Venugopal Dhoot Challenges Supreme Court Ruling Upholding Separate Insolvency Proceedings for Vodafone Idea Ltd and Videcon Industries Ltd.

Supreme Court Petition Filed by Videocon Founder Against NCLAT Order

Venugopal Dhoot, the founder of Videocon, has filed a petition in the Supreme Court against a National Company Law Appellate Tribunal (NCLAT) order upholding separate insolvency proceedings for two group entities – Videocon Industries Ltd and Videocon Oil Ventures Ltd – while setting aside an earlier NCLT order that had directed clubbing of the two cases. The petition was filed on May 19 against the May 14 order of the appellate tribunal.

The NCLAT had said that creditors of Videocon Industries Ltd (VIL) and Videocon Oil Ventures Ltd (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 specialized resolution. The appellate tribunal noted that 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.

The objective of the Insolvency and Bankruptcy Code (IBC) is to keep the corporate debtor a going concern besides the resolution of creditor dues. In this regard, the NCLAT said that the decision to have separate CIRPs for VIL and VOVL was taken in the commercial wisdom of the committee of creditors (CoC), which should not be interfered with by the tribunal (NCLT).

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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 (SBI). Later in 2016-17, the chairman and managing director of VIL, Venugopal Dhoot, 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.

The CIRP of VIL is still pending, while VOVL has been acquired by BPRL, a state-owned Bharat Petroleum subsidiary, exercising its right of first refusal (ROFR), which was subsequently approved by the National Company Law Tribunal (NCLT) through a June 2024 order. Dhoot had sought that all foreign oil and gas assets be considered as assets of Videocon Industries. However, the NCLAT stayed the NCLT order on February 19, 2020, which had directed the resolution professional to consider and treat all assets, property 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.

The NCLAT rejected Dhoot's submission, saying that he had made contradictions in his stand, with his entire journey being "of flip-flops". The appellate tribunal noted that Dhoot had sought to remove VIL as a co-obligor in 2016 and 2017 to ring-fence the foreign oil and gas assets from the troubles being faced by the domestic business to avoid showing the said liability as its primary liability in the books of accounts of VIL.

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