There's a big twist in tale of Essar Steel. In a surprise move, the company's promoters, the Ruias have offered to make a payment of over Rs 54,000 crore to the creditors to settle their claims. On the other hand, the committee of creditors (CoC) of Essar Steel is moving fast with the process to sell the company to ArcelorMittal.

Shardul Shroff, executive chairman of Shardul Amarchand Mangaldas & Co, spoke to CNBC-TV18 about Ruias last ditch attempt to retain the company.

“The proposal that they have put forward and the press release is not kosher as it is not acceptable under the provisions of the Insolvency and Bankruptcy Code (IBC). The argument that there is a maximisation value doesn’t hold good because this has to be contextual, you had to make the maximisation of value during the period that was available and not after the period. It was considered ineligible and would be eligible only if they paid the entire value of non-performing accounts across the group. This sort of process now that has been initiated in some sense is a backdoor method because if you had the money to pay off the entire creditors and declare yourself as solvent then the point made that you are then a wilful defaulter will hold good because if you had the capacity to pay or to raise money to pay and why did you not do so for a period of one and a half years is a very potent argument. So my belief is that, this proposal of Ruias is not kosher,” Shroff said on Friday.

Talking about how bankers will approach the Ruias offer, he said, “I don’t believe that the bankers will litigate because they want to wrap up this position. Why would they want to go and take any steps which will delay the proceedings further? They will progress with the procedure in relation to getting the resolution plan approved by the National Company Law Tribunal (NCLT). They will also, in all probabilities, report to the Supreme Court (SC) of the payment within two weeks as was stipulated in their judgement and therefore if any procedure is initiated by the Ruias either in the writ court or in the NCLT or in the SC, the position of the lenders should be quite clear as to why they did not accept the proposal of Ruias and that will probably define the moment as to what is to happen. I don’t believe after such a long time, any court will interfere because all these devices that have been used by Ruias are inequitable."

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