NCLAT upholds separate insolvency processes for 2 Videocon group entities

Appellate tribunal NCLAT has upheld separate insolvency proceedings for two Videocon group entities — Videocon Industries Ltd (VIL) and Videocon Oil Ventures Ltd (VOVL) — while setting aside an earlier NCLT order that had directed clubbing of the two cases.

Passing a final order, the NCLAT said creditors of VIL and VOVL had intended the Corporate Insolvency Resolution Processes (CIRPs) of the two companies to run independently, considering the distinct nature of their businesses and the need for a specialised resolution.

In this, state-owned Bharat Petroleum subsidiary, BPRL has acquired VOVL, exercising its Right of First Refusal (ROFR), which was subsequently approved by NCLT through a June 2024 order, while the CIRP of VIL is still pending.

The appellate tribunal in its order said VIL and VOVL operate in starkly different sectors — with VIL engaged in consumer electronics and VOVL in oil-related businesses — making it impractical for a single entity to possess the expertise required to revive both operations effectively.

“One single entity would not have the expertise to revive these varied businesses,” the National Company Law Appellate Tribunal (NCLAT) bench of Justice Yogesh Khanna and Ajai Das Mehrotra said.

The objective of the Insolvency & Bankruptcy Code (IBC) is to keep the corporate debtor a going concern besides the resolution of creditor dues.

“Therefore, the creditors of VIL and VOVL intended to conduct separate CIRPs for the two companies to ensure different buyers with the requisite expertise for their businesses, who would be able to effectively handle the assets and revive the businesses,” the tribunal said in a 40-page order passed on May 14, 2026.

It further held that the “decision was taken in the commercial wisdom of the Committee of Creditors (CoC), which should not be interfered with by the tribunal (NCLT).

Earlier, the National Company Law Tribunal (NCLT) had, on February 12, 2020, while allowing a plea filed by Venugopal Dhoot, directed the resolution professional to consider and treat all assets, properties rights, claims, benefits of Videocon Oil Venture, Videocon Hydrocarbon Holdings, Videocon Energy Brasil and Videocon Indonesia Nunkan Inc as assets and properties of VIL for insolvency.

Dhoot had sought that all foreign oil and gas assets be considered as assets of Videocon Industries.

This NCLT order was challenged before the appellate tribunal NCLAT by petitioners, which include public sector lender SBI, BPRL Ventures Indonesia, Pertamina Hulu Energi Nunukan Company, among others. This order was stayed by NCLAT a week after, on February 19, 2020.

The matter dates back to 2012, when VOVL and VIL availed of finances on an obligor/co-obligor basis, from a consortium of lenders led by the State Bank of India.

Later in 2016-17, its Chairman and Managing Director, VN Dhoot, himself approached the Bank, requesting that VIL be removed as a co-obligor and instead be made a corporate guarantor so that it would not be required to show it as a primary liability on its balance sheet.

Thus, this structure was changed, and VIL became a corporate guarantor. This step was taken in pursuance to the letters and V N Dhoot’s submission that foreign oil and gas assets are to be ring-fenced from troubles being faced by the domestic business.

However, on June 6, 2018 CIRP was initiated against VIL, after the Mumbai bench of NCLT admitted an application under Section 7 of the Insolvency & Bankruptcy Code, filed by SBI.

Later, on November 8, 2019, CIRP of VOVL was also initiated. Later, Dhoot filed an application before NCLT praying for the consolidation of CIRP of VOVL with the CIRP of VIL and 12 other entities.

Dhoot later also filed a proposal under Section 12A of IBC for withdrawal of CIRP against VIL and its 12 companies; however, it was rejected by lenders with 98.14 per cent votes.

On December 11, 2020, a resolution plan was submitted by Twin Star Technologies (promoted by billionaire Anil Agarwal of Vedanta) and was approved by CoC and NCLT both in July.

This was challenged by Dhoot before NCLAT by filing an appeal challenging the Resolution Plan approval, primarily on the ground that foreign oil and gas assets were not included.

Rejecting Dhoot’s submission, NCLAT said “the entire journey by Mr Dhoot has been of flip-flops” with contradictions in his stand.

NCLAT said Dhoot in 2016 and 2017 sought to remove VIL as a co-obligor to ring-fence the foreign oil and gas assets from the troubles being faced by the domestic business. This was to avoid showing the said liability as its primary liability in the books of accounts of VIL.