Passing the order on November 10, the NCLT bench had held that the subsidiary of the world’s largest steelmaker had “contravened” the resolution plan for Essar Steel.The National Company Law Appellate Tribunal (NCLAT) has stayed an order of the Ahmedabad bench of the National Company Law Tribunal (NCLT) which had directed ArcelorMittal India to pay corporate insolvency resolution process (CIRP) cost of around Rs 1,300 crore to Odisha Slurry Pipeline Infrastructure (OSPIL).
Passing the order on November 10, the NCLT bench had held that the subsidiary of the world’s largest steelmaker had “contravened” the resolution plan for Essar Steel.
ArcelorMittal India submitted before the appellate tribunal that the company had been directed to make payment as IRP costs to an entity which had not claimed them during the CIRP of Essar Steel or even thereafter.
Passing an order on December 4, a two-member bench of justices Bansi Lal Bhat and Anant Bijay Singh said, “As an ad interim the operation of the impugned order as regards making of payment by the Appellant to OSPIL by December 15, 2020, shall remain stayed till next date of hearing.”
The matter has been listed on January 22, 2021.
ArcelorMittal had acquired the bankrupt Essar Steel last year, establishing a joint venture with Japan’s Nippon Steel, called ArcelorMittal Nippon Steel India, under the CIRP following a long legal tussle. The resolution plan approved for Essar Steel was of around Rs 42,000 crore.
The LN Mittal-led steel major had also taken over the debt-laden OSPIL earlier this year for around Rs 2,350 crore as it is critical infrastructure for Essar Steel India to procure iron ore.
On November 10, a two-member bench of justices MB Gosavi and VK Gupta of the Ahmedabad bench of the NCLT had said, “The usage charges for the use of subject Slurry Pipeline for running the corporate debtor (Essar Steel) as going concern during the CIRP period of the corporate debtor are IRP costs.”
The bench had said such IRP costs had been duly considered and provided by the resolution applicant in the resolution plan submitted and approved by the adjudicating authority.
“The resolution applicant (corporate debtor) has contravened the provisions of such approved resolution plan by not making payment of such IRP costs. The resolution applicant (corporate debtor) is directed to make the payment of such IRP costs to OSPIL by December 15, 2020,” it had said.
The bench had directed ArcelorMittal India to pay Rs 1,300 crore as outstanding usage charges payable to OSPIL, failing which a liquidation order would be passed for ArcelorMittal Nippon Steel India (Essar Steel).
The tribunal had passed the order on the basis of an application moved by Srei Infrastructure Finance (SIFL) as a financial creditor of OSPIL. Srei contended that the right to use charges were payable by Essar Steel for the use of the pipeline belonging to OSPIL during the CIRP period of Essar Steel.
The dispute concerned a right to use agreement that Essar Steel India and OSPIL had entered into in April 2015. OSPIL’s only source of income was the lease rental. With the company defaulting in its repayment obligations to lenders, IDBI Bank had taken it to the NCLT under Section 7 of the Insolvency and Bankruptcy Code.
India Growth Opportunities Fund, a scheme of Srei Multiple Asset Investment Trust, owned around 69% equity stake in OSPIL, while the rest was held by Essar Steel.
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