Prashant Ruia, the promotor of debt-ridden Essar Steel, Wednesday submitted before the National Company Law Appellate Tribunal that the resolution plan moved by ArcelorMittal is in violation of the Insolvency & Bankruptcy Code.
Senior advocate U K Chaudhary, representing Ruia, said that the proposal of ArcelorMittal India was in violation of IBC code as the proposal if approved negates the right of Subrogation of the Guarantor.
“Item 18 in the adendum of the resolution plan says that Subrogation right of the guarantor would stand extinguished on the approval of the resolution plan,” he said.
Subrogation means substitution of one person or group by another in respect of a debt. With subrogation right, a guarantor can step into the shoes of a creditor.
According to Chaudhary, this was illegal and was in violation of Indian Contract Act and requested the appellate tribunal to quash the plan.
“This is also in violation of IB Code,” he said, adding that the resolution plan should …