The latest effort by the promoters of Essar Steel, one of India’s largest debt-defaulting companies, to prevent it from getting auctioned fell flat after the National Company Law Tribunal rejected their proposal.

The promoters, the Ruia family, had approached the NCLT to submit a settlement proposal under majority shareholder Essar Steel Asia Holding Ltd (ESAHL).

The tribunal rejected their proposal for a settlement offer of 540 billion rupees (US$7.58 billion), claiming that ESAHL did not have the legal right to make a debt-settlement proposal, as unlike others it had not approached the company-law regulator as a resolution applicant, Business Standard reports.

Essar is expected to challenge the decision in the National Company Law Appellate Tribunal.

The ruling works out in favor of the other frontrunner ArcelorMittal, whose proposal was approved in October by a committee of creditors (CoC) of Essar Steel.

Luxembourg-based ArcelorMittal, headed by Indian-origin chief executive officer Lakshmi Mittal, in association with Japan’s Nippon Steel had put forth a resolution plan for an upfront payment of 420 billion rupees and an additional injection of 80 billion rupees to support the operations and increase production.

Unlike ESAHL, which made a settlement offer outside of the resolution process, ArcelorMittal’s resolution plan was approved by 92% of the CoC.

Essar Steel was among the 12 companies identified by the Reserve Bank of India in 2017 for immediate bankruptcy proceedings. These 12 companies reportedly accounted for 25% of the 9.5 trillion rupees’ worth of non-performing assets faced by the banking sector in India.

Essar Steel is India’s third-largest steelmaker and operates a fully integrated steel mill at Hazira, Gujarat state, with an annual capacity of 10 million metric tons. It also has processing and distribution centers in Hazira, Pune, Chennai, Indore, Bhuj, Delhi-National Capital Region and Kolkata, besides three overseas locations.

It also owns the subsidiary Odisha Slurry Pipeline Infrastructure, which transfers iron ore from mines in Odisha state to Paradip Port, from where it is shipped to the Hazira plant.

This deal will give steel magnate Lakshmi Mittal’s company a foothold in the growing Indian steel market. It had earlier failed in its attempts to set up a greenfield facility in Jharkhand and Karnataka states.