The National Company Law Appellate Tribunal (NCLAT) on Tuesday had some harsh words for the erstwhile promoters of Essar Steel — the Ruias — who last week challenged ArcelorMittal’s eligibility to bid for their bankrupt firm, alleging that LN Mittal had links with loan defaulting firms of his brothers.
A two-member bench led by chairman SJ Mukhopadhyay asked the petitioner, Essar Steel Asia Holdings (ESAHL), why it has chosen to intervene at this stage.
“You have been present throughout the proceedings. Why were you waiting to intervene at this stage?” the bench asked ESAHL. “We are now being deviated to see endless proceedings… We are not in a position to dispose of a matter because thousands of people are intervening… Where were you roaming in the last few months? Why didn’t you challenge after the committee of creditors (CoC) and the adjudicating authority approved the plan?” the bench asked ESAHL’s counsel Harish Rawat.
However, the appellate tribunal agreed to hear their plea for a short duration on Wednesday.
After the Ahmedabad bench of the NCLT approved ArcelorMittal’s Rs 42,000-crore bid for Essar Steel, the latter’s promoters had moved the NCLAT but were asked to first pay up the dues of their entire group as per an earlier Supreme Court order. “We may consider (your appeal), if you pay the dues as per the Supreme Court order. Think over it. Think over `80,000 crore money, we will make room for you,” the two-member bench headed by Justice SJ Mukhopadhyay, had then said. The promoters of Essar Steel did not pursue the matter further at that point of time.
However, on May 7, ESAHL, which holds 72% shares of Essar Steel moved the appellate tribunal seeking rejection of ArcelorMittal’s bid, alleging that its promoter Lakshmi Mittal hid his association with loan defaulting firms run by his brothers, that made his firm ineligible to participate in insolvency proceedings.
The charge has been strongly rebutted by ArcelorMittal, which has termed the allegation as a delaying tactic by Essar promoters.
ESAHL’s allegation is that Lakshmi Mittal was a promoter of GPI Textiles, Balasore Alloys and Gontermann Piepers — firms run by his brothers Pramod and Vinod Mittal that had been classified as non-performing assets or bad loans by banks.
Insolvency and Bankruptcy Code (IBC) rules had previously compelled Lakshmi Mittal to shell out an extra `7,000 crore to clear bank dues of Uttam Galva Steels and KSS Petron where he held some stake and reportedly sold his holdings in one of them for `1 a share.
In its petition, ESAHL said Arcelor Mittal India and its promoter Lakshmi Mittal had “misled” the Supreme Court, lenders and insolvency court into believing that they had ceased to have any business association with Pramod and Vinod Mittal and their companies.
It alleged that as late as September 30, 2018 Mittal was a co-promoter of one Navoday Consultants Ltd (Navoday) along with his brothers Pramod and Vinod, and that Navoday was in turn a promoter of GPI Textiles, Balasore Alloys and Gontermann Piepers.
ESAHL has stated that these facts make it clear that ArcelorMittal had suppressed and concealed from the committee of creditors of Essar Steel and all courts that its promoter Lakshmi Mittal continued to have business relations with his brothers Pramod and Vinod and accordingly ArcelorMittal was ineligible to submit a resolution plan under Section 29A of the IBC.
ESAHL has alleged that ArcelorMittal was fully aware of such ongoing business association and consequent ineligibility. And in order to hide this, Mittal sold his shareholding in Navoday between October 1, 2018, and December 31, 2018, and stopped showing himself as the promoter of the company.
via Essar Steel case: NCLAT raps Ruias, asks why so late – The Financial Express