NCLAT chides Ruias, says interventions delaying Essar Steel resolution

Essar Steel Asia Holdings had approached NCLAT last week seeking rejection of ArcelorMittal bid for Essar Steel

Essar Steel

The National Company Law Appellate Tribunal on Tuesday pulled up the Ruias for their last-minute application to reject ArcelorMittal's Rs 42,000-crore bid for Essar Steel, saying such steps were stalling the company's insolvency resolution process.

“Where were you for the last so many months? Why did you not challenge or appeal against the order allowing ArcelorMittal bid? You have been present throughout the proceedings, why were you waiting to intervene at this stage?” a two judge bench led by Chairperson Justice S J Mukhopadhaya observed.

The lawyer for Essar Steel Asia Holdings Limited (ESAHL), however, submitted that vetting the correctness of the plans or bids for Essar Steel was the work of the resolution professional and not the bidders. The NCLAT has agreed to hear ESAHL on Wednesday. ESAHL, which holds 72 per cent shares of Essar Steel, had approached the NCLAT last week seeking rejection of ArcelorMittal's bid for the latter, alleging that its promoter Lakshmi Narayan Mittal hid his association with loan defaulting firms run by his brothers, which made his firm ineligible to participate in insolvency proceedings.

In its plea before the National Company Law Appellate Tribunal (NCLAT), ESAHL alleged that Mittal was a promoter of GPI Textiles, Balasore Alloys and Gontermann Piepers - firms run by his brothers Pramod and Vinod Mittal that had been classified as non-performing assets or bad loans by banks. Insolvency and Bankruptcy Code (IBC) rules had previously compelled Mittal to shell out an extra Rs 7,000 crore to clear bank dues of Uttam Galva Steels and KSS Petron where he held some stake and reportedly sold his holdings in one of them for Re 1 a share, the petition alleged.

ESAHL enclosed with its application various documents to show that as late as September 30, 2018 Mittal was a co-promoter of one Navoday Consultants Ltd (Navoday) along with his brothers Pramod and Vinod, and that Navoday was in turn a promoter of GPI Textiles, Balasore Alloys and Gontermann Piepers.

ESAHL alleged that ArcelorMittal was fully aware of such ongoing business association and consequent ineligibility. And in order to hide this, Mittal sold his shareholding in Navoday between October 1, 2018 and December 31, 2018 and stopped showing himself as the promoter of the company.