TMI Blog2020 (2) TMI 1345X X X X Extracts X X X X X X X X Extracts X X X X ..... envisaged under the IB Code and they shall be forced towards the liquidation despite having sufficient means and assets to resolve the debt of all corporate persons - there shall be compromise rather the rights and interest of important stakeholders like Operational Creditors, employees etc. shall be jeopardized to the greater extent as looking at the cross creation of the security interest in relation to the assets of each of the VIL Group Companies would not be able to independently meet with the claims lodged by all the creditors. As such, to effectively find resolution, and maximize the value of the assets, and keep the corporate persons as a going concern, the foreign Oil and Gas assets cannot be treated separately only for the benefit of the Financial Creditors. The foreign oil and gas assets and properties, including any claim, interest therein, of Videocon Group held through Respondent Nos.2 to 5 will have to be said to be the property of Respondent No. 1, the present Corporate Debtor/ VIL for the purpose of the present CIRP. The security interest is created by Rupee Facility Lenders in the oil and gas assets and there is cross creation of the security interest by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... angible and intangible) and benefits held by or through the Respondent Nos. 2 to 5; Background: 2. After admission of each of the Company Petition separately against the 15 Videocon Group Companies, the independent CIRP process against each of the 15 Companies was initiated. However, since there was obligor / co-obligor arrangement between these 15 Videocon Group Companies, Mr. Venugopal Dhoot as well as the State Bank of India moved an application to consolidate the CIRP of these 15 Companies into one single CIRP and prayed for common resolution of these independent Companies through one Resolution Professional. In all 15 application where filed, some in favour of ' Consolidation' and some opposing the 'Consolidation' of the Videocon group of companies. 3. The Adjudicating Authority after hearing all concerned parties Ordered for the consolidation of the CIRP of 13 Videocon Group Companies pursuant to the request made by both the parties i.e. by State Bank of India and Mr. V.N. Dhoot. The consolidation order was passed on 8th August 2019. 4. The Videocon Group has mainly three kind of businesses viz. Consumer Home Appliances (CHA), Telecom and forei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -- Equally between BPRL Ventures BV and VEBL Direct holder of the participating interests by virtue of the Joint Operating Agreement VB (Brasil) Petroleo Pvt. Ltd. 28 Jun 2007 Equally between BPRL and VIL JV Company incorporated to acquire IBV Brasil; stood merged with IBV Brasil Videocon Energy Brasil Ltd. ('VEBL') 07 Jan 2008 Shareholding : Incorporated as a wholly-owned subsidiary (WOS) of VIL; Presently a WOS of VHHL Management: VN Dhoot PN Dhoot (Directors) Foreign Company incorporated under the laws of the British Virgin Islands Videocon Indonesia Nunukan Inc. ('VINI') 21 May 2008 Shareholding: WOS of VHHL Management: VN Dhoot PN Dhoot (Directors) Foreign Company incorporated under the laws of the Cayman Islands Videocon Hydrocarbon Holdings Ltd. ('VHHL') 30 Nov 2009 Shareholding: Incorporated as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30.07.2007 The present Corporate Debtor / VIL and BPRL jointly submitted the final bid / binding proposal for the potential acquisition of 100% of the issued and outstanding capital stock of EnCana Corporation or alternatively for direct asset purchase. 1. The present Corporate Debtor / VIL and BPRL referred to as Purchaser . 2. Also mentioned In the event our proposal is successful, purchaser will set-up a SPV for the purpose of consummating the Transaction. 6. 7.01.2008 The Company VEBL (Respondent No. 4) was constituted, having 100% subsidiary of VIL which is now 100% subsidiary of VHHL (Respondent No. 3). 7. 12.09.2008 Quotaholders Agreement was entered into by and between BPRL, the present Corporate Debtor / VIL and VB (Brasil) Petroleo Private Limitada. It is important to note that the recitals mention that (a) BPRL and VIL have signed a Joint Bidding Agreement dated June 13, 2007, in connection with acquisition of all the quotas of Encana Brasil Petroleo Private Limitada (Target Company) from its quota holders viz. Enca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... VIL. 16. 21.12.2010 The present Corporate Debtor / VIL subscribed to 198 Million shares of VHHL (Respondent No. 3) through the funds raised by issuance of FCCB. 17. 