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The Ahmedabad Bench of the National Company Law Tribunal has observed that mere sale of shares and declassification as promoter after the companies had gone into default cannot absolve ArcelorMittal’s responsibility.
The observation was made in the 90-page order pronounced by NCLT in the case filed by Numetal India and ArcelorMittal to establish their eligibility for Essar Steel bidding after their bids were rejected by the Committee of Creditors (CoC).
NCLT had observed that persons connected to ArcelorMittal India who are either promoters or in the management control of the defaulted companies KSS Petron and Uttam Galva Steels are ineligible.
In order to become eligible, the Tribunal said that overdue amounts to the lenders in both the cases of KSS Petron and Uttam Galva should be paid off by ArcelorMittal before being eligible to bid, as provided in Section 29A of IBC, it added.
The CoC will meet on Monday to discuss the court order threadbare before taking a final call on both the companies’ eligibility or call for fresh bidding as noted by NCLT.
Responding to BusinessLine questions, ArcelorMittal spokesperson said the company is currently reviewing the order and will comment further in due course as appropriate.
The Tribunal further observed that the resolution professional’s suggestion to CoC to start afresh by inviting bids from all interested parties would have been a sound, reasonable and legally transparent option keeping in view of amendment to Section 29 of the Code when the resolution plan was considered.
While asking the CoC to reconsider the proposals, the Tribunal observed that the CoC may relook the option of recalling fresh bids as discussed in its March 21 meeting and take appropriate decision looking to time constrain.
Seshagiri Rao, Joint Managing Director, JSW Steel, said the company’s offer to place bid for Essar Steel without taking any extra time was rejected by CoC even without considering it. Now, he said, the Tribunal has vindicated JSW’s stance and suggested that recalling bids from all interested companies would be a better solution.
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