Ahmedabad: The Ahmedabad bench of the National Company Law Tribunal has approved the Rs 42,000-crore resolution plan submitted by ArcelorMittal for the debt-ridden Essar Steel Ltd. The tribunal’s approval for the mega deal has come 583 days after it started the insolvency proceedings, instead of the mandated 270 days.

ArcelorMittal’s takeover proposal for the indebted steel-maker was approved by the Essar Steel’s Committee of Creditors last October and it was pending before the NCLT for approval since then.

Clearing ArcelorMittal's bid, NCLT said it cannot impose judicial view over banks' wisdom. However, asking the Committee of Creditors (CoC) to reconsider distribution of dues, NCLT has suggested the lenders to give 15 per cent of total offer to operational creditors.

Last month, the National Company Law Appellate Tribunal (NCLAT) had directed the NCLT Ahmedabad to take a decision by March 8 on the bid or warned that it may take the decision itself.

Earlier, on January 29, NCLT Ahmedabad had rejected the debt settlement proposal put forth by the shareholders of Essar Steel. The tribunal said the offer violates Section 12A of the Insolvency and Bankruptcy Code.

The creditors had picked ArcelorMittal and Nippon Steel joint venture to acquire the 10-million tonne steel mill. But the original promoters, the Ruias, made a counter bid with Rs 54,384 crore offer later. The last ditch offer was rejected by the lenders and the resolution professional.

ArcelorMittal's resolution proposal also includes an additional Rs 8,000-crore of capital injection into the company to improve operational efficiencies, increase production and deliver enhanced levels of profitability.

Essar Steel's operational creditors with large dues include the national oil marketer IndianOil with over Rs 3,500 crore of dues.

The promoters of Essar Steel had made several attempts to wrestle back control of the company, first by trying to participate in the bidding itself and then by offering to withdraw the company from insolvency proceedings by clearing dues of all financial and operational creditors.

However, the provisions of Insolvency and Bankruptcy Code (IBC) had prevented them from succeeding. Section 29A of the IBC, which bars promoters of a defaulting company from bidding in the insolvency process meant the Ruias were not allowed to place a bid for the company.

Essar Steel runs a 10-million-tonne steel mill at Hazira in Gujarat and owes over Rs 49,000 crore to over two dozen banks led by the SBI and has been under the bankruptcy proceedings since June 2017.

An Essar spokesperson said the company continues to believe that its settlement proposal of over Rs 54,000 crore was the most compelling one available to Essar Steel creditors.

"It fulfils the IBC’s declared overriding objective of value maximisation, which has been established time and again by courts at all levels. We are also confident of the legal validity of our said offer made under Section 12A, which provides for the withdrawal from the IBC process by making full payment to the creditors. We are awaiting a copy of the NCLT order, and will take a call on next steps after examining the same,” the spokesperson said.