The shareholder of Essar Steel strives for the disqualification of ArcelorMittal over links with companies that have failed
NEW DELHI: A Majority Shareholder Essar Steel NCLAT Moved On Tuesday Looking For Rejection ArcelorMittal Rs 42,000 Crore Commandments To Acquire The Bankrupt Steel Producer, Claiming That His Promoter Lakshmi Mittal Hid His Association With Loan In Defective Businesses Run By His Brothers.
Seeking ArcelorMittal Declared Ineligible To Bid For Essar Steel, The Petition Cited Section 29A Of The Insolvency And Bankruptcy Code (IBC) Which Bars Promoters Or Defaulting Companies From Bidding For Stressed Assets.
The National Company Law Court Tribunal (NCLAT) Agreed To Hear The Plea By Essar Steel Asia Holdings Ltd. (ESAHL) And Asked ArcelorMittal To Respond To The Plea. It Fixed May 13 As The Next Date Of Hearing.
Essar Steel Asia Holdings Ltd (ESAHL) Holds 72 Per Cent Shares Of Essar Steel.
The Plea Comes Weeks After An Insolvency Court.
She Claimed That Mittal Was The Promoter Of GPI Textiles Ltd, Balasore Alloys Ltd And Gontermann Piepers (India) Ltd - Firms Run By His Brothers Pramod And Vinod Mittal That Have Been Classified As Non-performing Assets (NPAs) Or Bad Loans By Banks.
Appear For ESAHL, Senior Counsel Mukul Rohatgi Said," Grossest Violation Was Suppressed By Arcelor Before CoC, NCLT, NCLAT And Supreme Court."
IBC Rules Had Previously Been Compiled Mittal To Shell Out An Additional Rs 7,000 Crore To Clear Bank Dues Of Uttam Galva Steels And KSS Petron Where The Hero Some Stake And Reportedly Sold His Holdings In One Of Them For Re 1 A Share.
Reacting To Development, ArcelorMittal Said," This Is The Latest In A Long Line Of Frivolous Attempts By The Defaulting Promoters Of Essar Steel To Distract From The Central Fact That Indian Lenders Have Declared ArcelorMittal As The Most Credible Owner Of Essar Steel."
" The Latest Allegations Of The Essar Steel Promoters Are Yet Another Attempt To Subvert The Directions Of The Supreme Court And The IBC, Critical Government Legislation. Their Assertions Are Irrelevant, Misleading And Will Be Rebutted In The Strongest Possible Terms," it Said In A Statement.
ArcelorMittal Has Stated On Numerous Occasions That There Is Absolutely No Business Connection Between Lakshmi And His Brothers, The Company Said.
The Petition By ESAHL Alleged That While ArcelorMittal Paid Debts Or Uttam Galva Steels And KSS Petron," Suppressed And Concealed From The Committee Of (Essar Steel) Creditors And All Courts" About NPA Debts Or Three Other Companies.
It Alleged" Fraudulent Lies, Falsehood, Suppression And Misrepresentation" Done By Arcelor.
" ArcelorMittal Group Have Conspired To Suppress Vital Facts And Deliberately Made A False Statement That They Are Compliant Under Section 29A Of The IBC Code" And Have Completed Exited Gontermann Peipers India Ltd (GPIL), GPI Textiles Ltd And Balasore ALloys Ltd, It Said.
ESAHL Said It National Court Of Law For Company Law (NCLT) Had Rejected Its Rs 54,389 Crore Offer To Clear All Dues Or Both Financial And Operational Creditors Or Essar Steel, On Grounds Of The Company Was Ineligible Under Section 12A Of The IBC.
Bidding For The 10 Million Tonnes A Year Steel Mill Has Been One Of The Most Hotly Contested Auctions Under The New Insolvency Resolution Process, Drawing Offers From The World's Largest Steel Producer ArcelorMittal, Mining Baron Anil Agarwal's Vedanta Ltd And A VTB Capital-led Consortium, NuMetal.
The Petition Said The Supreme Court Had In Its Judgment Dated October 4, 2018, Both Hero ArcelorMittal India And NuMetal Ltd Ineligible To Bid For Essar Steel Owning Their Ties With Companies That Had Defaulted On Loan Payments. It, However, Gifted Them One Opportunity To Pay Off The NPAs For Their Related Corporate Debtors Within Two Weeks.
Mittal paid off overdue amounts of Uttam Galva and KSS Petrol but not of three other firms, it said adding Lakshmi Mittal is a shareholder and promoter of Navoday Consultants Ltd, which holds shares in Balasore Alloys Ltd, Gontermann Peipers (India) Ltd, and GPI Textiles Ltd.
With This Petition, The Promoters Of The Essar Steel Are A Last Ditch Attempt To Wrest Back The Family Jewel.
The Ahmedabad Bench Of NCLT Cleared ArcelorMittal's Rs 42,000 Crore Bid For Essar Steel Earlier This Year. But The Same Has Been Challenged By Operational Creditors About The Way The Money Will Be Distributed. They Want A Bigger Share Compared To The Financial Creditors. Standard Chartered Bank Has Also Moved The Tribunal On Similar Grounds.
ESAHL Alleged That Gontermann Peipers And GPI Textiles, Owned By Pramod And Vinod Mittal, Are Classified As NPA.
It challenged a sworn affidavit filed by Sanjay Sharma on behalf of Lakshmi Mittal and ArcelorMittal on October 17, 2018 that stated that there was no business association between Mittal and/or Arcelor and his brothers and their companies for more than 20 years and that Lakshmi Mittal and/or Arcelor has no shareholding in any of the companies where his brothers are promoters, including GPI Textiles, Balasore Alloys and Gontermann Piepers.
ESAHL enclosed with its application various documents to show 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 Alleged That ArcelorMittal Was Fully Aware Of Such Ongoing Business Association And Consistently 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.
This, It Said, Was The Same Tactic That Was Previously Used By ArcelorMittal To Avoid Making Payment Of The Overdue Debts Of Uttam Galva Steels And KSS Petron And That The Supreme Court Had Previously Held To Be Unlawful.