Sources close to the development said a significant amount of around Rs 70 billion had been put into the SBI account with a proposal on escrow of the deposited funds. The move is said to be a demonstration of ArcelorMittal’s commitment to Essar Steel even though it believed it was an eligible bidder, they said. A letter to this effect was sent to the committee of creditors (CoC) for Essar Steel on Tuesday. Lenders, however, said it was a conditional offer and was subject to ArcelorMittal being declared a successful and eligible bidder. ArcelorMittal’s move would be deliberated by lenders now.

ArcelorMittal in its statement said: ArcelorMittal can confirm it has written to the CoC for Essar Steel India (ESIL) in response to the letter received on May 8, 2018. The details of this letter are confidential. However, 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 ESIL. We continue to believe that a swift resolution is in the best interests of ESIL and its stakeholders, including its employees who deserve a strong and certain future.

The amount deposited with SBI relates to dues on account of Uttam Galva Steels and KSS Petron, both classified as non-performing assets (NPAs) for more than a year. ArcelorMittal had earlier offered Rs 53 billion for Uttam Galva.

However, lenders were understood to be negotiating an arrangement whereby Rs 53 billion could be transferred immediately, and the balance debt of around Rs 15 billion could remain on the books of Uttam Galva to be paid in three years. The dues on account of KSS Petron were likely to be Rs 80-90 billion.

Sources said how the deal, once the payment was actually made, was going to be structured with Uttam Galva would have to be seen, provided lenders accepted the conditions.

The amount could be given as a loan to the company, or it could also be in the form of equity.

ArcelorMittal had transferred its 29.05 per cent stake in Uttam Galva in an inter-se transfer to the promoter group company on February 7 at Rs 1 a share ahead of the Essar bid. ArcelorMittal headed-L N Mittal also sold his personal shareholding in KSS on February 9. KSS, in turn, had a 100 per cent subsidiary, KSS Petron, which was facing insolvency proceedings. The Essar bid was submitted on February 12.

However, the resolution professional found ArcelorMittal and Numetal to be ineligible and had rejected the first round of bids. ArcelorMittal was disqualified on technical grounds because even though it had sold the shares in Uttam Galva it continued to be a promoter of the company in the records of the stock exchanges. Numetal was disqualified on grounds of Rewant Ruia’s exposure in the consortium. Rewant Ruia is the son of Ravi Ruia, who is the promoter of Essar.

Both the companies, however, had moved the Ahmedabad Bench of the National Company Law Tribunal (NCLT) which remanded the first round of bids to the resolution professional and the CoC for consideration and pointed towards payment of dues, especially for ArcelorMittal as a cure for its ineligibility. ArcelorMittal has appealed against the observations of the NCLT. Numetal, too, has appealed, saying that the cure is not applicable to the company. The matters will come up for hearing on May 17.

The CoC, however, decided to follow the NCLT order and had written to bidders of Essar Steel in the first round - ArcelorMittal and Numetal - on May 8, to clear their outstanding dues on account of defaulting firms in seven days. That timeline ended on Tuesday.

In the case of ArcelorMittal, it had to clear dues relating to its holding in Uttam Galva Steels and KSS Petron, both classified as NPAs for more than a year. For Numetal, it had to regularise the Essar account which could have cost Rs 400 billion due to Rewant Ruia’s exposure in the consortium, even though it is indirect and minority.

Numetal has appealed against the payment of dues in the National Company Law Appellate Tribunal and also on its eligibility.