shareholder.

First Published: Thu, April 05 2018. 01:01 IST
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