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Guj HC orders re-hearing for ₹5,882 cr dues recovery by DGVCL from ArcelorMittal


The Gujarat high court has set aside an order by a commercial court in Surat and 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 February 25) and justice Hemant N Prachchhak in an order dated February 24 and recently put out on the website, said the judgment of September 28, 2021 passed by the second additional senior civil judge, Surat is hereby quashed and set aside and the matter is remitted back to the concerned trial Court for re-hearing on merits.

“The trial court is directed to hear the suit on merits and in accordance with law and the same shall decide and dispose of as expeditiously as possible,” according to the order.

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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 November 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 and Bankruptcy Code, 2016, and 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 and the order of the National Company Law Appellate Tribunal dated July 4, 2019 (the resolution plan, as modified, amended and approved).

“The Commercial Court erred in dismissing the DGVCL’ suit relying on Order XIII A of the Code of Civil Procedure and the matter ought to be remanded to the learned Commercial Court,” the Gujarat high court said in its order.

Before the NCLT, the claim had been made and 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 and not for adjudicating any amount, it was neither admitted nor denied and 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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