TMI Blog2019 (6) TMI 1028X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1996. This Bench is only concerned about the enforcement of the provisions of Insolvency Code. This Code is introduced with the objective as per its Preamble, to reorganize a corporate person in a time bound manner for maximization of value of assets as well as to promote entrepreneurship along with the motive to balance the interest of all the stakeholders, notwithstanding alteration in the Order of priority of payment of Government dues. All attempts are to be made to procure the value of the Debtor Company as also to procure the assets of the Debtor Company. Already an Order has been pronounced on 06.06.2018 by this Bench u/s. 7 of the Insolvency Code, thereupon, implementation of Section 14 of IBC by declaring commencement of Moratorium . The effect of declaration of Moratorium is that prohibition is enforced for recovery against the said Corporate Debtor. Prohibition is also towards institution of any suit or execution of any Judgment, Decree or Order of any Court of Law, Tribunal, Arbitration Panel, etc. Once the Moratorium is declared such an action on the part of the GoI, Ministry of Petroleum, is not legal as far as the Insolvency Code is concerned now fully app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 28-a, KG Marg, Connaught Place, New Delhi. 1.2. There was a Production Sharing Contract which was executed on 28.10.1994 (known as Ravva PSC) between the Government and the following four parties having percentage of participating interest as follows:- Sl. No. Name of Party % Participating Interest 1 ONGC Ltd. ( ONGC ) 40% 2 Videocon Industries Limited 25% 3 Vedanta Ltd. ( VIL ) (company in which Cairn India ltd. Stands merged) 22.5% 4 Ravva Oil (Singapore) Pte. Ltd. ( ROS ) 12.5% 1.3. A dispute arose between Government of India (GoI) and Videocon Industries (VIL), (Corporate Debtor), regarding deductibility of ONGC Participating Interest. There was a litigation for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 170 Base Development Cost 52 29 16 32 129 VIL short payment 15 15 Total 52 93 51 118 314 1.7. The vehement objection of the Applicant is that in a situation when the Arbitration Tribunal had passed an Award on 31.03.2005, then the GoI should not have unilaterally issued the impugned Notice of 10.07.2014, which was in breach of Ravva PSC . The Tribunal Award dated 31.03.2005 was binding upon the parties. An interesting point has also been mentioned by this Applicant that the said Award of 31.03.2005 was a partial awa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Arbitration Partial Award dated 31.03.2005 had concluded that the sales made by VIL to nominee of GoI were in fact sales made to GoI. The said Award provided for the payment by converting USD to Indian Rupees at SBI, Middle Rate (i.e. Average of SBI TT Buy Rate and SBI TT Sell Rate). As per this Applicant, and it is important to place on record that, pursuant to the said Award, VIL has been making payment of the GoI share of Profit Petroleum by converting USD into Indian Rupees at SBI Middle Rate. It is also placed on record that after dismissal of final appeal of GoI by the Federal Court of Malaysia in May 2016, there was no recourse left for the GoI but to settle the Exchange Rate as per the claim of VIL. 1.12. A legal argument has also been raised that vide an Order dated 06.06.2018 in the case of Videocon, an Order is pronounced and Insolvency was declared. Upon Admission, the Moratorium u/s.14 of the Insolvency Code was pronounced. On pronouncement of Moratorium no recovery proceeding be initiated against the Debtor Company. Because of the declaration of Moratorium the Applicant is seeking an Injunction against the impugned Notice dated 22.10.2018 issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rightly entitled to recover its share of Profit Petroleum . According to the Respondents, the Applicant had failed to demonstrate as to how the Profit Petroleum of ₹ 118 Million to be paid by Respondents 2 to 6. 2.1. Narrating the brief facts as it is stated in the Reply to the impugned Application that Union of India is the sovereign owner of the petroleum and natural resources underlying below the seabed of India territorial waters and the continental shelf, which is recognized and declared vide Article 297 of the Constitution of India. This fact has been interpreted by the Hon'ble Supreme Court to mean that the people of India are the real owners of these resources and that State is only a Trustee to hold them for the benefit of the people. The answering Respondents took steps to explore and exploit expeditiously the petroleum resources available within a specified area for the overall interest of India. In accordance with the rights conferred to it under the Oilfields (Regulation and Development) Act, 1948, the Answering Respondents entered into a Production Sharing Contract dated 28.10.1994 ( PSC ) with the Applicant, Cairn India Ltd. (now Vedanta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e contractor through operator had appropriated excessive amount of cost without approval of Management Committee. The outcome was that the share from Profit Petroleum entitlement got adversely affected. 2.2. To resolve the controversy, the contractor had initiated arbitration proceedings against the Respondent. The Arbitral Tribunal vide Award dated 18.01.2011 decided the dispute with regard to Base Development Cost in favour of the contractor, allegedly disregarding the express terms of the contract. Due to this the nation was deprived to the extent of USD 129 Million of Government share of Profit Petroleum . 