Multinational steel business giant, ArcelorMittal told India’s top court, supreme court that it would lift the escrow on £744.85 million and ready to pay the money of Uttam Galva and KSS Petron in which LN Mittal is classified as a promoter, if it permitted to bid with success for Essar Steel.
Senior advocate, Harish Salve told the Supreme Court bench on Thursday that the ArcelorMittal will pay the sum if the bid for Essar Steel is accepted.
Last week, the National Company Law Appellate Tribunal (NCLAT) had ruled that ArcelorMittal's second bid for Essar Steel would be eligible only if it takes necessary steps to repay all dues of the two companies.
In a response to the NCLAT ruling, ArcelorMittal filed a petition before the supreme court, stressing that no bank had ever made a claim against it and its promoters had given no personal assurance for any company.
According to a report published on India’s business daily, The Economic Times, senior advocate Harish Salve before the supreme court bench consisting of Justices RF Nariman and Indu Malhotra told, Arcelor had “deep pockets" and “had made provisions for the money.” "But we can't pay for them (Uttam Galva, KSS Petron) under the law. It will immediately become taxable income in the hands of the company if I pay without any consideration.”
"We have to arrive at a structure. You say pay - we will. But it is not as easy as that. Sufficient provision (for payment of debt) should be treated on par with payment. These are listed companies. There are regulatory hurdles in payment," the newspaper quoted Salve as saying.
In an argument, Salve also noted and criticised Numetal's rival bid for Essar Steel, which obtained the NCLAT's green signal for bidding. He said the company had at least £4.78 billion in the form of non-performing assets last year. The sum that would have moved up when we add interest rate also.
Salve also highlighted saying, ArcelorMittal's bid was far more than Numetal's. He also blamed that it was a way to permit the past promoters (Ruias) circle back in an opaque fashion. However, the lawyer noted that his client, Arcelor didn’t oppose the offer made by another corporate giant- Vedanta.
Earlier, Essar Steel’s lenders rejected the Numetal’s first bid as 25 per cent share owned by Rewant Ruja, the son of Essar Steel fonder Ravi Ruia, since he was considered as a related party. India’s Insolvency and Bankruptcy Code (IBC) doesn't permits the involvement of the persons in bidding who connected to businesses which have defaulted on debt. JSW Steel bought out this disputatious share before second round of bidding for Essar Steel.
Eassar Steel’s Committee of Creditors are awaiting the supreme court’s judgement as ArcelorMittal is its bid sum of £ 4.46bn followed by Numetal’s £3.93 bn and Vedanta’s bid in between £3.19 and £3.72bn.
Salve has also pointed number of loopholes in Indian insolvency law and asked the judges bench to block them immediately. Justice Nariman agreed, saying, "The process is wrong from the top to bottom.”
The Essar Steel, which has the third highest debt pile around £5.21bn among the first 12 companies identified by India’s central bank Reserve Bank of India (RBI) for insolvency proceedings.
The incident occurred on the same day Labour leader Sir Keir Starmer addressed the audience at London Tech WeekGetty Images
The business was started by Sir Anwar Pervez.getty images