Numetal has moved the National Company Law Appellate Tribunal (NCLAT) challenging the NCLT order that pointed towards payment of overdue amount for ArcelorMittal to cure its ineligibility. Legal sources in Numetal said the NCLT order, which suggested a 30-day cure period for payment of overdues for ArcelorMittal, wasn't applicable. It was applicable to companies who had bid before the IBC amendment, but ArcelorMittal submitted its bid for Essar Steel after the amendment, they said.
Sources close to ArcelorMittal said: "There seems to be no end to the lengths Numetal will go to prevent ArcelorMittal being selected as the new owner for Essar Steel. Media reports suggest ArcelorMittal has made a superior offer and they have always maintained they are eligible. Furthermore, they are the world's leading steel company and, in partnership with Nippon, clearly have all the industrial knowledge and experience to provide Essar with a strong future. It is disappointing for the stakeholders of Essar Steel that there will be further attempts to delay a swift resolution.”
After the NCLT remanded the first round of bids to the resolution professional (RP) and CoC, the first meeting of the CoC was held on April 24. The financial bids were opened at the meeting and ArcelorMittal's bid was found to be higher than Numetal's. However, lenders had not taken a call on the issue of eligibility of ArcelorMittal and Numetal or to go for a fresh bid, and it decided to meet again on April 27.
ArcelorMittal didn't comment on the letter, but said: “We have always believed and continue to believe that our first offer is eligible.”
The letter comes after the NCLT order, which remanded back the first bids to the RP and CoC, saying due procedure had not been followed.
The court felt enough time had not been given for rectification of bids. The court has referred to proviso 30 (4), which says that if the resolution applicant is ineligible under clause (c) of Section 29A, the resolution applicant shall be allowed by the CoC such period, not exceeding 30 days, to pay overdue amounts.
Uttam Galva Steels was a non-performing asset for more than a year and under Section 29A of the IBC, a promoter of a defaulting company was debarred from the bidding process unless it paid the dues. ArcelorMittal sold Uttam Galva Steels shares to terminate the co-promotion agreement even though it did not have management control or board representation.
The NCLT Bench, however, observed that ArcelorMittal would have to pay overdue amount for Uttam Galva Steels and KSS Petron to make itself eligible. In KSS, L N Mittal had personal shareholding, which he sold ahead of the Essar Steel bid. KSS, in turn, has a subsidiary, KSS Petron, which is also an NPA for more than a year. Despite making observations, the Bench also asked the CoC to take an independent view in the matter.