NuMetal -- a bidder for resolution plan for Essar Steel facing insolvency proceedings -- on Tuesday told the Supreme Court that the steel magnate Lakshmi Niwas Mittal-owned ArcelorMittal was not qualified to enter the fray as he stands burdened with Rs 7,000-crore liability of now beleaguered Uttam Galva and KSS Petron.
Contending that ArcelorMittal was saddled with the liability of Rs 7,000 crore, which it has not purged itself, the bench of Justice Rohinton Fali Nairman and Justice Indu Malhotra was told that sale of its 29 per cent holding in Uttam Galva and KSS Petron two days before submitting its resolution plan for Essar Steel was a "subterfuge" to tide over the disqualification.
"Only manner known to law to get rid of disqualifications is payment of outstanding dues," said senior counsel Mukul Rohatgi appearing for NuMetal. He described the entire exercise as "subterfuge", "fraud", "clandestine" or attempt to "circumvent" the payment of dues.
As Rohatgi described sale of shares by ArcelorMittal as "subterfuge", the bench said: "For alleging subterfuge, you have to get into facts...if ArcelorMittal was in active management of Uttam Galva.
"They (ArcelorMittal) have given details. You have to tell us if they are correct, they say that they have used it as an investment."
Telling the court that "I am entitled to show that this was a subterfuge", Rohatgi said: "If this (sale of share to get rid of disqualification under IBC) is allowed to happen then nobody will pay (the outstanding dues)."
Law does not give them the option of choose either of the two -- to pay the outstanding dues or sell shares and choose lesser of the two, senior counsel told the court wondering: "Why sell a share for Rs 1 that was bought for Rs 120. What was the hurry?"
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Assailing the National Company Law Tribunal (NCLT) and the Appellate Authority (NCLAT) order giving ArcelorMittal time to purge itself of the liability of Uttam Galva and KSS Petron, senior counsel Rohatgi said: "He (Mittal) is completely disqualified and there is no question of giving him time to remove the taint. It can't be redeemed by selling shares for Rs 1."
The court was earlier told that ArcelorMittal had sold its shares for loss, with each share getting just Rs one which he had bought for Rs 120.
Describing as "irrelevant" the ArcelorMittal's argument that it was not an active promoter of the Uttam Galva and KSS Petron and had just made investments which eventually turned out to be bad, Rohatgi told the bench: "He (Mittal) was aware of legal disqualification and tried to get rid of disqualification by selling shares."
Asserting that NuMetal was never in disqualification even in its first resolution plan, Rohatgi said that ArcelorMittal were disqualified earlier and even now and have nothing to come out of it.
Both ArcelorMittal and NuMetal have chyallenged an NCLAT order by which it had asked ArcelorMittal to clear Uttam Galva and KSS Petron's debts of Rs 7,000 crore.
While ArcelorMittal is contending that payment of Rs 7,000 crore cannot be made an eligibility condition to present resolution plan for Essar Steel, NuMetal has challenged the grant of time to ArcelorMittal to come clean.
Rohatgi will continue arguments on Wednesday.
--IANS
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