NCLAT dismisses ArcelorMittal plea over EPC Construction

The NCLAT on December 16 dismissed global steel major ArcelorMittal's petition, challenging approval of Royale Partners Investment Fund's resolution plan by the creditors of debt-ridden EPC Construction India Ltd (ECIL). A three-member NCLAT bench headed by Chairman Justice S J Mukhopadhaya dismissed ArcelorMittal India plea observing that it has "no vested fundamental right to challenge the plan approved by the CoC of ECIL" formerly known as Essar Projects India.

ECIL's Committee of Creditors (CoC) had rejected ArcelorMittal India's bid and had voted in favour - with a majority of 73.14 per cent - of the resolution plan by Mauritius-based Royale Partners Investment Fund Ltd.

ArcelorMittal India, subsidiary of the global steel major, had challenged it before the NCLAT contending that the action of the CoC is vitiated by "procedural irregularities rendering illegal approval".

The steel major has contended that the resolution plan submitted by it was ex facie a better resolution plan selected by the CoC.

According to ArcelorMittal India, approval of bids from Royale Partners was in contravention of the mandatory requirement - under the proviso of the Insolvency and Bankruptcy Code, 2016 - to ask a bidder to obtain approval from the fair trade regulator CCI prior to nod by CoC.

However, the argument was opposed by the Resolution Professional of EPC Constructions and it was contended that ArcelorMittal India is an 'unsuccessful resolution applicant' and cannot challenge the ‘resolution plan' as it has been duly approved by the CoC.

It was further submitted that the steel major was called for negotiations six times between December 4, 2018 to January 10, 2019 and its bid was duly considered by lenders.

ArcelorMittal India received only 17.67 per cent of the total votes in CoC.

Rejecting the steel major's submission, the National Company Law Appellate Tribunal (NCLAT) said that ArcelorMittal has no vested right to challenge the decision of the CoC, which rejected its resolution plan and approve another resolution plan which is under consideration of the Adjudicating Authority (NCLT).

The tribunal also observed that mandatory approval from the Competition Commission of India (CCI) has been taken for the resolution plan.

"In absence of any merit, the appeal is dismissed," said the NCLAT.

Earlier on May 16, passing an interim order, the NCLAT had said if any resolution plan is approved for the company, then it would be subject to final outcome of its order.

According to reports, Royale Partners Investment Fund had offered to put in around Rs 900 crore to revive the company, which owed more than Rs 7,700 crore to its financial and operational creditors.