The Supreme Court will hear on Monday a petition filed by Kamaljeet Singh Ahluwalia, an operational creditor of Essar Steel, against the National Company Law Appellate Tribunal’s (NCLAT) direction to the National Company Law Tribunal (NCLT).
The appellate authority had directed the NCLT to hear only one of the many objections brought by the steel-maker’s operational creditors to the ArcelorMittal bid, and limit their hearing sessions.
Violation of laws
Stating that the NCLAT order was in violation of well-settled laws — that no person should be judged without a fair hearing — the petition said without giving an opportunity of hearing to operational creditors, the NCLAT has restricted the appellant “in a manner which is unprecedented and in complete breach of principles of natural justice”. NCLAT has exceeded its appellate jurisdiction in passing the impugned order, it said.
The operational creditors have raised a red flag against ArcelorMittal’s ₹43,000-crore resolution plan for Essar Steel since, if implemented, they will end up taking a major haircut.
On the other hand, the promoters of Essar Steel, the Ruias, have agreed to repay the entire defaulted loan of ₹54,000 crore.
The Ruias placed their offer the day the ArcelorMittal resolution plan was approved by Committee of Creditors (CoC) with 92 per cent vote. NCLT Ahmedabad subsequently turned down the Ruias’ offer.
Currently, the Ruias are negotiating with banks to withdraw the insolvency petition under Section 12A of the Insolvency and Bankruptcy Code.
Ahluwalia, in his petition, claimed the NCLAT neither has supervisory jurisdiction nor can define the procedure and practice to be followed by the NCLT. It has erred in holding that all the creditors including operational creditors are not to be heard by the NCLT before approving the resolution plan, he added.
Consequently, the petition has sought the apex court to set aside the impugned order passed by the NCLAT on January 23 and February 4 and direct the NCLT to hear all the operational creditors before approving the resolution plan of ArcelorMittal.