The Supreme Court on Thursday struck a reconciliatory note in the ArcelorMittal-Numetal spat in relation to the auction of distressed Essar Steel by giving both companies a fortnight to pay off the NPAs of their related corporate debtors and re-submit resolution plans.
A Bench of Justices Rohinton Nariman and Indu Malhotra, in a judgment, modified a National Company Law Appellate Tribunal (NCLAT) decision that Mittal should pay the dues before bidding. The tribunal had, however, cleared the Russian VTB Bank-back Numetal group to place its bid.
Constitutional powers
The Bench’s decision to give another opportunity came after the Committee of Creditors urged the apex court to exercise its extraordinary constitutional powers under Article 142 of the Constitution to render complete justice in the case.
The judgment, authored by Justice Nariman, referred to how senior advocate Gopal Subramanium, on behalf of the Committee of Creditors, “requested us to give one more opportunity to the parties before us to pay off their corporate debtors’ respective debts in accordance with Section 29A [of the Insolvency and Bankruptcy Code, 2016], as the best resolution plan can then be selected by the requisite majority of the Committee of Creditors, so that all dues could be cleared as soon as possible.” “Acceding to this request, in order to do complete justice under Article 142 of the Constitution of India, and also for the reason that the law on Section 29A has been laid down for the first time by this judgment, we give one more opportunity to both resolution applicants to pay off the NPAs of their related corporate debtors within a period of two weeks from the date of receipt of this judgment.” Justice Nariman directed.
If such payments are made within the next two weeks, both resolution applicants can resubmit their resolution plans of April 2, 2018 to the Committee of Creditors. The Committee has been given eight weeks to accept, by the requisite majority, the best among the plans submitted.
This includes the resolution plan submitted by Vedanta, who is also another prospective bidder.
“We make it clear that in the event that no plan is found worthy of acceptance by the requisite majority of the Committee of Creditors, the corporate debtor, i.e. ESIL (Essar Steel India Limited), shall go into liquidation,” the apex court ordered.
The Supreme Court’s judgment is based on an appeal by ArcellorMittal against the NCLAT decision of September 7, allowing rival Numetal to place second round bids worth ₹37,000 crore for Essar Steel while ordering the Luxembourg-based Mittal to first clear the ₹7,000 crore dues of its previously associated subsidiaries in order to qualify to bid.
The appellate tribunal had also asked lenders, who are auctioning Essar Steel, to recover over ₹49,000 crore of unpaid loans, to consider second round of bids by Numetal and Vedanta.
