ARCELORMITTAL INDIA PRIVATE LIMITED versus SATISH KUMAR GUPTA & ORS.

Summary

The Supreme Court held both ArcelorMittal and Numetal ineligible under section 29A(c) to submit their Essar Steel resolution plans, including the April 2018 plans. Eligibility was tested at submission, but proximate arrangements designed to avoid the NPA-payment requirement could be examined through corporate structures. Political sanctions and the particular US settlement did not establish the separate alleged disqualification of VTB Bank. Exercising Article 142, the Court allowed both applicants two weeks to make the requisite payments and conditionally resubmit their April plans for consideration alongside Vedanta’s plan; no plan was itself approved.

Issues

1. When section 29A(c) ineligibility attached and whether prior share transfers could avoid it.
2. How acting jointly or in concert, promoter status and positive control applied through corporate structures.
3. Whether the foreign measures against VTB Bank attracted section 29A(f) read with (i).
4. What roles the resolution professional, creditors’ committee and adjudicating authorities performed, and how litigation affected the statutory timetable.
5. Whether either bidder was eligible and what further opportunity could be granted.

Provisions considered

• Section 29A(c), with its proviso, and section 29A(j), as considered in the judgment, Insolvency and Bankruptcy Code, 2016Eligibility attached at plan submission, including through persons acting jointly or in concert and connected persons; proximate avoidance arrangements were examinable and the specified overdue amounts, interest and charges had to be paid to cure the relevant NPA disqualification. (¶¶ 22, 23, 29, 43, 54, 55, 57, 60, 95, 109, 111)
• Section 29A(f) and (i), Insolvency and Bankruptcy Code, 2016The political sanctions and particular US settlement relied on did not constitute the corresponding securities-market prohibition necessary for VTB Bank’s alleged disqualification. (¶¶ 58, 59, 103, 104, 105)
• Sections 2(27) and 2(69), Companies Act, 2013The Court construed control as positive or proactive control for section 29A(c), while identification as promoter in annual returns independently established the relevant promoter status. (¶¶ 46, 47, 48, 50, 52, 53, 107, 111)
• Regulation 2(1)(q), SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011The common-purpose test and rebuttable presumptions informed identification of persons acting in concert, including the family and group-company relationships proved here. (¶¶ 38, 39, 41, 84, 95, 109)
• Sections 30 and 31, Insolvency and Bankruptcy Code, 2016The resolution professional examined compliance and supplied an opinion rather than adjudicating; creditors evaluated plans, and the adjudicating authority determined legal compliance. (¶¶ 68, 76, 77, 78, 79, 80, 81)
• Sections 12 and 33, as then applicable, Insolvency and Bankruptcy Code, 2016The Court treated the statutory resolution periods as mandatory in view of the liquidation consequence, while explaining exclusion of litigation time where a resolution plan was upheld on appeal. (¶¶ 68, 70, 71, 72, 82, 83)
• Sections 60(5), 61 and 62, Insolvency and Bankruptcy Code, 2016The scheme governed adjudication and appeals on legal compliance; section 60(5) did not create an entitlement to premature intervention at the resolution applicant’s instance. (¶¶ 68, 80, 81)

Held

• Section 29A required a purposive examination of the real persons behind a corporate vehicle established to submit a plan. Acting jointly meant acting together and did not require a legally constituted joint venture; concert required the relevant shared purpose, with statutory presumptions remaining rebuttable. (¶¶ 27, 29, 34, 35, 38, 39, 41)
• Ineligibility under section 29A(c) attached when the plan was submitted. The insolvency-commencement date served the separate function of measuring the required year after NPA classification; the 2018 clarification did not change that temporal rule. (¶¶ 42, 43, 44)
• Control for section 29A(c) meant positive or proactive control, rather than mere power to block a special resolution. Promoter status was a separate route: identification as promoter in annual returns did not depend on actual exercise of board appointment or voting rights. (¶¶ 45, 46, 47, 48, 49, 50, 52, 53, 107)
• The prescribed NPA-related overdue amounts, interest and charges had to be paid before submission; a promise of payment conditional on acceptance could not replace that requirement. Although submission was the relevant date, reasonably proximate arrangements made to avoid the proviso could render the applicant ineligible. (¶¶ 54, 55, 56, 57)
• The resolution professional’s compliance scrutiny and due diligence produced a prima facie opinion for creditors, not a binding adjudication. An applicant had no vested right to consideration or approval at the preliminary stages; legal disqualification remained subject to adjudication and the statutory appeals. (¶¶ 75, 76, 77, 78, 79, 80, 81)
• Under the statutory scheme then considered, the resolution timetable was mandatory, with liquidation following the specified failure of resolution. The Court also recognised exclusion of litigation time where a resolution plan was upheld on appeal, balancing timely completion with preservation of a viable going concern. (¶¶ 70, 71, 72, 82, 83)
• Numetal’s shareholders were acting jointly, and the trusts did not remove the proved Ruia connection. The continuing earnest-money deposit and the sequence of avoidance transactions meant that AEL’s share exit did not cure the disqualification: both submitted plans attracted section 29A(c). (¶¶ 84, 85, 86, 87, 88, 89, 90, 91, 92, 93, 94, 95)
• The political sanctions against VTB Bank were not a corresponding securities-market disqualification based on the bank’s misconduct. The particular US consent settlement restricted specified inter-party transactions, rather than access to or trading in the securities market generally; that separate challenge failed. (¶¶ 96, 97, 98, 99, 100, 101, 102, 103, 104, 105)
• ArcelorMittal’s group relationships, promoter status in Uttam Galva and positive joint control relating to KSS Petron attracted section 29A(c). The last-minute share divestments and director resignations were avoidance arrangements on the facts. The further Pramod Mittal argument was not entertained for the first time in this Court. (¶¶ 106, 107, 108, 109, 110, 111, 112)
• Because section 29A was being interpreted for the first time and creditors sought another opportunity, Article 142 relief allowed both applicants two weeks from receipt of judgment to pay as required. Upon payment, their 2 April 2018 plans could be resubmitted; creditors then had eight weeks to choose the best plan by the requisite majority, including Vedanta’s. Absent an acceptable plan, ESIL would enter liquidation. (¶ 113)

Result

Appeals disposed of. Both applicants held ineligible under section 29A(c), but given the conditional two-week payment and resubmission opportunity under Article 142, followed by eight weeks for creditors’ selection; liquidation to follow if no plan secured the requisite acceptance.