The National Company Law Appellate Tribunal (NCLAT) on Friday ruled that Numetal’s ₹37,000-crore second-round bid for Essar Steel is valid, but asked rival bidder ArcelorMittal to clear the ₹7,000-crore dues of Uttam Galva and KSS Petron, firms with which it was associated, within three days to qualify as a bidder.
The NCLT had held that the first-round bid by Russia’s VTB Group-backed Numetal in February was ineligible as the firm was 25 per cent owned by Rewant Ruia, son of Ravi Ruia, the defaulting promoter of Essar Steel. But he exited the firm before the second round of bids was submitted in March.
The NCLAT today directed Essar Steel’s Committee of Creditors (CoC) to consider Numetal’s second-round bid, in which JSW Steel is a stakeholder, too, as a shareholder. Anil Agarwal-owned Vedanta, which had placed a financial bid for Essar Steel in the second round, will also be considered.
The first round of bids placed by ArcelorMittal and Numetal had been rejected as the National Company Law Tribunal (NCLT) had ruled that they were not eligible bidders. The NCLT gave the companies a week’s time to ‘cure’ themselves and ordered the CoC to call for a second round of bidding.
While challenging the NCLT order at the NCLAT, ArcelorMittal made a conditional deposit of ₹7,000 crore in its own current account to settle the dues of its group companies and Numetal forced Ravi Ruia to sell his stake.
Escrow deposit not a payment
On Friday, NCLAT said ArcelorMittal’s deposit in its own escrow account does not qualify as payment of the overdue amount. A conditional offer to repay cannot be accepted, said the 69-page judgment passed by Justices SJ Mukhopadhaya and Bansi Lal Bhat.
In the case of Numetal, the order said that as of March 29, it was not a shareholder in any of the related parties, hence the ‘stigma’ of Section 29A of the IBC goes.
ArcelorMittal said in statement: “We note today’s NCLAT judgment and await the full order, which we will review before determining our next steps.”
A Numetal spokesperson said the order vindicates the company’s conviction that it is an eligible bidder. The NCLAT has also excluded the period of appeal (over four months) from the 270 days granted for the insolvency proceedings under IBC.