26 February 2019: The National Company Law Tribunal (NCLT) Ahmedabad bench on Tuesday rejected Mukesh Ambani-led Reliance Industries Limited (RIL)’s plea opposing ArcelorMittal’s Rs 42,000 crore takeover bid of insolvent Essar Steel. The tribunal also rejected RIL’s plea to be heard as an operational creditor (OC).
However, the two-member bench, consisting of adjudicating authorities Harihar Prakash Chaturvedi and Manorama Kumari, upheld RIL’s plea by directing Essar Steel’s resolution professional (RP) to consider its claims for dues worth Rs 16 crore.
Ruling that the “application succeeds on partial ground”, the tribunal allowed RIL to approach RP to get its claims registered and resubmitted before the Committee of Creditors (CoC). “The resolution professional is a public servant and must follow the course of natural justice…he should have maintained the claim,” the bench said while reading the operative part of the order orally, even as it directed RP to consider RIL’s claims of Rs 16 crore.
In two separate pleas, RIL had moved NCLT against Essar Steel. In one plea, it sought repayment of dues worth Rs 16 crore of which Essar Steel’s RP had considered only Rs 99 lakh. In another plea, it also sought quashing of ArcelorMittal’s resolution plan for taking over Essar Steel which now stands rejected.
The tribunal rejected RIL’s plea on the grounds that, as an OC, RIL was ineligible as its claims worth Rs 16 crore were less than 10 per cent of the total debt.
Joining other OCs, RIL had moved NCLT seeking dues from Essar Steel as a member of Hazira Area Industries Association for availing additional water supply but failing to pay for the same. As many as 30 OCs, apart from unsecured financial lender Standard Chartered Bank (SCB) had moved NCLT against ArcelorMittal’s bid for Essar Steel.
It needs to be mentioned here that, as per ArcelorMittal’s resolution plan, OCs with claims of more than Rs 1 crore will not get anything out of the Rs 42000 crore while those with less than Rs 1 crore will be repaid in full.
Essar Steel was part of the original list of 12 defaulters against whom Reserve Bank of India directed lenders to initiate insolvency and bankruptcy proceedings. Essar Steel now awaits an order from NCLT that would either see ArcelorMittal’s bid be approved by the tribunal or liquidation proceedings being initiated against the insolvent steel maker.
The Business Standard reported