12.7.2011 The present Corporate Debtor / VIL sold 195.97 Million shares of VHHL (Respondent No. 3) held by it to VOVL and, therefore, revised shareholding structure of VHHL (Respondent No. 3) has become 99% held by VOVL; whereas 1% is held by the present Corporate Debtor / VIL. 18. 06.06.2018 to 25.09.2018 The company Petitions against 15 Videocon Group Companies were admitted by NCLT, Mumbai Bench. 19. 08.08.2019 The Adjudicating Authority passed order of Consolidating CIRP of 13 Videocon Group Companies by way of detailed order. 20. 22.08.2019 The Adjudicating Authority of this Bench granted interim protection thereby prevented the State Bank of India from selling oil and gas assets pending the hearing of the present Application. 11. The fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scrow of receivables of the Identified Assets, through escrow of receivables of the Identified Assets. v) The event of default Clause 20 mentions that non-payment of interest and/or scheduled repayment by Borrower (i.e. the 13 obligor / co-obligor Companies in CIRP, including Respondent No. 1) OR VHHL (Respondent No. 3) for a period of 30 days from respective due dates. It also further mentions that cross defaults by Borrowers or VHHL shall also be treated as the event of default of RTL facility besides the insolvency of the VHHL. vi) The RTL Agreement also mentions about LOC / SBLC Facility Agreement, Offshore Share Pledge Agreement, Oil Gas Funding Loans is defined as collectively the LOC / SBLC Facility, the Supplemental Rupee Facility, the Foreign Currency Facility, Additional Foreign Currency Facility. vii) Clause 12.47 regarding revenues from identified oil and gas assets of RTL Agreement mentions that The obligor shall ensure that the contracts in respect of product of identified oil and gas assets shall be broadly consistent with the terms envisaged in the business plan. In the event that the selling price of the products from the identified oil and gas assets a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 3 and VIL of 1% fully paid shares of Respondent No. 3; (e) Second charge on the account of the offshore trust and retention or escrow account which would contain Respondent No. 3's share of the cash flow generated from the 'Identified Oil Gas Assets'. (c) For foreign Oil Gas business, LOC/SBLC Facility Agreement dated 27.09.2012 executed inter-alia by and between (i) the Consortium of Lenders set out in the Schedule; (ii) the State Bank of India (as the 'Security Agent'); (iii) the Respondent No. 1 / the present Corporate Debtor / VIL and Respondent No. 2-VOVL (as 'Obligors'); and (iv) VHHL (Respondent No. 3) (as the 'Foreign Currency Borrower'). The VIL is termed as one of the co-obligors; (i) In recitals, it is mentioned that VOVL (Respondent No. 2) directly and/or indirectly manages and controls the overseas oil and gas business of Videocon Group by holding participating interest in foreign oil and gas assets fields; whereas in relation to the present Corporate Debtor / VIL, it is mentioned that VIL is also engaged in the oil and gas exploration and extraction business in India and through overseas subsidiaries of VIL holds part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oot and Mr. R.N. Dhoot; (d) First ranking pledge by the Foreign Currency Borrower of 100% fully paid shares of VEBL (Respondent No. 4) and VINI (Respondent No. 5), or otherwise to the satisfaction of Lenders Legal Counsel, over which the Rupee Lenders will have second charge; (e) First ranking pledge by VEBL (Respondent No. 4) of all its shares of IBPL, both present and future (currently 50% of the share capital of IBPL), over which the Rupee Lenders will have second charge; (d) On 30.3.2017, the SBLC Tranche 1 Facility Agreement as well as SBLC Tranche 2 Facility Agreement came to be amended by way of Deed of amendment to both the Tranche 1 and Tranche 2 LOC / SBLC Facility Agreements, inter alia, mentioning as under: 2. VIL Obligations 2.1 ...VIL shall stand released from all its obligations as a Co-Obligor / Obligor and Obligor Agent under the Tranche 1 / 2 LOC/SBLC Facility Agreement. ... 2.2 ... All references to the terms Obligor , Co-Obligor and Obligor Agent under the Tranche 1 / 2 LOC/SBLC Facility Agreement, shall be deemed to be references only to VOVL. ... 