Essar Steel auction: NCLAT to hear Numetal's petitions on May 17

The legal wrangle around the Essar Steel auction is becoming all the more complicated.

Even as the National Company Law Appellate Tribunal (NCLAT) is set to hear petitions from Numetal and ArcelorMittal on May 17, one more petition has been added to the list.

NCLAT will now also hear Numetal's second petition. This time the VTB Capital-led consortium has moved against the lenders' decision asking it to clear Essar Steel's dues to make its bid eligible.

Earlier this week, the Committee of Creditors  - consisting of the lenders - had given Numetal and ArcelorMittal seven days to pay off dues to make their bids eligible.

While Numetal - whose minority shareholder Rewant Ruia is a son of Essar co-founder Ravi Ruia -  was asked to clear dues of Essar Steel, ArcelorMittal was asked to clear loans in the books of Uttam Galva Steels and KSS Petron.

But Numetal argued that other shareholders in the consortium have already bought out shareholding of the Aurora Enterprises, which was represented by Rewant Ruia.

"Neither Numetal nor its shareholders have any loans overdue with any creditors in India," Numetal had said in a statement earlier this week.

The hearing

Numetal had first moved the NCLAT in late April after the lenders gave ArcelorMittal time to rework its bid for Essar Steel. Later ArcelorMittal also moved the Tribunal.

Bids from Numetal and ArcelorMittal were termed ineligible by the resolution professional overseeing the auction. Both the bidders had then approached the Ahmedabad bench of National Company Law Tribunal, which had then asked the CoC to give the bidders time to 'correct' their bids.

The NCLAT will now hear all the petitions on May 17.

"The Tribunal on Friday made suo motu observations, and said that if Numetal has to pay off dues of Essar Steel, wouldn't that need approval from shareholders, and will it have an impact on the shareholding of the steelmaker," said a source in the industry.