MUMBAI | KOLKATA: Tata Steel, which was so far leading the race in acquiring Bhushan Power & Steel, is contemplating challenging an order passed by the bankruptcy court that directs the resolution professional to consider Liberty’s application, despite it being filed after the deadline.
Two senior officials, who did not want to be named, said Tata Steel will approach National Company Law Appellate Tribunal on the grounds that it would amount to penalising those who are law observers and reward violators.
Liberty House had submitted a resolution plan for Bhushan Power & Steel on February 20, although the last day of submitting bids was February 8. When the resolution professional declined to open the bid on grounds that it was submitted after the deadline, Liberty approached the bankruptcy court to question the RP’s decision.
While Tata Steel is likely to be disappointed with the court’s directive, it has not spoken out against it. When contacted, a Tata Steel spokesperson said he was aware of the matter. Asked whether Tata Steel is planning to appeal against the NCLT order, the official said the company may take a couple of days to firm up its response.
For Tata Steel, it could be a frustrating experience since the company had emerged as the highest bidder for Bhushan Power with a Rs 24,500-crore offer, outbidding JSW Steel which put in a Rs 13,000- crore bid. Officials agreed the Tata Steel-BPSL scenario is turning out to be somewhat similar to the Binani Cement case, where UltraTech Cement came into the fray after Dalmia Bharat emerged as the highest bidder.
Incidentally, Tata Steel has already accepted the Letter of Intent (LoI) for Bhushan Steel and, together with BPSL, it was hoping to add almost 8 million tonne capacity that would take it to the top league of the domestic steelmakers, including Steel Authority of India and JSW Steel.
At the bankruptcy court, the Tata’s had appealed that the applicant (Liberty House) is nothing but a spoiler and a proxy for the debtor whose only objective is to delay and scuttle the resolution process. In their argument, the lenders had alleged that Liberty has deliberately delayed their applications. The resolution professional argued that Liberty’s application is a complete abuse of the process.
Senior Counsel for RP, Arun Kathpalia also pointed out that Liberty House failed to submit documents required for qualification and there was noncompliance of Section 29 A, and it failed to provide Rs 10 lakh deposit as per the mandate. The Tatas had also stated that allowing Liberty would set a bad precedent in IBC and entertaining such application would penalise the law-abiding participants and reward violators.
The counsel for creditors argued that allowing the present application would open floodgates for other applications. Liberty had appealed on the ground that the RP had accepted two applications — ArcelorMittal’s and their application — for expression of interest much after the deadline of October 6, which means that deadline was neither sacrosanct nor considered binding. Bhushan Power is among the 12 companies wherein the Reserve Bank of India (RBI) directed the bank to refer to the bankruptcy court. It faces .`49,264 crore claims from financial creditors. Lenders had received binding offer from JSW Steel and Tata Steel before the deadline on February 8.