Russia's VTB Capital-based NuMetal Ltd on Thursday told the company law appellate tribunal, NCLAT, that it has offered over Rs 37,000 crore for Essar Steel in the second-round of bidding, which should be opened and the highest bidder be selected from it.
ArcelorMittal, the only other bidder to have put in a bid for Essar Steel in the first round in February, however, opposed the opening of the second round of bids and wanted only the first round of bids to be considered.
At a hearing of counter petitions filed in the National Company Law Appellate Tribunal (NCLAT), senior advocate Mukul Rohatgi appearing for NuMetal said that the second round would help to maximise value for lenders.
Essar Steel is being auctioned after the company defaulted on payment of about Rs 49,000 crore loan to lenders.
Rohatgi submitted that the resolution professional, who is conducting the auction of Essar Steel, should open the second round of bids as it would help realise the maximum value for the assets.
"Our bid in the second round is much higher at Rs 37,000 crore. Let there be competition," he said.
Both NuMetal and ArcelorMittal put in a second round of bids after the first bids were opined to be invalid -- NuMetal because of it being 25% owned by Aurora Trust of Ruia family, the promoters of Essar Steel; and ArcelorMittal because of it being holding shares in loan defaulting companies Uttam Galva Steel and KSS Petron.
The insolvency and bankruptcy law bars participation by promoters of delinquent companies in bidding for assets being auctioned.
For the second round of bid, VTB Bank sought to severe ties with Ruia family by buying out Aurora Trust's stake in NuMetal.
Appearing for ArcelorMittal, senior advocate Abhishek Manu Singhvi opposed NuMetal's plea saying the second round of bid had become "infructuous" after the world's largest steelmaker paid Rs 7,000 crore to cure its ineligibility.
ArcelorMittal transferred Rs 7,000 crore to an escrow account of SBI to clear outstanding loans of Uttam Galva and KKS Petron.
A two-member bench of NCLAT, headed by Chairman Justice S J Mukhopadhaya, which was hearing the matter, directed the case to be list on May 22 for next hearing.
It also said that NCLT Ahmedabad could also extend the period of Corporate Insolvency Resolution Process.
Under the present law, the insolvency proceedings should be completed within 270 days and this period is ending on May 28.
In the second round of bidding, mining baron Anil Agarwal's Vedanta Resources also joined the race. Also, JSW joined NuMetal for the bid.
The appellate tribunal was hearing two cross-appeals by Arcelor Mittal and Numetal.
Russia's VTB Capital-backed Numetal Ltd has challenged a lower court order allowing rival ArcelorMittal to clear bank dues of associate companies so that it can become eligible to acquire Essar Steel. ArcelorMittal, on the other hand, has challenged its disqualification from bidding.
In a statement, ArcelorMittal said, "ArcelorMittal has participated in the resolution process for Essar Steel in good faith from the start. On February 12, we submitted a competitive offer to creditors which we understand was the superior offer received. Moreover, while we have always believed our offer was eligible, as a demonstration of our commitment to India and Essar Steel we have indicated to the Committee of Creditors our readiness to settle outstanding dues of companies where we only had a passive shareholding.""We would hope that this very serious offer would be given appropriate consideration and that we will be identified as the preferred bidder for the asset. In our view, it is critical for the credibility of the IBC that the process is followed fairly and correctly as originally laid out."