ArcelorMittal filed an appeal to the Supreme Court against the National Company Law Appellate Tribunal (NCLAT) order dated September 7, 2018. The NCLAT had ruled that NuMetal’s second bid for Essar Steel is eligible under Insolvency and Bankruptcy Code (Amendment) Act, 2018 (IBC) whereas ArcelorMittal’s is not. The NCLAT order asked ArcelorMittal to pay off its Rs. 7,000 crore dues to become eligible to bid for Essar Steel.
Supreme Court in Arcelormittal India Private Limited v. Satish Kumar Gupta, Civil Appeal No(s). 9402-9405/2018, on October 4, 2018, held that both the parties, ArcelorMittal and Numetal, are ineligible under Section 29 of IBC for submitting resolution plan, as they have not paid off the debts of corporate debtors related to them. However, the Court has given them 2 weeks’ time to clear the dues and cure their ineligibility.
- Supreme Court reiterated that a person is ineligible to submit a resolution plan as per Section 29A(c) of IBC if such person has an account or an account of a corporate debtor under the management or control of such person or of whom they are a promoter, classified as an NPA and whose debts have not been paid off for a period of at least one year before commencement of the corporate insolvency resolution process. Read more on disqualifications under Section 29A here.
- ArcelorMittal argued that it was not commercially viable to pay off NPA before making a speculative bid which they may or may not succeed in and asked the Court to make the Section ‘workable’. The Court rejected this argument and held that the plain language of the section cannot be disregarded and the only way to remove the ineligibility as a result of Section 29A(c) is to pay off the debt before submission of a resolution plan.
- The time limit for completion of the insolvency resolution process as laid down in Section 12 is 270 days (180 days + 90 days). Supreme Court, in a bid to balance timely completion of insolvency resolution proceedings and the corporate debtor otherwise been put into liquidation, interpreted the 270 days to exclude the time taken by NCLT, NCLAT and the Court to decide upon the matter.