Standard Chartered Bank (SCB), which has more than 7.5 per cent weight in the Committee of Essar Steel Creditors, in the petition before the National Company Law Tribunal (NCLT) claimed that ArcelorMittal’s revised bid of Rs 420 billion was never considered by the CoC.

SCB had lent Essar Steel, which the lenders are auctioning to recover Rs 493.95 billion of unpaid financial dues, a principal amount of Rs 26.46 billion but the Committee of Creditors admitted only Rs 607 million for repayment out of the auction proceeds.

“The manner of conducting the 21st CoC meeting dated October 22, 2018 and e-voting on the voting resolutions approved on October 24, 2018 and October 25, 2018 is non transparent, flawed and illegal and was carried out with an intention to deny legal right to (SCB) to take an informed decision on the revised resolution plan (of ArcelorMittal)," the petition said. It wanted quashing of the October 24-25 voting by more than 92 per cent of creditors of Essar Steel in favour of handing over the company to ArcelorMittal.

It also wanted rejection of the resolution plan of ArcelorMittal and if that was done, the Rs 420 billion proceeds be distributed among all financial creditors on pro-rata basis of the amount of claim.

Earlier this month, operational creditors, including GAIL India and Gujarat Energy Transmission Corp, filed separate applications seeking rejection of ArcelorMittal's bid saying the Rs 420-billion project leaves out their claims.

Last month, a committee of Essar Steel lenders picked ArcelorMittal's Rs 420-billion proposal to take over the debt-laden company by paying Rs 419.87 billion out of total dues of Rs 493.95 billion of financial creditors. Operational creditors, under the plan, are to get just Rs 2.14 billion against the outstanding of Rs 49.76 billion.

Aggrieved, over two dozen operational creditors filed separate interlocutory applications in the Ahmedabad-bench of NCLT. They wanted Arcelor to pay in full all dues of operational creditors, or a Rs 543.89 billion proposal of the owners of Essar Steel to be considered.

While ArcelorMittal spokesperson could not be reached for comments, the spokesperson had at the time of operational creditors like GAIL approaching the NCLT stated: “We have followed the IBC process in good faith since first submitting our EOI in 2017. The committee of creditors has clearly decided ArcelorMittal's plan is in the best interests of Essar Steel and we are confident that the process will be implemented correctly and according to the law." SCB said the details of the Rs 420 billion revised resolution plan of ArcelorMittal, including the distribution among the creditors, was not circulated along with the agenda of the meeting. “It is an admitted position that the Revised Resolution Plan was never discussed in the CoC meetings, since there have been no CoC meetings on or after October 23, 2018 (when the revised resolution plan was received),” it said.

It wanted the Rs 420-billion ArcelorMittal’s revised resolution plan rejected as it was “not complete in all aspects” and it was “not in accordance with the law and hence is un-implementable.”

It alleged discriminatory practice by the Committee of Creditors, which has illegally formed a core-committee of CoC (beyond the scope of Insolvency and Bankruptcy Code) to negotiate with ArcelorMittal India.

The core-committee included State Bank of India, ICICI Bank, IDBI bank, and Edelweiss ARC, which illegally negotiated with ArcelorMittal and retained the right to distribute the amount of Rs 420 billion of upfront payment amongst the financial creditors as per the choosing of the core-committee members.

Accordingly, the core-committee members recommended that SCB receive Rs 607 million against its admitted claim of Rs 34.87 billion (including interest) -- only 1.47 per cent of the admitted claim of SCB. While the SBI and other lenders got 100 per cent of the principal amount due and 40 per cent of the interest amount.

"The basis of the distribution of amounts to secured financial creditors is illegal and biased," the petition said. "The consortium of lenders have acted with continued bias with the applicant (SCB) and such bias is apparent from the decision-making process and the decision on the manner of distribution. Accordingly, both the decision-making process and the decision on the manner of distribution stands vitiated." SCB has also challenged the Resolution Plan of Arcelor as being incomplete and in violation of the IBC.

It has also sought to bring to the attention of the NCLT the arbitrary practice of the CoC lead by SBI to retain legal firms to send notices to SCB without an authorisation from CoC itself.

SCB had loaned Essar Steel $500 million in August 2010. This was refinanced to the tune of $413 million in January 2014 by granting extended repayment schedule. Also, Essar Steel pledged 71.8 million shares with SCB.