- Essar Steel shareholder seeks rejection of ArcelorMittal’s proposal for misleading Supreme Court and NCLAT
New Delhi, 7 May 2019: Essar Steel Asia Holdings Ltd (ESAHL), a shareholder of Essar Steel, today sought to bring to the attention of the NCLAT that Mr Lakshmi Mittal and Arcelor Mittal India Ltd (AM) had “conspired to suppress vital facts” and misled the Committee of Creditors, the Hon’ble Supreme Court and the Appellate Tribunal into believing that Mr Lakshmi Mittal and AM had ceased to have any business association with his brothers Mr Pramod Mittal & Mr Vinod Mittal and their companies.
In its application, ESAHL has cited a sworn affidavit filed by Mr Sanjay Sharma on behalf of Mr Lakshmi Mittal and AM on 17.10.2018 which states inter-alia that
- There has been no business association between Mr Lakshmi Mittal and/or Arcelor and his brothers and their companies for more than 20 years
- Lakshmi Mittal and/or Arcelor has no shareholding in any of the companies where his brothers are promoters, including GPI Textiles, Balasore Alloys and Gontermann Piepers.
ESAHL enclosed with its application various documents which show that as late as 30.9.2018, Mr Lakshmi Mittal was a co-promoter of one Navoday Consultants Ltd (Navoday) along with his brothers Mr Pramod Mittal and Mr Vinod Mittal, and that Navoday was in turn a promoter of GPI Textiles, Balasore Alloys and Gontermann Piepers.
ESAHL has stated that these facts make it clear that AM has suppressed and concealed from the CoC and all Courts that its promoter Mr Lakshmi Mittal continued to have business relations with his brothers Mr Pramod Mittal and Mr Vinod Mittal, and accordingly AM was ineligible to submit a resolution plan under Section 29A of the IBC.
ESAHL has further stated that AM was fully aware of such ongoing business association and consequent ineligibility and in order to hide this fact, Mr Mittal sold his shareholding in Navoday between 01.10.2018 and 31.12.2018 and stopped showing himself as promoter of Navoday. This is the same tactic that was previously used by AM to avoid making payment of the overdue debts of Uttam Galva Steels and KSS Petron and that the Hon’ble Supreme Court had previously held to be unlawful.
Both Gontermann Peipers and GPI Textiles are classified as NPA and due to association of Mr Lakshmi Mittal with these companies, AM would be a related party of these companies, thus making it ineligible under the provisions of the IBC.
Editor’s Note: ESAHL’s Rs 54,389-crore proposal
Earlier, ESAHL had offered Rs 54,389 crore to the lenders of the company. The proposal was submitted to the CoC under Section 12A of the IBC and would have led to full upfront recovery of loans for the lenders, and maximum recovery for all other classes of creditors. This proposal was rejected by the CoC.
Manish Kedia, Senior Vice President – Corporate Affairs, Essar
Phone: +91 98197 30092, Email: email@example.com
Ravi Muthreja, Vice President – Corporate Communication, Essar
Phone: + +91 99301 34566, Email: Ravi.Muthreja@essar.com