Giving another opportunity to ArcelorMittal and Numetal, the original bidders for Ruias promoted Essar Steel India Ltd., the National Company Law Tribunal (NCLT) bench in Ahmedabad asked the Resolution Professional (RP) and Committee of Creditors (CoC) to re-examine the bids submitted by the two in the first round.
It may be noted that the CoC and RP had rejected both bids, citing ineligibility on technical grounds.
The court held the second round of bidding ‘prima facie invalid’.
“The RP and CoC’s decision to hold second round of bids may sound prudent but is not legally sound. The RP and CoC are directed to reconsider their decision (of disqualifying Numetal and ArcelorMittal),” the bench observed.
The Committee of Creditors had disqualified ArcelorMittal’s bid stating that the company continued to be a promoter of the defaulter Uttam Galva Steels on the stock exchanges, whereas Numetal’s bid was rejected because defaulting company Essar Steel’s promoter family member Rewant Ruia, along with an offshore trust, was holding 25% shares in Numetal, and as a result became the beneficiary.
On Thursday, the two adjudicating members Bench asked the RP and the CoC to review the bids, including the resolution plans, afresh with an extended time duration.
‘Omitted procedures’
The Bench observed that Essar Steel’s CoC, and the RP, “omitted to follow procedures” laid out as per Sections 29(A) (c) and 30(4) of Insolvency & Bankruptcy Code (IBC).
The Bench also exempted the time duration which went into litigation at challenging the disqualifications of the two bidders, and extended the deadline with equal days.
According to sources, the next course of action for the RP would be either to reconsider the bids as directed by the NCLT or make an appeal in the National Company Law Appellate Tribunal (NCLAT).
The NCLT directive is seen as an ouster of Anil Agarwal-promoted Vedanta and JSW, which partnered with Numetal in a step-down subsidiary, Nu Metal & Steel Pvt. Ltd., as the Bench termed the second round of bidding “prima facie invalid.”