2.3 On and from the date of this Amendment Agreement, VIL shall be deemed to be the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14 IDBI BANK 4,844.50 4,716.43 9,560.93 15 INDIAN OVERSEAS BANK 1,272.54 489.94 1,762.48 16 INDIAN BANK 183.05 371.93 554.98 17 J K BANK 92.11 - 92.11 18 LIC OFINDIA 973.68 - 973.68 19 ORIENTAL BANK OF 353.18 - 353.18 20 PUNJAB NATIONAL BANK 1,684.61 415.32 2,099.93 21 COMMERCE STATE BANK OF INDIA 5,532.50 5,307.50 10,840.00 22 SYNDICATE BANK 867.74 834.77 1,702.51 23 UCO BANK 998.04 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Applicant mentions that this Application under Section 60(5) (c) of the Code and the Applicant being guarantor, shareholder and Ex Managing Director and Chairman of the Videocon Group has locus to file present Application to include all assets and properties belonging to the Respondent No. 1 in the present CIRP in the interest of all stakeholders. 14. It is further contention of the Applicant that under the provisions of the Code, he is duty bound to bring all assets and properties of the Respondent No. 1 in the knowledge of this Authority as the Resolution Professional has failed to include the said assets as the assets and properties of the present Corporate Debtor / VIL. 15. The foreign oil and gas assets, properties, claims and participating interests therein i.e. participating interests in the Brazil and Indonesia blocks were initially acquired by the present Corporate Debtor / VIL and then subsequently Respondent Nos.2 to 5 were incorporated just to ostensibly hold these foreign oil and gas assets for and on behalf of the present Corporate Debtor / VIL. 16. The Respondent Nos.2 to 5 are the special purpose vehicles (SPVs) created only to ostensibly hold the forei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose as it was practically difficult for the present Corporate Debtor / VIL to fund the operation costs of these foreign oil and gas assets (cash calls) from India to foreign countries under the provisions of the FEM Act. 25. Under the provisions of the FEM Act, the foreign subsidiaries could easily get the finance in the foreign countries in the foreign currency under the automatic route on the basis of the guarantee of the Indian holding company i.e. the present Corporate Debtor / VIL. Whereas, the substantial time was being wasted to send money of cash call from India to abroad as it required the specific permission from Reserve Bank of India under the approval route and therefore just for the convenience purpose the structure of SPVs i.e. Respondent Nos.2 to 5 was created. However, the said SPVs companies never did any other business except holding the participating interests for and on behalf of present Corporate Debtor / VIL. 26. That as per Sub-Section 3 of Section 6 of the Foreign Exchange Management Act read with Overseas Direct Investment regulations, 2004 a parent company may remit funds to its foreign subsidiaries via the automatic route without any prior RBI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Debtor / VIL as it was/ is the confirming party and Guarantor to the said Facility Agreement under which oil and gas business was financed. 33. In consequence to above arrangement in the present ongoing CIRP of the Respondent No. 1, the present Corporate Debtor / VIL plus other 12 consolidated companies, the Lenders of foreign oil and gas business i.e. lenders of Respondent Nos.1 to 5 have lodged their claim to the tune of ₹ 23,120.90 Crores in the present ongoing CIRP. 34. In the clauses of the Loan Agreements i.e. RTL Agreement as well as LOC/ SBLC Facility Agreement, the loan granted are interconnected and inseparable. Hence, it is impossible to have Resolution of the group as envisaged in the Code without inclusion of the foreign oil and gas assets in the present CIRP. 35. That it shall be in public interest to lift the corporate veil of Respondent Nos.2 to 5. The Applicant's counsel has relied on various authorities in support of this contention. 36. That in view of the creation of security interest of the properties of the present Corporate Debtor / VIL (Ostensibly held through SPVs, Respondent Nos.2 to 5), the provisions of Section 14 of the Code shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the present Applicant is warranted. The present Application is filed to delay the ongoing CIRP. 42. The present Applicant, Mr. V. N. Dhoot has no locus standi to file the present Application. The Resolution Professional is competent to take any such steps if required in law. The property sought to be included is not owned by the present Corporate Debtor / VIL and will not come under the ambit of the order of moratorium under Section 14(1) (b) of the Code. 43. The Adjudicating Authority do not enjoy any jurisdiction over the foreign companies so no order of restraining the sale of such assets can be passed by the Adjudicating Authority. 44. The subsidiary and its assets are not the assets of the holding company and that the subsidiary and its assets are separate and independent. The corporate veil cannot be lifted on the contentions pleaded by the Applicant. 