2.3. With regard to the ONGC Carry issue, since the Contractor represented that they were entitled to deduct the ONGC Carry charges in the computation of PTRR, the Contractor deducted the same in PTRR as a consequence of which, the Answering Respondents suffered a loss of Profit Petroleum to the extent of USD 284 million because of illegal suppression of PTRR calculated under Appendix D of PSC. 2.4. A legal point vehemently pleaded is that the Awards dated 31.03.2005 and 18.01.2011 being foreign Awards, therefore, the Appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the oil companies (R-2 to 5) shall not release amounts under profit petroleum which comprises subject matter of notice, till disposal of MA No.1300/2018. 4. Learned Adjudicating Authority is requested to consider the aforesaid MA on its merit being uninfluenced with the observations made in the impugned order. It is clarified that this order shall not in any manner be interpreted as limiting the authority and powers of Adjudicating Authority to pass appropriate direction in regard to profit petroleum after hearing the matter on merit. 2.5. Further it is pleaded that the Profit Petroleum‟ is an Asset of the Respondent, hence out of the ambits of Section 14 of IBC, therefore, the Moratorium has no role to play to recover its own asset belonging to Respondent. The Answering Respondent has a legal right over the Profit Petroleum, therefore, issued Notice dated 22.10.2018. Such claim also does not constitute the essential Goods and Services. It is concluded that the Applicant is not entitled for the relief(s) as prayed for in this Application. 3. Learned Counsel Advocate Manidhar Acharya (ASG) along with Ld. Sheeja Joh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cy Bankruptcy Code, 2016 on 06.06.2018 titled as SBI V/s. Videocon Industries Ltd. (C.P.(IB)-02(MB)/2018) admitting the petition of the Financial Creditor by declaring Moratorium u/s 14 and appointing Interim Resolution Professional to commence Insolvency process. It is worth to place on record that the Debtor Company is under heavy financial Debt pertaining to various types of Loan facilities availed from consortium of Banks approximately to the tune of ₹ 3,961 Crores. The process of consolidation of group matter under the direction of the Principal Bench, New Delhi and preparation of Information Memorandum for inviting Expression of Interest is in progress on the date when this Interim Application was submitted. 5.2. The reason for submission of this Miscellaneous Application is a Letter-cum-Notice dated 22.10.2018 (No. O-22013/38/2010-ONG-D-V (E-4731) issued by Respected Under Secretary to the Government of India, Ministry of Petroleum Natural Gas (Exploration Division) with the subject quote, Non Payment of Profit Petroleum by M/s. Videocon Industries Ltd., M/s. Oil and Natural Gas Limited, M/s. Vedanta Limited and Ravva Singapore Pte. Ltd. (ROS) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as jurisdiction to determine the sums payable to other parties. 5.5. Not only the above observation, the Tribunal held as under:- To sum up, the Tribunal holds: (a) The Tribunal is not functus officio to consider and entertain the Interim Application dated 24.07.2014 filed by the Claimant; (b) The Tribunal is not denuded of the power to grant interim relief as prayed for or after modifying the same, if a case is made out after hearing the parties; (c) The issue of juridical seat of arbitration is pending adjudication before the Federal Court at Malaysia. Accordingly, the present order will be deemed to have been made at the juridical seat as finally determined by the Federal Court at Malaysia. 5.6. Finally on 18.05.2015 in the said Arbitration case an Interim Order was passed by the Presiding Arbitrator Mr. Soli J Sorabjee, already reproduced supra in Para 1.8 that the Respondents ( Ministry of Petroleum and Natural Gas ) be restrained from taking any coercive action in pursuance of Show Cause Notice of 10.07.2014 (referred supra). 5.7. The above discussion re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 48 of the Arbitration and Conciliation Act, 1996. I am of the view that the scope of this Miscellaneous Application is very limited that whether the GoI can recover Petroleum due at this stage when the Corporate Debtor is already under Insolvency. The scope of this Miscellaneous Application is not towards a request of enforcement of Foreign Award. Because of this reason, since this Bench is not adjudicating upon Enforcement of Foreign Award, therefore, not inclined to answer the legal question raised about the applicability of Section 47, 48 and 49 of the Arbitration and Conciliation Act, 1996. 7. This Bench is only concerned about the enforcement of the provisions of Insolvency Code. This Code is introduced with the objective as per its Preamble, to reorganize a corporate person in a time bound manner for maximization of value of assets as well as to promote entrepreneurship along with the motive to balance the interest of all the stakeholders, notwithstanding alteration in the Order of priority of payment of Government dues. All attempts are to be made to procure the value of the Debtor Company as also to procure the assets of the Debtor Company. Already an Or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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