Approved by the National Company Law Tribunal (NCLT), the take over of Bhushan Steel by Tata Steel and Electrosteel Steels by Vedanta Ltd moved near to the conclusion with the National Company Law Appellate Tribunal (NCLAT) on Friday upholding the adjudicating authority’s order that approved their bids and found them eligible under Section 29 (A) of the Insolvency and Bankruptcy Code (IBC).
Article 29 (A) bars a promoter convicted with offence punishable with imprisonment for two years or more from submitting a resolution plan. Following NCLT’s approval of the resolution plans for Bhushan Steel, its former promoter Niraj Singal moved NCLAT challenging Tata Steel’s eligibility under Section 29 (A). Similarly, Renaissance Steel, a contender for Electrosteel Steels, moved NCLAT challenging Vedanta’s eligibility.
Singal alleged that since Tata Steel UK, a subsidiary of Tata Steel, has been convicted under the ‘Health and Safety at Work Act’, with an offence punishable with imprisonment for two years or more, it should not be qualified under the IBC.
However, in its 52-page order, the NCLAT bench observed that the UK Act and Section 29 (A) of the IBC should not be equated given that the severity of the offence under Section 29A (d) is much more than the severity of offence punishable under Section 33(1) (a) of the ‘UK Act’.
“For the said reason, we hold that ‘Tata Steel UK’, which is the ‘connected person’ of ‘Tata Steel’, does not attract the disability under Section 29A of the IBC and for the said reason, we also hold that ‘Tata Steel’ is eligible to file the ‘Resolution Plan’,” it said.
As for Vedanta, Renaissance Steel alleged that since Vedanta was a “related party” of Zambia-based Konkola Copper Mines, against which a local court found it guilty for the offence punishable with a fine or imprisonment for a term not exceeding three years or to both, it should be barred from putting in bids.
In this case also, the NCLAT bench observed that the offence for which Vedanta’s punishment was prescribed was not corresponding to clause (d) of Section 29 A.
“For the said reasons, we hold that ‘Vedanta Resources PLC’, who is a ‘connected person’ of ‘Vedanta Limited’ is not covered by clause (d) of Section 29A of the IBC. In view of the aforesaid findings, we hold that ‘Vedanta Limited’ is eligible and clause (d) of Section 29A of the IBC is not attracted in its case,” it said.
State Bank of India had dragged both Electrosteel Steels and Bhushan Steel to the insolvency court. The Kolkata bench of NCLT approved Vedanta’s resolution plan for Electrosteel Steels on April 17, while the Principal bench of the adjudicating authority approved Tata Steels’ resolution plan fro Bhushan Steel on May 15.
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