The National Company Law Appellate Tribunal (NCLAT) on Tuesday reserved its order over a batch of petitions against ArcelorMittal's Rs 42,000-crore take over bid for Essar Steel as well as the distribution of funds among the creditors of the debt-ridden company.
A two-member bench headed by Chairman Justice S J Mukhopadhaya asked all parties, including ArcelorMittal, to file their written submissions over their submissions by Wednesday.
During the proceedings, senior advocate Kapil Sibal appearing for Standard Chartered Bank, a secured creditor of Essar Steel, questioned the addition of working capital in the final resolution amount.
According to him, Rs 42,000 crore coming should not be touched and the profit made by Essar Steel should be left with the company only.
"Working capital is revenue generated from going concern. It can not be added," said Sibal adding, "ArcelorMittal cannot touch it. It's not their money."
According to him, their argument that it's an accounting thing, cannot stand here.
"ArcelorMittal bid should be Rs 42,000 crore plus Rs 4,000 crore, which is Rs 46,000 crore," he added.
Essar Steel has reported an Ebitda of around Rs 4,000 crore during the over 600 days of insolvency period.
"ArcelorMittal is now giving us Rs 43,000 crore, which means it is taking away Rs 3,000 crore," Sibal said.
Meanwhile, senior advocate Harin P Rawal, appearing for Essar Steel Asia Holdings, a shareholder of Essar Steel, raised the issue of ineligibility of ArcelorMittal under section 29 (A) of the Insolvency & Bankruptcy Code.
According to Rawal, ArcelorMittal Chairman and CEO L N Mittal has stakes in two defaulting firms owned by his brothers as a promoter.
"Whatever be the share, the fact is that he (L N Mittal) was holding share as a promoter and hence he is ineligible under section 29 (a) of IBC," he said.
Senior advocate UK Chaudhary appearing for Prashant Ruias raised the issue of Subrogation.
According to him, Ruias who had given a personal guarantee to SBI for loans of Essar Steel, the bank cannot claim the money after lender are getting their dues.
On Monday, ArcelorMittal had told NCLAT that it would pay Rs 42,000 crore, including a minimum of guarantee of Rs 2,500 crore as working capital, for acquiring debt-laden Essar Steel under the insolvency process.
Senior advocate Harish Salve had contended that during the resolution period, Essar Steel had a profit of Rs 3,500 crore and the company is already providing Rs 2,500 crore as working capital.
"As ArcelorMittal has assured a working capital of Rs 2,500 crore, a profit of Rs 3,500 crore means that ArcelorMittal will make available a sum of Rs 43,000 crore to the creditors of the company," Salve had said.