45. The Applicant, as an afterthought trying to obtain multiple stages on the CIRP and attempting to defeat the rights of the lenders. The lenders have an independent claim and remedy against each of the Respondents. It has been maliciously portrayed a false and ill conceived picture that lenders have filed their c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ets shall not include the assets of any Indian or foreign of the subsidiary of the Corporate Debtor. 52. Therefore, the assets of the Respondent Nos.2 to 5 cannot be said to be assets of the present Corporate Debtor / VIL. 53. That it is established principle of law that the subsidiary companies have separate legal existence than their legal holding companies. For the said purpose the Ld. Senior Counsel has relied on many authorities which are discussed hereinafter. 54. The Beneficial Ownership Agreements have never been tendered in past nor brought in the knowledge of lenders and now have been surreptitiously revealed at the application stage to defeat the rights of the lenders. The signatures appearing on the said Agreements are of the same parties. The Beneficial Ownership Agreement creates serious doubt and therefore no reliance shall be placed on the Beneficial Ownership Agreement. The Beneficial Ownership Agreements have been prepared as an afterthought. The contentions of BPCL/ BPRL: 55. The BPCL is having 53.29% direct ownership of Government of India which is 100% holding company of another Indian Company viz., BPRL which in turn holds 100% of the Nethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... structure cannot be permitted in law to pray for lifting corporate veil which he himself created. 63. The Respondent Nos.2 to 5 are independent companies and just because it is 100% held by the present Corporate Debtor / VIL, the assets of Respondent Nos. 2 to 5 is separate and distinct with the assets of the Respondent No. 1, the present Corporate Debtor / VIL and cannot be termed as assets of the holding company in view of the settled law. 64. In case the Application is allowed for any reason, the crucial investment by BPCL shall get jeopardized and entire investment of ₹ 11,750 Crores shall be at stake as the participating interest allotted to the JV company may get allotted to the other parties under the terms of the Joint Operating Agreement pursuant to default of payment by JV company i.e. IBV Brazil Petroleo Limitada. Analysis of the contentions of the parties: 65. It is undisputed fact that Videocon Group was a conglomerate which was into the diversified businesses and for the said business the Group has availed various financial facilities from different financial institutions. Bare perusal of the claim lodged in the ongoing CIRP of Respondent No. 1, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... derstand the acquisition and financing for operational of these foreign oil and gas assets and the terms mentioned therein. 69. It is not disputed by the parties that the CHA business was funded through the RTL Agreement by the lenders of Respondent No. 1, the present Corporate Debtor/ VIL. The RTL Agreement had an obligor / co-obligor arrangement initially amongst the 13 Videocon Group Companies which were mainly into the CHA business. The 14th Company i.e. C.E. India Limited is owner of Videocon brand, goodwill, trademark and patents and was the guarantor and later on, the 15th Group Company i.e. Videocon Telecommunication Limited, which was in the telecom business had also become party to the RTL Agreement and accepted the obligor / co-obligor structure with the other 13 Group Companies. 70. The foreign oil and gas business was admittedly funded through LOC / SBLC Facility Agreement, to which Respondent No. 1, the present Corporate Debtor/ VIL was initially co-obligor and facility agent. Later on, by way of amendment Agreement, Respondent No. 1 was relieved as a co-obligor, but was made the Confirming Party without changing any obligation against Respondent No. 1 in the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and clearly refers to the second charge by the Rupee Lenders (i.e. the lenders of CHA business of 13 consolidated Companies under the ongoing CIRP). 73. It is worthwhile to understand that the aforesaid clauses of the LOC / SBLC Facility Agreements, both Tranche 1 and Tranche 2, have not been diluted by the amendment Agreements executed by both the parties belatedly. 