MUMBAI: Billionaire Lakshmi Mittal’s ArcelorMittal has cut a cheque of Rs 7,000 crore to clear the dues of its associate companies and to make itself eligible by law to bid for bankrupt Essar Steel . Rival bidder Numetal, which has one of the Ruia family members as a stakeholder, is challenging the banks’ direction to pay up, said three people familiar with the action.“ArcelorMittal has parked the money in connection with the overdues of two defaulting companies — Uttam Galva and KSS Petron — in the escrow account of the London branch of State Bank of India,” said a banker who didn’t want to be identified.The lenders had given Numetal and ArcelorMittal one week to clear the dues which ended on Tuesday.A core committee of lenders of Essar Steel met the executives of the companies in Mumbai after ArcelorMittal’s payment was credited to the SBI account.“Both the bidders were given an opportunity to present their case on compliance under Section 29A of the Insolvency and Bankruptcy Code since the one-week deadline is over,” said the person quoted above.Under Section 29A of IBC , defaulting companies are not eligible to submit resolution plan for companies facing bankruptcy.Of the Rs 7,000 crore, around Rs 6,000 crore is to regularise loans of Uttam Galva and the balance is for KSS Petron, said those people. The overdues of Numetal is expected to be around Rs 40,000 crore to regularise loan accounts related to Ravi Ruia, founder promoter of Essar Steel.Banks have made a claim on Numetal on grounds that Rewant Ruia, one of the partners in the VTB-led consortium, is son of Essar promoter Ravi Ruia and is therefore seen as a connected party.In an email response, officials of ArcelorMittal confirmed the payments. “ArcelorMittal maintains that its offer for Essar Steel, submitted on February 12, is and always has been eligible. Any offer to pay any outstanding loans of companies where we only had a passive stake with no management or governance role, would be made without prejudice to demonstrate the seriousness of our commitment to India and Essar Steel.”Numetal has objected to the lenders’ claim to regularise the loans linked to Ravi Ruia and have approached National Company Law Appellate Tribunal.Numetal is now arguing for the second bid to be considered by the lenders where it would be at an advantage over its rival ArcelorMittal. The tribunal will hear its case on May 17. It has appealed against the lenders’ decision to demand that Numatel should pay up dues to be eligible for bidding in bankruptcy process under the Insolvency and Bankruptcy Code. Numetal said that none of its shareholders have any overdue loans with any Indian lender without getting into the specifics of its appeal to consider the second round of bidding.Satish Gupta, the resolution professional, had declared both the bids received in the first round ineligible, following which a second round of bidding was conducted in early April. Vedanta Resources, Numetal in partnership with JSW Steel, and ArcelorMittal in partnership with Nippon had bid in the second round.At that time, Numetal moved the bankruptcy court against lenders’ decision to go for second round pleading that they are eligible in the first round itself and that the bids received in second round should not be opened until the court decides on the matter.