More than four years after the insolvency proceedings were initiated against the Videocon group, the petroleum ministry has now moved the Supreme Court seeking intervention in the case. It sought recovery of $525.62 million towards its “legitimate sovereign claims” against the debt-laden Videocon Industries, even as it raised allegations that Vedanta group company Twinstar Technologies’ bid has no provision for the repayment of the government’s dues.
The government through the Ministry of Petroleum claimed that Videocon owes millions of dollars to it under the Production Sharing Contract of October 28, 1994, which it has “wrongfully withheld.”
Meanwhile, Abhijit Guhathakurta, the resolution professional of Videocon Industries, has also moved a fresh plea seeking a direction to the government to return $353.74 million (over and above the $86 Million be returned and refunded) that the four oil marketing companies (OMCs) have diverted to the latter. The RP has sought vacation of the apex court’s November 13, 2019 that allowed the government to receive 100 per cent sale proceeds of oil and gas towards the alleged provisional unpaid share of profit petroleum dues from all Ravva Oil Fields joint venture partners, including Videocon Industries, under the PSC.The SC is likely to hear the case on November 11.
The NCLT had in June 2021 accepted Twinstar’s bid for Videocon Industries and 12 other group companies, at a steep haircut for lenders who had a collective ₹43,743 crore exposure. The National Company Law Appellate Tribunal had also approved its ₹2,962 crore bid. While the lenders had in December 2020 approved the Twinstar’s bid by 95.08 per cent majority, it had rejected Dhoot’s proposal by 98.14 per cent vote.
Videocon Industries and its 12 group companies had a total admitted claims of ₹64,838.63 crore.
According to the government, the resolution plan (RP) as such does not include any provision for the repayment of the petroleum ministry’s claims, despite its “well-documented entitlement to these dues.”
“The failure to provide for the claims amounting to over $525.62 million (as on March 31, 2025) in the RP shall result in public funds amounting to hundreds of millions of dollars being diverted to private creditors of the corporate debtor, including financial institutions, while the rightful share of the applicants will be unlawfully ignored,” the application filed by the ministry stated.
Wanting its dues to be settled before any final resolution plan is approved, the government said that it being the custodian of natural resources under Article 297 of the Constitution holds a legal and constitutional mandate to ensure that its rightful share in profit petroleum and sale proceeds arising therefrom are safeguarded. The failure to account for the claims “has grave implications for the sovereign rights” of the government, the ministry said while seeking urgent intervention in the proceedings.
The apex court had in October 2023 stayed the NCLAT’s March 2019 order that restrained the government from implementing a notice of October 22, 2018 asking the four OMCs, including GAIL and BPCL, to allocate100 per cent of the sale proceeds/oil and Gas invoices in the government’s favour.
Stating that the government should have acted in “a fair and reasonable manner by withdrawing the notice when the alleged due of $86 million had already been diverted,” the resolution profession in its separate application stated that the government is at present holding on to $439.74 million, which is far in excess of the alleged dues, and is still continuing to receive the diverted funds from the OMCs, as a result severely aggravating the already precarious financial position of Videocon.
“…the Ravva sales proceeds constitutes the primary cash flow to the corporate debtor and comprise approx. 93 per cent of total sales proceeds (including proceeds from other assets / businesses of the corporate Debtor), thus, impacting its going concern nature. (share based on approx. total sales proceeds as per audited financials of the company from form FY 2020-21 till FY 2023-24),” Guhathakurta said.
