The Supreme Court on Tuesday agreed to hear Videocon Group founder Venugopal Dhoot's plea against an NCLAT order that upheld separate insolvency proceedings for two group entities - Videocon Industries Ltd. and Videocon Oil Ventures Ltd.. A Bench of Justices P S Narasimha and Alok Aradhe issued notice on Dhoot's appeal and posted the matter for further hearing on August 10. According to reports from ETLegalWorld, the Supreme Court is set to review Dhoot's challenge against the appellate tribunal's May 14 order that set aside an earlier NCLT directive that had directed clubbing of the two cases.
Senior advocate K K Venugopal, appearing for Dhoot, argued that the dispute was confined to whether foreign oil and gas assets valued at about $7.5 million should form part of Videocon Industries' insolvency estate. As reported by ETLegalWorld, he submitted that while a related appeal was already before the court, the present case specifically concerned the treatment of these overseas assets in the insolvency process. Representing State Bank of India (SBI), Solicitor General Tushar Mehta opposed the appeal, contending that Dhoot had adopted contradictory positions during the insolvency proceedings.
The NCLAT had upheld separate insolvency proceedings for the two entities, citing the distinct nature of their businesses and the need for specialized resolution. According to ETLegalWorld, the appellate tribunal noted that VIL operates in consumer electronics while VOVL is engaged in oil-related businesses, making it impractical for a single entity to possess the expertise required to revive both operations effectively. The tribunal emphasized that the decision was taken in the commercial wisdom of the committee of creditors (CoC), which should not be interfered with by the tribunal. It rejected Dhoot's submission, calling his approach 'flip-flops' with contradictions in his stand, particularly regarding his 2016-17 efforts to ring-fence foreign oil and gas assets from domestic business troubles.
The dispute dates back to 2012, when VOVL and VIL availed finances from a consortium of lenders led by SBI. In 2016-17, Dhoot approached the bank requesting that VIL be removed as a co-obligor and instead made a corporate guarantor to avoid showing foreign oil and gas assets as primary liability. On June 6, 2018, a CIRP was initiated against VIL after the Mumbai bench of NCLT admitted an application filed by SBI under Section 7 of the Insolvency and Bankruptcy Code. A CIRP of VOVL was initiated on November 8, 2019. Dhoot later filed applications for consolidation of VOVL's CIRP with VIL's and proposed withdrawal of the CIRP against VIL and its 12 companies, but both were rejected by lenders with 98.14 per cent votes.
After hearing both sides, the Bench observed that the issues substantially overlapped with those arising in the pending appeal and decided to tag the matter with the connected case. According to ETLegalWorld, the Supreme Court's decision to link the current appeal with the pending matter reflects the court's approach to managing related legal disputes in the complex insolvency proceedings involving Videocon Industries and its related entities. The case has significant implications for creditor decisions and business operations in distinct sectors, with the Insolvency and Bankruptcy Code's objective to keep corporate debtors as going concerns being a key consideration.
