NuMetal to take on Arcelor eligibility for Essar in NCLT

Russia's VTB Capitalbacked NuMetal has moved the National Company Law Appellate Tribunal (NCLAT) against an order allowing rival ArcelorMittal to clear bank dues of associate companies so that it can become eligible for acquisition of Essar Steel.

The NCLAT is likely to hear the petition on Friday, a day when a panel of lenders to Essar Steel is also slated to meet to decide if fresh bids are to be called. In the petition, NuMetal said the Ahmedabadbench of National Company Law Tribunal had disqualified Arcelor Mittal India from bidding to acquire Essar Steel on grounds that it was a promoter company of firms that had defaulted on payment of bank loans.

The NCLT had, however, "erred" in permitting ArcelorMittal India "to cure the ineligibility by making payment of the overdue amounts of Uttam Galva and KSS Petron" within 30 days, it said.

Allowing ArcelorMittal to clear dues after the government frame legislation, barring promoters who had defaulted on bank loans from bidding for firms that were being auctioned to recover unpaid loans, was not in accordance with the law, it contends.

NuMetal sought setting aside and quashing of the NCLT order that directed the resolution professional conducting the auction and the committee of creditors of Essar Steel to "reconsider the resolution plan submitted by Arcelor Mittal and afford Arcelor Mittal an opportunity to make payment of the over dues amount of Uttam Galva Steels and KSS Petron after the submission of the resolution plan for Essar Steel and cure the ineligibility".

Essar Steel had a debt of Rs 49,000 crore and was referred to NCLT in June last year. A committee of Essar Steel creditors had earlier failed to reach a decision if the first round of bids put in by ArcelorMittal and NuMetal should be considered or fresh bids sought.