Essar House Private Limited, which owns Essar House, the headquarters of Ruias-controlled Essar group, and Essar Services Private Limited have been directed to deposit the refundable security payable to ArcelorMittal Nippon Steel India by the Bombay High Court.
The petitions were filed by AM/NS India as urgent protective interim order pre-arbitration under Section 9 of the Arbitration and Conciliation Act 1996. Both sides agreed to a reference of their disputes to the sole arbitration of Soli Cooper, a senior advocate of the high court.
In an order passed on December 10, Essar House Private Limited (EHPL) has been ordered and directed to deposit with the Prothonotary and Senior Master an amount of Rs 35.5 crore within eight weeks from the date of order; optionally, a bank guarantee of any nationalised bank for the entire amount along with all interest earned thereon could be furnished.
Till the time the deposit is made or bank guarantees furnished, EHPL has been injuncted from disposing assets or creating any third party rights.
If the respondent wished to make an extraordinary disposal of the assets, it would have to apply to the court for relief only after at least one week’s written prior notice to the advocates for the petitioners (AM/NS India).
AM/NS India sought a deposit of Rs 35.81 crore as security for their claim in arbitration. This was a refundable security deposit payable to it under a Business Centre Agreement dated September 17, 2018.
A spokesperson for the Essar group said, “The matter is subjudice and therefore we can’t comment. We are exploring all available options including appealing to a higher court in this matter.”
On April 1, 2016, Essar Steel had entered into a rental agreement with EHPL to occupy the ground floor, podium and 20 upper floors of Essar House. The agreement was of a leave and license, and was extended by consent to operate until 31st March 2019.
However, on September 17, 2018, Essar Steel entered into the Business Centre Agreement for the corporate insolvency resolution period with EHPL, to avail of business centre facilities on six floors of Essar House. The agreement subsumed the earlier rental agreement.
On November 27, 2019, EHPL asked Essar Steel to vacate premises (after Supreme Court order paved the way for acquisition of Essar Steel by ArcelorMittal and its partner, Nippon Steel); however, the refundable security deposit was not returned after vacating the premises. EHPL had adjusted the amount against receivables from Essar Steel.
AM/NS India also sought a deposit of Rs 47.41 crore as refundable security deposit payable upon termination of a Support Services Agreement dated 15th May 2014 with Essar Services India Private Limited (ESIPL).
The court, on December 10, ordered and directed to deposit with the Prothonotary and Senior Master an amount of Rs 47.41 crores within eight weeks; optionally, ESIPL may furnish a bank guarantee of any nationalized bank for the entire amount along with all interest earned thereon.
In addition, within six weeks, a disclosure of all its movable and immovable assets including monthly receivables, without exception including financial investments. An order of injunction on disposing of assets has also been passed till such time.