The Supreme Court on Thursday gave two weeks' time to NuMetal and ArcelorMittal to clear their respective corporate dues before resubmitting bids to acquire insolvency-hit Essar Steel.
A bench of Justice Rohinton Fali Nariman and Justice Indu Malhotra said the two companies should submit their resolution plans for acquiring Essar Steel that was facing bankruptcy proceedings under the Insolvency and Bankruptcy Code (IBC) after they have cleared their dues.
Holding that the resolution plans submitted by the two entities are marred by Section 29(A)(c) of the IBC, Justice Nariman said, "We give one more opportunity to ... (NuMetal and ArcelorMittal ) ... to pay off the NPAs of their related corporate debtors within a period of two weeks from the date of receipt of this judgment, in accordance with the proviso to Section 29A(c)."
If the two companies make the payments within two weeks, the court said, then they can resubmit their resolution plans dated April 2, 2018 to the Committee of Creditors comprising banks and financial institutions.
The court gave the CoC eight weeks from the date of resubmission of the April 2 plan "to accept, by the requisite majority, the best amongst the plans submitted, including the resolution plan submitted by Vedanta."
The requisite majority of the CoC means 66% of the votes.
Since Section 29A(c) is a see-through provision, the court said, "Great care must be taken to ensure that persons who are in charge of the corporate debtor for whom such resolution plan is made, do not come back in some other form to regain control of the company without first paying off its debts."
The court further said that in the "event no plan is found worthy of acceptance by the requisite majority of the Committee of Creditors, the corporate debtor, that is Essar Steel, shall go into liquidation."
The apex court also made it clear that none of the adjudicating authorities - National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) - would interfere while the resolution plan was under process.
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