74. Consequent to the above clauses as well as the guarantee issued, the Financial Creditors of foreign oil and gas business of the Videocon Group have admittedly lodged claim of ₹ 23,120.90 Crores in the ongoing CIRP. 75. Now, coming to the RTL Agreement, for default of which the said 15 Videocon Group Companies, including Respondent No. 1 / VIL are referred to the CIRP, as particularly referred in the consolidation order dated 8.8.2019. The clauses of the said RTL Agreement also indicate its linkage with the foreign oil and gas assets, properties and interest therein. The Financial Creditors under the RTL Agreement, which are also part of Committee of Creditors (COC) of the ongoing CIRP, have also created the substantial rights and interest in the foreign oil and gas assets and properties which is evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... OC / SBLC Facility Lenders have interweaved the obligations and rights of Respondent Nos.2 to 5 while granting the Rupee Facility to the 13 Companies under the CIRP. Whereas similarly the SBLC Lenders have taken the obligations from Respondent No. 1 / VIL while granting the loan to the foreign oil and gas business. Therefore, it brings us to the conclusion that the lenders treated the Assets of the Videocon Group as the common Assets and created common / cross liabilities in favour of each other, by creating inter-dependent and interlacing financial arrangements between the CHA business, telecom business and foreign oil and gas business of the Videocon Group. 80. However, mere treating the Assets as the common Assets, liabilities as the common and inter-dependent and interlace liabilities, the Assets held through Respondent Nos.2 to 5 cannot be said to be the Assets of Respondent No. 1 / VIL. To find out the real ownership of the Assets besides conduct of the parties and reference in the financial documents as referred to hereinabove, we need to consider the source of acquisition of the same. Source of acquisition of foreign oil and gas assets: 81. It is not disputed e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate veil to discover Mr. Swaraj Paul lurking behind. It was submitted that thirteen applications were made on behalf of thirteen companies in order to circumvent the scheme which prescribed a ceiling of one per cent on behalf of each non-resident of Indian nationality or origin, or each company 60 per cent of whose shares were owned by non-residents of Indian nationality/origin. Our attention was drawn to the picturesque pronouncement of Lord Denning M. R. in Wallersteiner v. Moir (1974) 3 All ER 217 and the decisions of this Court in Tata Engineering and Locomotive Co. Ltd. v. State of Bihar (1964) 6 SCR 885 : (AIR 1965 SC 40), the Commr. of Income Tax. v. Meenakshi Mills AIR 1967 SC 819 and Workmen v. Associated Rubber Ltd. (1985) 2 Scale 321. While it is firmly established ever since Salomon v. A. Salomon and Co. Ltd. 1897 AC 22 was decided that a company has an independent and legal, personality distinct from the individuals who are its members, it has since been held that the corporate veil may be lifted, we corporate personality may be ignored and the individual members recognised for who they are in certain exceptional circumstances. Pennington in his Company Law (Fourth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o prevent devices to avoid welfare legislation. It was emphasised that regard must be had to substance and not the form of a transaction. Generally and broadly speaking, we may say that the corporate, veil may be lifted where a statute itself contemplates lifting the veil, or fraud or improper conduct is intended to be prevented'. or a taxing statute or a beneficent statute is sought to be evaded or where associated companies are inextricably connected as to be, in reality, part of one concern. It is neither necessary nor desirable to enumerate the classes of cases where lifting the veil is permissible, since, that must necessarily depend on the relevant statutory or other provisions, the object sought to be achieved, the impugned conduct, the involvement of the element of the public interest, the effect on parties who may be affected etc. 87. Inference from the above : The various acquisition and finance documents of respondent No. 2 to 5 and respondent No. 1 ,have already pointed that these companies are evidently interconnected, interwoven and interlaced to much greater extent. The obligations of each other are also intermingled and it is evident that the Responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by voting as shareholders. It was held that the foreign company was not carried on by the English company, nor was it the agent of the English company, and that the English company was not, therefore, assessable to income-tax. Renusagar was not the alter ego of Hindalco, it was submitted. On the other hand these English cases have often