The National Company Law Appellate Tribunal (NCLAT) on Tuesday observed that the Committee of Creditors of Essar Steel cannot discriminate between operational creditors of the debt-ridden firm.
The CoC of Essar Steel has divided operational creditors of the company into two types — one with claims under ₹1 crore and another above ₹1 crore.
During the proceedings, the NCLAT bench headed by Chairman Justice S J Mukhopadhaya said that the operational creditors cannot not be treated differentially.
“We have said that you cannot discriminate among the same set of creditors. You can not discriminate among operational creditors on the basis of their dues,” the NCLAT said.
According to the resolution plan of ArcelorMittal approved by CoC on October 24, 2018, operational creditors having claims below ₹1 crore will get their dues and those with claims of over ₹1 crore will receive almost zero.
Financial creditors would get an upfront ₹41,987 crore payment against their admitted claims of ₹49,395 crore while operational creditors are getting ₹214 crore against their dues of ₹4,976 crore.
Later, the CoC decided to allocate an additional ₹1,000 crore to operational creditors after the NCLT and the NCLAT suggested it to rework on the distribution of funds.
According to advocate Anand Verma, who is representing operational creditors, the banks, which are financial creditors, are getting almost 90-92 per cent of their dues.
“Moreover, the offer of additional ₹1,000 crore given to the additional creditors has no meaning in law, as it requires equal treatment to financial and operational creditors,” he said.
However, senior advocate Gopal Subramanium, representing the CoC said that the Supreme Court in a judgement has said that financial creditors and operational creditors could not be treated at par.
The NCLAT would continue the hearing in the matter Wednersday.
According to a notice published earlier, the total dues of operational creditors with below ₹1 crore claim is only around ₹200 crore and the dues of operational creditors with above ₹1 crore claim stood at ₹4,900 crore.
Last week, the Supreme Court stayed the payment of money by ArcelorMittal to lenders to buy Essar Steel over a petition filed by various stakeholders.
Source: Mint