Amalgamated Company may be transposed as Appellant by undertaking all liabilities and contingent obligations of the Transferor Company.

In brief

The question

Whether the Applicant (ArcelorMittal Nippon Steel India Private Limited) is the rightful successor-in-interest entitled to be transposed as the Appellant following the court-approved Scheme of Arrangement.

The court held

The Tribunal allowed I.A. No. 1951 of 2025, directing the transposition of ArcelorMittal Nippon Steel India Private Limited as the Appellant.

It also directed

The holding is subject to the express condition and direction that the Applicant assumes all liabilities and obligations arising from the impugned order dated 10.11.2020, including the potential payment of ₹1300 crores.

The Tribunal ordered the amended memo of parties to be taken on record.

01Facts

The Corporate Insolvency Resolution Process (CIRP) of Essar Steel India Ltd. (ESIL) concluded with the Supreme Court's approval of a Resolution Plan submitted by ArcelorMittal India Pvt. Ltd. (AMIPL/Appellant).

p. 2 · ¶ 3(i)

Post-CIRP, the Adjudicating Authority (NCLT) directed the Appellant to pay ₹1300 crores as 'Right to Use' (RTU) charges, classifying them as IRP costs.

p. 3 · ¶ 3(ii)

The Appellant challenged this via Appeal No. 1038/2020.

During pendency, NCLT Ahmedabad sanctioned a Scheme of Arrangement on 15.03.2023.

pp. 3-4 · ¶ 3(v)

Under this Scheme, the Appellant (Transferor) was amalgamated such that its "Residual Business Undertaking"—comprising all assets and contingent liabilities—was transferred to ArcelorMittal Nippon Steel India Pvt. Ltd. (Applicant/Respondent No. 2).

pp. 8-9 · ¶ 12

The Applicant sought transposition as the Appellant to continue the litigation.

Respondent No. 1 (SREI) opposed, alleging the liability actually shifted to a third entity, AM Associates India Pvt. Ltd.

p. 6 · ¶ 7

02Issues

i.Whether the Applicant (ArcelorMittal Nippon Steel India Private Limited) is the rightful successor-in-interest entitled to be transposed as the Appellant following the court-approved Scheme of Arrangement.

p. 8 · ¶ 11

ii.Whether the liability for the ₹1300 crore RTU charges remains with the Applicant or was transferred to a third party under the Scheme.

p. 11 · ¶ 17

03Law Applied

The Tribunal applied the principles of corporate succession under Sections 230-232 of the Companies Act, 2013, as manifested through a NCLT-sanctioned Scheme of Arrangement, which carries the force of law.

p. 10 · ¶ 15

Specifically, it relied on the contractual definitions within the Scheme, where "Residual Business Undertaking" includes all "secured and unsecured debts, borrowings and liabilities (including contingent liabilities)" of the Transferor.

p. 9 · ¶ 12

The Tribunal also adhered to the principle of "substitution of parties" in pending litigations where a legal interest is transferred or devolved during the pendency of a suit.

p. 11 · ¶ 17

04Reasoning

The Tribunal examined the sanctioned Scheme dated 15.03.2023, specifically Clause (g) of Paragraph 20, which mandated that proceedings involving the Transferor Company regarding the Residual Business be continued by the Amalgamated Company (the Applicant).

p. 8 · ¶ 11

Although Respondent No. 1 pointed to financial statements of a third party (AM Associates) reflecting the ₹1300 crore liability, the Tribunal found the Applicant’s categorical undertaking in its rejoinder affidavit to be decisive.

p. 10 · ¶ 16

The Applicant explicitly stated it "stepped into the shoes of the Original Appellant" and accepted all contingent liabilities arising from the ESIL CIRP, including the RTU charges.

p. 10 · ¶ 14-16

The Tribunal reasoned that since the Residual Business—defined to include these specific liabilities—vested in the Applicant, the Applicant is the proper party to prosecute the appeal to its conclusion.

p. 11 · ¶ 17