Hot steel billets used for production of seamless pipes roll along the production line in a steel-making shop. (Photographer: Andrey Rudakov/Bloomberg)

Numetal Says Banks Led By SBI Asked ArcelorMittal To Clear Dues Of Two Firms

Russia’s VTB Bank-backed Numetal today told the Supreme Court that contrary to claims, a consortium of banks led by the State Bank of India Ltd. had written to ArcelorMittal to pay the dues of debt-ridden firms.

A bench of Justice RF Nariman and Justice Indu Malhotra took note of the submissions with a word of caution saying the charges and counter-charges by the two firms, seeking to bid for Essar Steel, against each other, would open a “pandora’s box”. The bench had earlier asked Numetal to establish that there was “subterfuge” on part of rival ArcelorMittal in divesting shares in two debt-ridden firms before bidding for Essar Steel.

Senior advocate Mukul Rohatgi, appearing for Numetal, assailed the submissions of ArcelorMittal that no bank has asked it to pay the dues of Uttam Galva and KSS Petron. The counsel claimed that a consortium of banks led by the SBI had written to them to pay the dues in these two firms.

Also read: Numetal Asked To Establish Subterfuge Charge Against ArcelorMittal 

He then referred to the non-disposal undertaking agreement and said that ArcelorMittal should have taken permission of the lenders before disposing off its shares in Uttam Galva. Moreover, this information was not disclosed to the public and the Bombay Stock Exchange, he said.

Referring to the legal provisions, Rohatgi said ArcelorMittal suffered “triple disqualifications” as it was the promoter in Uttam Galva and was also managing and exercising control over the company. “ArcelorMittal was the promoter of Uttam Galva because of the co-promoter agreement and if you are the promoter, then you are the promoter and there is no concept of a sleeping promoter.”

Sale of shares worth Rs 80 crore at Rs 19.5 apiece as on Feb. 7 were disposed off at an aggregate value of Re 1, he said, adding that ArcelorMittal was not a philanthropist. “The one rupee business is the fraud. Misleading the public, BSE, banks and the court is the fraud,” Rohatgi said, adding that his submissions alleging the role of ArcelorMittal in Uttam Galva was equally applicable in the case of KSS Petron, in which it had stakes.

Also read: ArcelorMittal’s Proposal Holds Back Essar Steel Lenders From Making A Decision

The advancing of arguments remained inconclusive and would resume on Sept. 25. ArcelorMittal had said that Numetal was not eligible to bid for Essar Steel on several grounds, including that it was a “shell company” created by a firm in which Essar group promoters had majority shares.

Numetal also filed an appeal challenging the National Company Law Appellate Tribunal order allowing ArcelorMittal to take part in the bid and alleged that the firm stood disqualified due non-deposition of the money.

Also read: Mittal's Good Essar Show Mired in Legal Farce