pierced the veil to serve the real aim of the parties and for public purposes. See in this connection the observations of the Court of Appeal in DHN Food Distributors Ltd. v. London Borough of Tower Hamlets (1976) 3 All ER 462. It is not necessary to take into account the facts of that case. We may, however, note that in that case the corporate veil was lifted to confer benefit upon a group of companies under the provisions of the Land Compensation Act, 1961 of England. Lord Denning at page 467 of the report has made certain interesting observations which are worth repeating in the context of the instant case. The Master of the Rolls said at page 467 as follows:- Third, lifting the corporate veil. A further very interesting point was raised by counsel for the claimants on company law. We all know that in many respects a group of companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transparent in modern company jurisprudence. The ghost of Salomon's case (1897 AC 22) still visits frequently the hounds of Company Law but the veil has been pierced in many cases. Some of these have been noted by Justice P. B. Mukharji in the New Jurisprudence. 69. It appears to us, however, that as mentioned the concept of lifting the corporate veil is a changing concept and is of expanding horizons. We think that the appellant was in error in not treating Renusagar's power plant as the power plant of Hindalco and not treating it as the own source of energy. The respondent is liable to duty on the same and on that footing alone; this is evident in view of the principles enunciated and the doctrine now established by way of decision of this Court in Life Insurance Corpn. of India (AIR 1986 SC 1370) (supra) that in the facts of this case sections 3(1)(c) and 4(1)(c) of the Act are to be interpreted accordingly. The person generating and consuming energy were the same and the corporate veil should be lifted. In the facts of this case Hindalco and Renusagar were inextricably linked up together. Renusagar had in reality no separate and independent existence apart from and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the modern jurisprudence, the corporate veil can be lifted for unlimited reasons and it is not only limited to the extent of the cases of fraud, impropriatory. Each case need to be tested with the unique facts of arrangement applicable to it. In the recent case of Arcelormittal India, Hon'ble Apex Court has held that there is a limited principle of English Law which applies and the Court may pierce the corporate veil for the purpose, and only for the purpose of depriving company or its controller of the advantage that they would otherwise have obtained by company's separate legal personality. 91. It is also held in the said Judgment that where a statute itself lifts the corporate veil, or where protection of public interest is of paramount importance, or where a company has been formed to evade obligations imposed by the law, the court will disregard the corporate veil. Further, this principle is applied even to group companies, so that one is able to look at the economic entity of the group as a whole. 92. Keeping the aforesaid ratio in front of us now to apply to the facts of the present case, it is the specific case of the Applicant that the Respondent Nos.2 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be benefited in case the corporate veils are lifted and the foreign oil and gas assets are included in the present ongoing CIRP as the personal guarantee exposure of Mr. V. N. Dhoot would reduce however, after examining the Rupee Term Loan Agreement and LOC/ SBLC Facility Agreement which clearly mention that all promoters including Mr. V. N. Dhoot will be personally liable and has issued the personal guarantees for repayment of both the facilities to the lenders of both Respondent No. 1/ VIL as well as Respondent Nos.2 to 5. Therefore, we do not find that just because of inclusion of the assets in the present CIRP any benefit would accrue to the Applicant as in such case under the personal guarantee the Applicant will have to make loss good in other Facility Agreements. Even if presuming due to inclusion of the said assets in the present ongoing CIRP, the liability/ exposure of personal guarantee of the Applicant would reduce. As such, we do not see any merit in the argument that by including the foreign oil and gas assets in the CIRP of Respondent No. 1/ VIL, the Applicant would be in advantageous position. 97. From the above, it is clear that Respondent Nos.2 to 5 herein and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed by the subsidiaries from its sources. However, in the present case as stated above the crucial acquisition documents still mentions that name of Respondent No. 1/ VIL as the Purchaser and there is no subsequent transfer of these rights in favour of the Respondent Nos.2 to 5. 