NCLAT backs rejection of Ruias bid for Essar Steel

New Delhi: Essar Steel Asia Holdings (ESAH) has been asked by the National Company Law Appellate Tribunal (NCLAT) to remove its appeal against the rejection of its Rs 54,389-crore bid for Essar Steel. This would likely make it more difficult for the Ruias, the founders of the Essar Group, to regain control of the asset. NCLAT though said that ESAH's appeal might possibly be heard during a parallel plea against the sanctioning of ArcelorMittal's Rs 42,000-crore resolution plan.

Removing Essar Steel from the bankruptcy process, the National Company Law Tribunal's (NCLT) Ahmedabad bench had turned down ESAH's appeal to consider its offer in January. Under the Insolvency and Bankruptcy Code (IBC), only the banks that had moved NCLT could withdraw Essar Steel from the process, the bankruptcy court had said.

Essar may not contest the rejection of its plea

The two-member bench led by Justice SJ Mukhopadhaya, said: "No application should have been entertained. You can withdraw it and argue the main case (against the ArcelorMittal plan)." According to sources, ESAH may not do so, though there is no official word on the matter.

The bench also urged the committee of creditors (CoC) of Essar Steel to think about modifying the distribution of funds under the ArcelorMittal resolution plan.

Operational creditors must be given similar treatment

This will entail treating Standard Chartered Bank, who had earlier gone against the plan, at par with other financial creditors.

"It cannot be that you (other financial creditors) get 92 percent (of your dues) and they (Standard Chartered) get 1.7 percent," said Mukhopadhaya. He added that operational creditors must be given similar treatment.