NCLAT dismisses government claims of USD 314 million from Videocon Industries for Ravva on the high seas
New Delhi, September 1 () The National Court of Appeals for Company Law (NCLAT) has rejected the statement of the Ministry of Petroleum seeking USD 314 million (about Rs 2,245 million rupees) from Videocon Industries insolvency in unpaid earnings of oil from the Ravva oil and gas fields on the east coast.
On October 22 of last year, the ministry sent Videocon a demand notice for the payment of the government's share of oil profits, which is calculated after all capital and operating costs are deducted from the sale of Oil and gas
Videocon, which owns a 25 percent stake in the Ravva oil and gas fields, had been admitted to insolvency and the resolution professional (RP) who oversaw the process approached the Mumbai Bank of the National Court of Corporate Law (NCLT) against the lawsuit saying that the company cannot be asked to separate from any money, including profit sharing, during the moratorium period.
NCLT confirmed the appeal of the PR, which was challenged before the NCLAT.
A three-member NCLAT bank headed by President Justice S J Mukhopadhaya also confirmed the same and said the oil ministry was unable to recover these revenues during the moratorium period of Videocon Industries, against whom insolvency began in June 2018.
NCLT rightly argued that during the moratorium period, the Ministry of Petroleum and Natural Gas cannot recover any amount or issue a notice of demand to the corporate debtor through 'provisional resolution professional' to pay any amount, the NCLAT said.
The appeals court also confirmed the NCLT order to maintain the ministry's demand note and ordered the PR to get the amount back.
We maintain that NCLT rightly suspended the notice of demand dated October 22, 2018 during the processing of the resolution process, as long as the 'moratorium' is applicable to the corporate debtor, said NCLAT.
According to Section 14 of the Bankruptcy and Insolvency Code (IBC), no recovery of the corporate debtor may be required, once the moratorium period becomes effective once the NCLT begins insolvency.
The matter is related to a 'Shared Production Contract' executed between the government and ONGC, Videocon Industries, Vedanta and Ravva Oil (Singapore) on October 28, 1994.
While the state NGO had a 40% stake, Videocon 25% and Vedanta had a 22.5% share in the production contract.
A dispute between the government and Videocon arose in 2002, which was initially referred to the International Arbitration Tribunal, which partially confirmed the company's claims.
The Government of India filed an appeal on May 10, 2005 before the High Court of Kuala Lumpur, Malaysia and the Federal Court of Malaysia, where on May 16, 2016, it was unable to obtain any relief.
Both admitted Videocon's claim that the courts had no jurisdiction to decide on the issue and the adjudication of the International Tribunal in favor of Videocon became final.
However, on October 22, 2018, the Ministry of Petroleum sent a notice of demand to Videocon asking it to allocate USD 314 million as a government share in oil profits.
After this, the Videocon RP had approached the NCLT, arguing that the company could not be asked to separate from any money, including profit sharing, during the moratorium period. The NCLT in its order had said: It was judicious to order the ministry not to press for the implementation of said demand notice. KRH ANZ MKJ