101. Now, coming back to the contentions of BPCL that in the event such application is entertained it shall suffer irreparable loss and rather the investment of ₹ 11,750 Crores shall be at stake, firstly, this submission on the face of it is not correct from the perspective of the Code, as the BPCL or BPRL is a 50% holder of the participating interest held through the 50:50% JV of the BPCL and Respondent No. 1/ VIL. Now, Respondent No. 1/ VIL is already in CIRP pursuant to which there are defaults in payment of the 50% shares of the cash call attributable to the Videocon Group. It is admitted that pursuant to the clauses of joint operation agreement and JV Agreement, for the default of Videocon Group, its share of cash call is being paid by BPCL/ BPRL and converting the proportionate equity of JV belonging to the Videocon, in its favour by BPCL. 102. We fail to understand that how does it make d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... businesses dependent with the CHA business by way of putting various restrictions and cross defaults in respective funding Agreements to CHA and foreign oil and gas business. That apart the executed documents, the acquisition documents do indicate the Respondent Nos.2 to 5 were never independent and financially sound to acquire and maintain the properties but, it is admitted that all the time Respondent Nos.2 to 5 were dependent on Respondent No. 1/ VIL. Similarly, the funding arrangements also envisaged that for the CHA business funding foreign oil and gas assets shall have second charge and vice versa. vi) Interlacing of finance: In view of the aforesaid discussion and reference to the specific clauses in Rupee Facility Agreements on one hand, (for the default of which the 15 Videocon Group Companies are referred to the ongoing CIRP), clearly establishes the substantial right, security and interest qua the foreign oil and gas assets, properties, including interest therein is secured in favour of the Rupee Lenders under the various terms of the RTL Agreement. Whereas on the other hand, the LOC / SBLC Lenders i.e. lenders of Respondent Nos.2 to 5 for the foreign oil and gas bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondent No. 1/ VIL. x) Intertwined accounts: The accounts of Respondent Nos.2 to 5 were completely under control of the Respondent No. 1/ VIL and each other Lenders have taken the charge on the proceedings of each other's account, which itself shows the accounts were intertwined. xi) Inter-looping of debts: As stated hereinbefore, we have already held that the accounts were intertwined and creditors of CHA business and oil and gas business have already created inter-looping of the debts in favour of each other's debt. xii) Singleness of economics of units: As discussed above in the preceding paragraphs thereby referring to various specific clauses clearly shows that the Lenders have treated the Respondent Nos. 1 to 5 as one single economic unit, irrespective of the different businesses and assets, properties. The same is fortified from the various securities and restrictions mentioned in the loan documents. The foreign oil and gas assets acquisition documents also support the said fact. xiii) Common Financial Creditors: As per two financing agreements viz., SBLC Facility Agreement and the RTL VTL Facility Agreements, the lenders are members of 'consort ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by order declare moratorium for prohibiting all of the following namely:- 1. xxx 2. xxx 3. Any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (54 of 2002) 110. As referred in foregoing paragraphs, we have already held that the security interest is created by Rupee Facility Lenders in the oil and gas assets and there is cross creation of the security interest by all lenders in other business assets of Videocon Group treating it as single economic entity. Further, we have concluded the foreign oil and gas assets of Videocon Group held through Respondent No. 2 to 5 is in fact, asset and property of Respondent No. 1/ VIL on the count of being original acquirer or alternatively even for qualifying all tests to lift corporate veil in between Respondent No. 1 / VIL and Respondent Nos. 2 to 5. Therefore, the assets held by them can be said to be its assets i.e. the assets of Respondent No. 1/ VIL/ Present Corporate Debtor, which is under the CIRP. 111. MA 2385/2019 is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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