ArcelorMittal Plea Over EPC Construction dismissed by NCLAT

The National Company Law Appellate Tribunal (NCLAT) dismissed global steel major ArcelorMittal’s petition, which sought to challenge the approval of Royale Partners Investment Fund’s resolution plan by the creditors of debt-ridden EPC Construction India Ltd.

A three-member NCLAT bench headed by Chairman Justice SJ Mukhopadhaya observed that it had no vested fundamental right to challenge the plan approved by the Committee of Creditors (CoC) of Essar Constructions India Limited (ECIL) – formerly known as Essar Projects India.

The CoC of ECIL had rejected ArcelorMittal India’s bid and had voted in favour of the resolution plan by Mauritius-based Royale Partners Investment Fund Ltd. with a majority of 73.14 percent whereas ArcelorMittal India received only 17.67 percent of the total votes in CoC.

ArcelorMittal India was of the view that the approval of bids from Royale Partners was in contravention of the mandatory requirement – under the proviso of the Insolvency and Bankruptcy Code, 2016 (IBC) – to ask a bidder to obtain approval from the fair trade regulator Competition Commission of India (CCI) prior to nod by CoC.

The NCLAT ruled that proviso to Section 31(4) of the IBC which relates to obtaining the approval from the CCI under the Competition Act, 2002 prior to the approval of such Resolution Plan by the CoC is directory and not mandatory. It is always open to the Committee of Creditors, which looks into viability, feasibility and commercial aspect of a Resolution Plan to approve the Plan subject to such approval by the CCI, which may be obtained prior to approval of the plan by the Adjudicating Authority under Section 31 of the IBC.

In the current matter since the approval of the CCI had been taken to the Resolution Plan, the NCLAT dismissed the matter and held that the appellant had no vested fundamental right to challenge the plan approved by the Committee of Creditors.