IBC: NCLAT Asks Rewant To File Affidavit Over Association With Ravi Ruia In Essar Steel Insolvency Case
The NCLAT today asked Aurora Enterprises promotor Rewant Ruia to file an affidavit stating that he has no business with Ravi Ruia in the affairs of Numetal, which is in race to acquire debt ridden Essar Steel.
National Company Law Appellate Tribunal also declined to allow the requests of Committee of Creditors of Essar Steel to open the second round of bids.
A two-member bench of the appellate tribunal headed by Chairman Justice SJ Mukhopadhaya asked to file a submission over the relationship between Rewant Ruia and Ravi Ruia.
Besides, Russia's VTB Capital-backed Numetal Ltd alleged that rival ArcelorMittal India is not eligible to bid for Essar Steel under the IBC as it was shown as promotor of defaulting company Uttam Galva till March by leading bourses, almost a month after submission of its bids.
Senior Advocate Mukul Rohatgi appearing for Numetal submitted that although ArcelorMittal has disposed of share before submitting its resolution plan in February, but it was a promotor of Uttam Galva till March 21 on NSE and March 23 on BSE records.
"They (ArcelorMittal) continued as a promotor of the company notwithstanding of selling of their share," he said, adding the "tag of promotor was removed in March not in February when bids were submitted".
Arcelor Mittal was the promoter of Uttam Galva for almost nine years, even when these account got classified as an NPA.
The Insolvency and Bankruptcy Code bars participation by promoters of delinquent companies in bidding for assets being auctioned.
Later, issuing a statement, ArcelorMittal spokesperson said that the company has sold its shareholding in Uttam Galva on Feb. 7 and submitted all relevant documentation to NSE and BSE for declassification prior to submitting our resolution plan for Essar Steel on Feb. 12. "We had no control over the NSE and BSE's declassification process," he said, adding "no ArcelorMittal representative ever held a Board position at Uttam Galva, nor did we ever propose a Board member".
The NCLAT on May 22 ordered status quo on insolvency of Essar Steel for two months as it admitted petitions of Numetal and ArcelorMittal over the bidding eligibility.
Numetal and ArcelorMittal have filed petitions in the NCLAT challenging the disqualification of their first round of bids.
Both, Numetal and ArcelorMittal put in bids in the second round after their offers in the first round were opined to be invalid. Numetal faced disqualification as its 25 percent stake was owned by Aurora Trust of Ruia family, the promoters of Essar Steel, while ArcelorMittal's first bid was rejected because of its holding shares in loan defaulting companies Uttam Galva Steel and KSS Petron.
For the second round of bid, VTB Bank sought to sever ties with the Ruia family by buying out Aurora Trusts stake in Numetal. ArcelorMittal transferred Rs 7,000 crore to an escrow account of SBI to clear outstanding loans of Uttam Galva and KSS Petron.
In the second round of bidding, Anil Agarwal's Vedanta Resources also joined the race. JSW joined Numetal for the bid.