Setting aside a 2020 order of the Mumbai bench of national company law tribunal (NCLT), the national company law appellate tribunal (NCLAT) held that foreign oil and gas assets owned through offshore subsidiaries could not be treated as assets of Videocon Industries Ltd (VIL) for insolvency proceedings under the Insolvency and Bankruptcy Code (IBC/the Code). In the 2020 order, NCLT had directed the inclusion of Videocon group’s foreign oil and gas assets in the corporate insolvency resolution process (CIRP) of Videocon Industries and 12 group entities.
In a significant ruling delivered on 14 May 2026 (State Bank of India vs Venugopal Dhoot & Ors/Filing No9910110041352020), a two-member bench of justice Yogesh Khanna and technical member Ajai Das Mehrotra, says, "The creditors of Videocon Industries and Videocon Oil Ventures Ltd (VOVL) intended the CIRPs of the two companies to run separately. The objective of the Code is to keep the corporate debtor a going concern besides the resolution of creditor dues. Videocon Industries and Videocon Oil Ventures are involved in starkly different businesses - Videocon Industries being in the market of consumer electronic products while Videocon Oil Ventures being in the business of oil products. One single entity would not have the expertise to revive these varied businesses."
"Therefore, the creditors of Videocon Industries and Videocon Oil Ventures intended to conduct separate CIRPs for the two companies to ensure different buyers with the requisite expertise for their businesses who would be able to effectively handle the assets and revive the businesses. It was a decision taken in the commercial wisdom of the committee of creditors (CoC), which cannot be interfered (with) by this tribunal," the NCLAT order says.
The appellate tribunal allowed four appeals filed by lenders and related parties, including State Bank of India (SBI), while dismissing two appeals filed by Videocon's former promoter Venugopal Dhoot.
The dispute revolved around whether overseas oil and gas assets held through entities such as VOVL, Videocon Energy Brasil Ltd and Videocon Indonesia Nunukan Inc should be included in the insolvency resolution process of Videocon Industries Ltd and its consolidated domestic entities.
NCLAT categorically rejected Mr Dhoot’s contention that the foreign assets formed part of a 'single economic entity' with Videocon Industries.
“It is trite law that assets of subsidiaries of a corporate debtor cannot be included in the CIRP of the corporate debtor,” the appellate tribunal observed.
NCLAT noted that Videocon Industries and Videocon Oil Venture underwent separate insolvency proceedings and that lenders had consistently maintained that the foreign oil and gas assets belonged to separate entities.
The bench also criticised Mr Dhoot for repeatedly changing his stand on the issue.
“Mr Dhoot's entire journey has been of flip-flops,” NCLAT says, referring to correspondence from 2016 and 2017 in which Mr Dhoot himself had sought to 'ring-fence' foreign oil and gas assets from the financial troubles of Videocon’s domestic business.
The order records that Mr Dhoot had earlier requested lenders to remove Videocon Industries as a co-obligor in overseas financing arrangements and instead make it a corporate guarantor so that liabilities would not appear as primary liabilities on Videocon Industries’ balance sheet.
The appellate tribunal reproduced portions of Mr Dhoot’s 2016 communication to lenders, where he had stated: “The group is facing stress in domestic debt servicing… therefore, in order to protect the oil and gas assets of the group from the financial stress being experienced by VIL in the domestic business, it is essential to shift the standby letter of credit (SBLC) facility.”
NCLAT held that Mr Dhoot’s later attempts to include those same foreign assets in Videocon Industries’ CIRP are inconsistent with his earlier position.
The judgement also reaffirmed the primacy of creditors’ 'commercial wisdom' under the IBC framework.
The appellate tribunal observed that lenders constituting the CoC had consciously decided to run separate CIRPs for Videocon Industries and VOVL because the businesses are fundamentally different — one dealing in consumer electronics and the other in oil and gas exploration.
“One single entity would not have the expertise to revive these varied businesses,” NCLAT noted.
The ruling also upheld the validity of the resolution process undertaken for Videocon Oil Venture, including the exercise of right of first refusal (ROFR) rights by BPRL Ventures BV in relation to Brazilian oil and gas assets.
The appellate tribunal says the ROFR mechanism is necessary to ensure implementation of approved resolution plans and avoid future contractual disputes.
It also upheld the 26 June 2024 order of the Mumbai NCLT approving consummation of the transaction involving BPRL’s acquisition of certain Brazilian energy assets linked to Videocon Oil Venture.
The appellate tribunal noted that Mr Dhoot had unsuccessfully raised similar objections before multiple forums over several years.
“It is evident that Mr Dhoot's contentions have been considered in detail and dismissed on four separate occasions by different fora, including this tribunal,” the judgment stated.
NCLAT further held that its earlier 5 January 2022 judgement in a related appeal had already conclusively rejected Mr Dhoot’s plea seeking inclusion of foreign oil and gas assets in the information memorandum of Videocon Industries’ insolvency process.
The appellate tribunal says the 2022 ruling had effectively overruled the 12 February 2020 NCLT order that had favoured Mr Dhoot’s plea.
Rejecting Mr Dhoot’s arguments on ownership, the appellate tribunal relied on the Supreme Court’s ruling in the Vodafone International Holdings BV vs Union of India case to reiterate that a holding company and its wholly owned subsidiary are distinct legal entities.
“When a holding company owns all of the voting stock of another company… the holding company does not own the assets of the subsidiary,” NCLAT noted while citing the Supreme Court precedent.
NCLAT finally ruled that the insolvency processes of Videocon Industries and Videocon Oil Venture had been conducted in accordance with the IBC and that there is no basis for including offshore subsidiary assets within Videocon Industries’ CIRP.
“In view of the above reasoning the order dated 12 February 2020 is set aside,” the appellate tribunal says while allowing appeals filed by SBI and others and dismissing Mr Dhoot’s subsequent appeals against the 2024 NCLT orders.
