A bankruptcy court based in Ahmedabad has asked ArcelorMittal to pay Rs 1,308.87 crore to Odisha Slurry Pipeline Infrastructure Ltd (OSPIL) in a case linked to the Essar Steel insolvency process.
The National Company Law Tribunal passed an order on Tuesday directing ArcelorMittal (AM), the successful resolution applicant of Essar Steel, to pay the sum by December 15, failing which the company may potentially face liquidation.
The court order comes nearly a year after AM, along with Japan’s Nippon Steel (NS), acquired Essar for Rs 42,000 crore through a bankruptcy resolution process. Subsequently, AM acquired OSPIL through a separate insolvency process for Rs 2,350 crore in March this year.
However, Srei Infrastructure Finance, which is a creditor to OSPIL and also indirect majority equity shareholder, had challenged the resolution process of the pipeline company at the National Company Law Appellate Tribunal. The matter is pending there.
The latest twist to the Essar resolution process, which ran for more than two years and went up to the Supreme Court twice, comes at the instance of Srei again, which moved NCLT Ahmedabad seeking clearance of unpaid dues to OSPIL.
OSPIL owns a 253-kilometre long pipeline connecting an iron ore beneficiation plant at Debuna to a pellet plant at Paradip in Odisha. It is a critical infrastructure to source raw material for Essar Steel, now AM/NS India.
NCLT held that this amount is payable to OSPIL as right to use charges for the period Essar was under resolution.
“The resolution applicant has contravened the provisions of such approved resolution plan by not making such IRP cost,” the NCLT bench said in the order.
A successful resolution applicant is liable to pay insolvency resolution process (IRP) cost — which often includes the expense of running a plant pending resolution, such as user charges of a pipeline as in this case — apart from creditors.
AM/NS India did not comment on the development but it is understood that the company will approach the higher court.
A spokesperson for Srei said: “Srei has always maintained that Essar should have paid the outstanding RTU charges to OSPIL. If the payments were made, OSPIL would have serviced its debts due to its lenders and there would have been no occasion for it to be taken for insolvency as the lenders of OSPIL would not have suffered any losses. Hence, our stance has been vindicated by NCLT Ahmedabad.”
Advocate Rishav Banerjee, who appeared on behalf of Srei, said the order widens the scope of IBC. “Any stakeholder who is affected by non-implementation of a resolution plan can approach the adjudicating authority for necessary directions and such stakeholder doesn’t necessarily have to be a direct stakeholder of the corporate debtor,” he said.