The Bombay High Court has directed Ruias-owned Essar House Pvt Ltd (EHPL) and Essar Services India Ltd (ESIL) to deposit ₹35.5 crore and ₹47.41 crore respectively with the court within eight weeks (by February 4) of the order.
The case relates to default of deposit refund by both companies to ArcelorMittal which had leased out office space in Essar House during the insolvency period of Essar Steel.
Until the time the deposit is made or bank guarantees are furnished, both companies have been directed not to dispose their assets or create any third party rights, the court order said.
The court also directed both EHPL and ESIL to disclose all their movable and immovable assets, including financial investments, by January 21.
The judgment was an interim relief to protect the rights of ArcelorMittal as the disputing companies have agreed to the sole arbitration of Soli Cooper, Senior Advocate of Bombay High Court.
“The matter is subjudice and therefore we cannot comment. We are exploring all available options, including appealing to a higher court on this matter,” said an Essar spokesperson.
Use of facilities
On September 2018, after insolvency process started, Essar Steel entered into an agreement with EHPL to use business centre facilities on six floors of Essar House. It also availed itself of support services from ESIL through a separate agreement by paying a deposit of ₹47.41 crore.
As per the agreement with EHPL, Essar Steel was to pay a monthly fee of ₹1.78 crore and provide a refundable deposit of ₹35.81 crore. On December 15, 2019, Essar Steel vacated the leased premises and asked EHPL to refund the security deposit.
In June, EHPL acknowledged receipt of ₹25.80-crore deposit and said it had ‘taken over’ Essar Steel payment of ₹26 crore to one Marvel Mines and Minerals Pvt Ltd and the entire deposit was adjusted against it.
Further, in November, EHPL, in a letter, said that Marvel Mines had taken a loan of ₹26 crore from HDFC Bank to service Essar Steel and the deposit amount was used to repay the loan, leaving only ₹9.52 crore as repayable. EHPL added that other than the 22-floor Essar House at Mahalakshmi, it has no other assets. Essar House itself is mortgaged to India Bulls Housing Finance, IDBI Trusteeship and India Bulls Financial Services for ₹138 crore and cannot repay the deposit.