The High Court of Gujarat has set aside an order by a Commercial Court in Surat & ordered re-hearing in a matter where a Gujarat state power utility company claimed dues to the tune of ₹5,882 crore from ArcelorMittal Nippon Steel India (AM/NS India) Ltd, formerly known as Essar Steel India Ltd.
Chief Justice Sonia Gokani (who retired on Feb 25) & Justice Hemant N Prachchhak in an order dated Feb 24 & recently put out on the website, said the judgment of Sept 28, 2021 passed by the second additional senior civil judge, Surat is hereby quashed & set aside & the matter is remitted back to the concerned trial Court for re-hearing on merits.
According to the Order, “The trial court is directed to hear the suit on merits & in accordance with law & the same shall decide & dispose of as expeditiously as possible".
Dakshin Gujarat Vij Company Limited (DGVCL) in 2018 approached the dedicated bankruptcy court in Ahmedabad, opposing a resolution plan submitted by the resolution professional (RP). In its plea, DGVCL said its claim of ₹5,882 crore will stand extinguished if the tribunal approves the plan.
It said AM/NS India’s Essar Steel bid does not consider contingent liabilities to debtors.
In Nov 2020, ArcelorMittal acquired the debt-ridden Essar Steel, which has a steel manufacturing facility at Hazira in Gujarat, after the Supreme Court approved the resolution plan it had submitted to the bankruptcy court.
DGVCL said it has submitted its claim to the resolution professional as per the provisions of the Insolvency & Bankruptcy Code, 2016, & IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The claim of the applicant, it said, was incorrectly determined by the interim resolution professional at ₹1.
Of the claims of ₹5,882 crore, DGVCL said ₹1,136 crore were towards cross-subsidy surcharge, ₹666 crore towards additional surcharge and ₹4,047.01 crore were for breach of minutes of meeting dated 1/2/2010.
The Supreme Court in its judgment dated November 15, 2019 approved the resolution plan submitted by ArcelorMittal in respect of the corporate insolvency resolution process of Essar Steel India Ltd, after considering the order of the National Company Law Tribunal, Ahmedabad bench dated March 8, 2019 & the order of the National Company Law Appellate Tribunal dated July 4, 2019 (the resolution plan, as modified, amended & approved).
In its Order the HC said, “The Commercial Court erred in dismissing the DGVCL’ suit relying on Order XIII A of the Code of Civil Procedure & the matter ought to be remanded to the learned Commercial Court".
Before the NCLT, the claim had been made & that the same had been taken note of. It was also specifically noted that at the time of finalizing all the claims that the operational creditors’ claims were subject to dispute pending before the authorities. Giving of Re 1 was for the purpose of permitting the appellant to participate in the very process of corporate insolvency resolution. The notional amount of ₹1 was thus meant for ensuring of participation & not for adjudicating any amount, it was neither admitted nor denied & therefore, to say that the appellant could not have continued the suit in respect of the pre- CIRP (Corporate Insolvency Resolution Plan) claim is not an acceptable proposition,” the high court said in its order.
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