The National Company Law Appellate Tribunal (NCLAT) on Friday turned down a plea by the ministry of petroleum & natural gas seeking to recover nearly Rs 2,245 crore from Videocon Industries as unpaid share of profit petroleum.
The government defines profit petroleum as the total value of petroleum produced and saved from the contract area in a particular period, as reduced by cost petroleum and calculated as provided in the Model Production Sharing Contract (MPSC).
The petroleum ministry, had on October 22 last year, sent a demand notice to Videocon asking it to allocate the amount as “government share of profit petroleum.” Following the notice, the resolution professional (RP) of Videocon had approached the Mumbai bench of the National Company Law Tribunal (NCLT) with a plea that the company could not be asked to part with any money, including share of profit, during the moratorium period.
The Mumbai bench of the NCLT, while upholding the RP’s plea, said “it was judicious to direct the ministry not to press for implementation of the said demand notice.”
“At the most, the ministry of petroleum can lodge its claim of any legally enforceable right or recovery to the appointed RP, being not rendered remediless, as prescribed under the Code (Insolvency and Bankruptcy Code),” the NCLT had then said.
Videocon was admitted to insolvency by the Mumbai Bench of the NCLT in June 2018 after banks led by State Bank of India approached it with unpaid dues of Rs 20,000 crore. According to Section 14 of the IBC, no recovery can be enforced from the corporate debtor after the moratorium period comes into force once the insolvency is initiated.
In its pleadings before the Mumbai bench of the NCLT, the petroleum ministry had contended that a demand notice issued by it to Videocon in October did not fall under the category of recovery, and instead was its rightful share.
Since petroleum is the property of the central government, profit petroleum is a public property and hence should be rightfully given, the ministry had said in its plea. NCLT Mumbai, had in its order, restrained Mangalore Refinery and Petrochemicals, GAIL (India), and Bharat Petroleum Corporation from remitting any amount to the Centre, that it would have given to Videocon. The NCLAT also upheld the same and said the petroleum ministry would not be able to recover the proceeds during the moratorium period.
Videocon, along with Oil and Natural Gas Corporation (ONGC), Vedanta, and Ravva Oil Singapore had signed a production-sharing contract with the government in 1994.
While ONGC had a 40 per cent participating interest, Videocon had 25 per cent and Vedanta 22.5 per cent in the production-sharing contract.
A dispute between the government and Videocon on the profit petroleum issue arose in 2002, which was initially referred to the International Arbitration Tribunal, which partially upheld the company’s contentions.
Subsequent appeals before the High Court of Kuala Lumpur and Federal Court of Malaysia also did not give any relief to the Centre, and accepted Videocon’s contention that the courts had no jurisdiction to decide on the issue.