NCLAT Allows AMNS To Replace ArcelorMittal India In ₹1,300 Crore Essar Steel RTU Appeal

The National Company Law Appellate Tribunal (NCLAT) at Delhi has allowed ArcelorMittal Nippon Steel India Private Limited to be transposed as the appellant in a pending appeal arising from the Rs 1,300 crore Right to Use charges dispute linked to the Essar Steel insolvency resolution process.

The company will replace ArcelorMittal India Pvt. Ltd., the original successful resolution applicant, in the proceedings. The tribunal clarified that the transposition will be subject to the applicant assuming all liabilities under the challenged order.

A Bench of Chairperson Justice Ashok Bhushan and Technical Member Barun Mitra allowed the interlocutory application after the National Company Law Tribunal, Ahmedabad sanctioned a Scheme of Arrangement on March 15, 2023, between ArcelorMittal India Pvt. Ltd., AM Associates India Pvt. Ltd., and ArcelorMittal Nippon Steel India Ltd.

Under the scheme, the residual business undertaking of ArcelorMittal India Pvt. Ltd. stood vested in ArcelorMittal Nippon Steel India Ltd

The dispute traces back to a November 10, 2020, order of the NCLT, Ahmedabad, passed on an application filed by financial creditor SREI Infrastructure Finance Ltd. The NCLT had directed the successful resolution applicant to pay Rs 1,300 crore towards Right to Use charges to Odisha Slurry Pipeline Infrastructure Ltd. It treated the amount as Insolvency Resolution Process costs.

The order was challenged before the appellate tribunal. The NCLAT stayed its operation in December 2020.

During the pendency of the appeal, the scheme of arrangement was sanctioned.

SREI opposed the application. It argued that the move was a “clever device” to evade liability. Referring to financial statements of AM Associates India Pvt. Ltd., it contended that the Rs1,300 crore contingent liability had been reflected in that entity's books. It also argued that allowing the application would make compliance with the NCLT's November 10, 2020 direction difficult.

After examining the scheme and the rival submissions, the appellate tribunal rejected the objection. It held that the residual business of ArcelorMittal India Pvt. Ltd. was transferred to the applicant and not to AM Associates India Pvt. Ltd. It held that the applicant was entitled to prosecute the present appeal.

Addressing the respondent's apprehension, the Bench clarified that the transposition would be “subject to taking by Applicant all liabilities and obligations arising from the impugned order dated 10.11.2020.”

The tribunal also recorded that the applicant was “readily and willingly undertaking” to assume such liabilities.

The interlocutory application was accordingly allowed, and ArcelorMittal Nippon Steel India Private Limited was directed to be transposed as the appellant in the pending appeal, subject to its assumption of all obligations arising from the NCLT's November 2020 order.

For Appellant: Senior Advocate Neeraj Kishan Kaul, with Advocates Ashim Sood, Sanjeev Kumar, Abhishek E Kisna, Anshul Sehgal, Divyansh Jain, Pranshu Paul, J. Shivam Kumar, Srajan Dixit, Abhishek Tiwari, Deepak Joshi, and Prateek Kumar

For Respondent: Senior Advocate N. Venkatraman with Advocates Anirban Bhattacharya, Rajeev Chaudhay, Priyanka Bhatt, Chanrashekhar Bharathi, Shivshankar G., Nakul Mohta, Abhishek R, for SREI Infrastructure Finance Ltd.