Bhushan Steel founder Neeraj Singal and the firm’s operational creditor Larsen & Toubro had moved NCLAT against the Tata Steel bid. Photo: Pradeep Gaur/Mint
New Delhi: The National Company Law Appellate Tribunal (NCLAT) on Friday ruled that Tata Steel Ltd and Vedanta Ltd were eligible to bid for Bhushan Steel Ltd and Electrosteel Steels Ltd, respectively.
The two-judge NCLAT bench headed by Justice S.J. Mukhopadhyay rejected pleas by Bhushan Steel founder Neeraj Singal and the firm’s operational creditor Larsen & Toubro Ltd, and ruled that Tata Steel was eligible to bid for the debt-ridden company.
“On hearing the counsel for the parties and taking into consideration the submissions made by the counsel for the appellant ‘operational creditor’ and the respondents, we hold that the ‘resolution plan’ submitted by ‘Tata Steel Limited’ is fair and equitable to all the creditors, including the ‘operational creditors’. Therefore, no interference is called for,” the tribunal said.
The NCLAT order comes a day after the Serious Fraud Investigation Office (SFIO) arrested Singal on charges of siphoning off more than ₹2,000 crore from Bhushan Steel’s bank loans using 80 different companies.
Singal had moved NCLAT questioning Tata Steel’s eligibility to bid for the company under Section 29(A) of the Insolvency and Bankruptcy Code (IBC), while L&T had moved the appellate tribunal seeking to be declared a secured creditor so that it received higher priority in repayment of dues.
Tata Steel’s resolution plan had proposed to pay Bhushan Steel’s operational creditors ₹1,000 crore and another ₹200 crore on a pro-rata basis over one year, depending on the “vitality to running the business”.
The appellate tribunal also rejected appeals against Electrosteel Steels sale to Vedanta. “We hold that ‘Vedanta Limited’ is eligible and clause (d) of Section 29(A) of the ‘I&B Code’ is not attracted in its case,” it said in its judgment to various appeals by Renaissance Steel India Pvt Ltd, one of the unsuccessful bidders for Electrosteel, against a 17 April order of the National Company Law Tribunal’s (NCLT’s) Kolkata bench approving Vedanta Ltd’s ₹5,320 crore resolution plan for Electrosteel.
Renaissance Steel had contended that Vedanta was ineligible to bid under Section 29(A) of IBC as one of Vedanta’s affiliates in Zambia—a unit of its UK-based parent Vedanta Resources Plc—had been found guilty of violating certain environmental laws, punishable with two or more years in jail.
Electrosteel owes lenders more than ₹13,000 crore, of which about ₹5,000 crore is to State Bank of India alone.
Both Bhushan Power and Steel and Electrosteel are among the 12 initial accounts identified by the Reserve Bank for resolution.
Bhushan Power and Steel owes more than Rs48,500 crore to a consortium of lenders led by Punjab National Bank. A recent report by credit rating agency Crisil pegged Bhushan Steel’s flat steel capacity at 5 million tonnes a year, about 9% of the Indian market.
State Bank of India’s insolvency plea against Electrosteel was admitted by the Kolkata bench of NCLT in July 2017.