NCLT Extends Status Quo On Sale Of Videocon’s Overseas Petroleum Assets

The National Company Law Tribunal today extended a status quo on sale of Videocon Group's overseas oil and gas assets by State Bank of India.

The status quo would be maintained till ownership of the assets is decided, the Mumbai bench of the tribunal said in its order. It has asked the parties to respond, and will hear the matter on Nov. 21.

NCLT, while ordering the status quo last month, had said if SBI is allowed to execute the sale as per the advertised process, the Videocon Group may suffer an irreparable loss if it was determined later that the assets belong to the Venugopal Dhoot-led entities.

SBI had invited bids on Aug. 5 for the overseas assets offered as collateral for loans to Videocon entities. Dhoot then filed a plea in the NCLT to extend the moratorium on sale of assets belonging to the group's petroleum unit in Brazil and Indonesia. SBI and Bharat Petroresources Ltd.—a subsidiary of Bharat Petroleum Corporation Ltd.—had opposed his plea, citing that the overseas petroleum assets were outside the scope of the ongoing resolution process and extension of the moratorium would hamper their position.

Here are the key arguments made by SBI and Bharat Petroresources...

Bharat Petro's Arguments

The counsel representing Bharat Petro sought a revocation of the tribunal's stay order on the following grounds:

• The status quo order issued by the tribunal will not be binding on the Indonesian and Brazilian government who had granted the exploration rights for the petroleum assets. Therefore, there is a likelihood that these countries may proceed with the cancellation or takeover of the assets or associated rights.
• The agreement governing the ownership and operations of Brazilian Petroleum Assets requires periodic payment of ‘call money'. However, Bharat Petroresources has been incurring out-of-pocket expenses for payment of the call money.

SBI's Arguments

The counsel representing SBI said:

• SBI, as part of a consortium of banks, had independently lent money to Videocon Oil Ventures Ltd., and a consolidation can delay the recovery process.
• The question to be determined by the tribunal was on the ‘ownership of the sale proceeds'. Therefore, an embargo on the sale process by the bank must not arise.