The National Company Law Appellate Tribunal (NCLAT) has decided to hear the Essar Steel insolvency case dispute on a daily basis for an early resolution.
ArcelorMittal, the winning bidder, has been fighting to takeover the steel company for over one-and-half year but there is no sign of a resolution yet.
Arguing on behalf of Essar Steel’s financial creditor Standard Chartered Bank (SCB) on Monday, senior advocate Kapil Sibal said ArcelorMittal’s bid is only ₹39,500 crore rather than ₹42,000 crore as claimed by the company in the Supreme Court.
Sibal said ArcelorMittal has carved out ₹2,500 crore from the bid for working capital which should have ideally gone to the financial creditors.
Moreover, the truncated four-member committee of creditors privately negotiated with ArcelorMittal to get a slurry pipeline, which was not even part of Essar Steel’s asset.
Odisha Slurry Pipeline India (OSPIL), which owns a 253-km slurry pipeline critical for Essar Steel operations, is owned 70 per cent by Srei Infrastructure and only the rest is owned by Essar Steel.
An amount of ₹2,500 crore, which should have been paid to Standard Chartered, has been diverted to lenders of OSPIL, he said.
Raking up conflict of interest issues, Sibal said the common lenders of OSPIL and Essar Steel are also part of Essar Steel Committee of Creditors. Such private negotiations in an unrelated company inthe insolvency process by four members of the CoC is detrimental to Essar Steel stakeholders, he argued.
Standard Chartered Bank also claimed that the profit made by Essar Steel during the insolvency process is being misappropriated.
At this stage, the NCLAT questioned why profits generated during the period are given to financial creditors, when in fact it is the operational creditors who have supported Essar during the insolvency process and supplied goods and services. Without this the profits would not have been even generated.
Kapil Sibal to continue arguments on Tuesday.
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