Prove subterfuge charge against ArcelorMittal, SC tells Numetal
The Supreme Court on Tuesday asked Russia’s VTB Bank-promoted company Numetal to establish that there was “subterfuge” on part of its rival bidder ArcelorMittal in divesting its shares in two debtridden firms before bidding for Essar Steel.
The observation by a bench of Justices R F Nariman and Indu Malhotra came when Numetal accused steel and mining major ArcelorMittal of cheating Indian banks of ~70billion owed by Uttam Galva Steels and KSS Petron by selling its shares just before bidding for Essar Steel.
During the day-long hearing, senior advocate Mukul Rohatgi, appearing for Numetal, alleged ArcelorMittal had disposed off its shares in a “tearing hurry” and this was contrary to the ‘non-disposal’ agreement signed with the bankers that the stakes in Uttam Galva cannot be sold without taking the consent of the lenders.
“Instead of paying dues to the banks, it (ArcelorMittal) says it was aware of the disqualification. The only manner known to law to get rid of disqualification is to pay. The payment of dues of Uttam Galva is the condition precedent to apply for the bid. There was no scope of post-facto payment of dues,” Rohatgi said.
The bench said irrespective of the claim that ArcelorMittal was the promoter at Uttam Galva, it has provided the documents to establish that it was not managing the affairs of Uttam Galva. They were also not on its board and there was only a “co-promotion agreement” between them.
“There has to be subterfuge. There have to be documents to assume that this (sale of shares) was part of a devious and fraudulent design,” the bench said, adding, “you (Numetal) will have to show that they were the active promoters of Uttam Galva” and the fact that they (ArcelorMittal) owed the debt to “start with”.
Rohatgi said ArcelorMittal was also the promoter of debtridden entities Uttam Galva and KSS Petron and exited just before the bidding for Essar Steel.
Senior advocate Harish Salve, appearing for ArcelorMittal, objected to the submissions of Rohatgi and asked whether his submissions were part of the records. To this, the Numetal’s counsel said he would deal with this aspect on Wednesaday.