Essar Steel case: SC rejects operational creditors’ plea, promoters move NCLAT

Even as the Supreme Court on Monday dismissed the petitions of operational creditors of bankrupt Essar Steel, which includes Indian Oil Corporation, the promoters of the company — Ruias — moved the National Company Law Appellate Tribunal (NCLAT) against the January order of the Ahmedabad bench of the National Company Law Tribunal (NCLT) which had rejected its plea for placing an offer for resolution of the company.

Meanwhile, the NCLT Ahmedabad bench, which was hearing the petition of the operational creditors who complained that the plan of ArcelorMittal approved by the committee of creditors (CoC) gives them a raw deal, has reserved its order.

As is known, the two-member Ahmedabad bench of the NCLT on January 29 ruled that the plea by Essar Steel Asia Holdings’ to consider the Ruias’ settlement plan for Essar Steel was not maintainable. The NCLT had said the Essar plea was not maintainable under Section 60 (5) of the Insolvency and Bankruptcy Code (IBC), which empowers it to have jurisdiction to entertain or dispose of any application or proceeding by or against the debtor or corporate person.

As many as 31 operational creditors of Essar Steel had moved the NCLT in five separate petitions urging that it direct the CoC to ensure full payment to them and take necessary steps to modify ArcelorMittal’s resolution plan for that. Alternatively, they had urged the tribunal to direct the CoC to also consider the last-minute offer of the Essar Steel promoters which promises to pay all creditors in full.

Earlier in January the lenders of Essar Steel had moved the NCLAT urging that it direct NCLT to expeditiously hear the matter. The appellate tribunal had directed that only one operational creditor will argue the case and not all 31. It was against this order that three of the operational creditors had moved the SC.

Dismissing their appeal, a Supreme Court bench led by Justice RF Nariman said that some of the operational creditors are “put up by the promoters”.

The appeals were filed by three operational creditors – Indian Oil Corporation, State tax officer, Gujarat, and Kamlaljeet Singh Ahluwalia (an individual).

Essar Steel