Supreme Court has given both ArcelorMittaland Numetal two weeks to clear their outstanding dues and then submit a bid for Essar Steel.
A bench comprising Justices R F Nariman and Indu Malhotra rejected the claim of each party that the other was ineligible, insisting that both were ineligible under the act to bid and would have to pay off their corporate dues before being allowed to do so.
While ArcelorMittal owes Rs 7,000 crore of outstanding dues related to Uttam GalvaNSE 1.10 %, where it held promoter stake, and KSS Petron, the top court has asked Numetal to clear the dues of related parties.
The top court also asked the Committee of Creditors to take a decision within eight weeks on the bids submitted by Numetal and ArcelorMittal for Essar Steel.
The apex court order said that 66% majority of Committee of Creditors (CoC) will finalise the bid and if the majority doesn’t approve any bid, then Essar Steel goes into liquidation.
The top court also said that it is important that ineligible bidders do not wriggle out of the IBC clauses.
ArcelorMittal had challenged the NCLAT order which held that steel major’s second bid for Essar Steel will be eligible if it clears Rs 7,000 crore of dues pending for two of its associated companies – Uttam Galva and KSS Petron.
Numetal, which is a consortium led by the Russian bank VTB, had challenged the NCLAT’s order giiving an option to ArcelorMittal to clear the dues even after it had submitted its bid.
The CoC, in its submissions, had said that the Supreme Court will have to lift the "corporate veil" to know the persons behind these firms and determine their eligibilty according to the provisions of the Insolvency and Bankruptcy court.
In its order, the NCLAT had declared that Numetal’s second round bid for Essar Steel was eligible. But, ArcelorMittal challenged it saying that Numetal is a shell firm in which the Essar promoters are a major shareholder.
The first round bidding by both the ArcelorMittal and the Numetal was rejected by the Commitee of Creditors (CoC) for being associated with firms which are classified as defaulters, thereby violating Section 29(A) of the IBC.
While ArcelorMittal’s bid was rejected on the grounds that two firms, Uttam Galva and KSS Pteron, associated with ArcelorMittal were defaulters, Numetal’s bid was rejected as Rewant Ruia, son of Essar Steel promoter Ravi Ruia, held 25 per cent stake in the consortium.
Both ArcelorMittal and Numetal had challenged the CoC decision to reject their first round bids in the NCLT. NCLT, in its order asked the CoC to take a relook at the bids. However, the CoC called for second round of bidding by April 2.
ArcelorMittal and Numetal approached the NCLAT challenging the NCLT order. Meanwhile, ArcelorMittal deposited Rs 7,000 crore of pending dues of Uttam Galva and KSS Petron in an escrow account.
Both ArcelorMittal and Numetal rectified their bids in the second round. ArcelorMittal sold off its stake in Uttam Galva and KSS Petron while Numetal dropped Rewant Ruia as one of the members of the consortium.
JSW Steel joined Numetal as it increased its second round bid to Rs 37,000 crore. Vedanta also joined the process in the second round.
NCLAT, in its order asked ArcelorMittal to clear the outstanding dues worth Rs 7,000 crore for its second bid to become eligible. Both Numetal and ArcelorMittal approached the Supreme Court challenging the NCLAT verdict>