Brief of Issues Involved and Orders Passed 

Case: I.A. No. 3896 of 2023 in CP(IB) No. 2742/MB/2019 Bench: NCLT, Court II, Mumbai — Shri Kuldip Kumar Kareer (Member Judicial) and Shri Anil Raj Chellan (Member Technical) Date of Order: 26.06.2024 

Applicant: Mr. Venugopal Dhoot (erstwhile promoter/chairman of Videocon Industries Ltd) Key Respondents: VOVL Ltd (Corporate Debtor), Videocon Industries Ltd, BPCL, BPRL Ventures BV 

Core Issues: 

1. Whether the applicant had locus standi to seek rejection of the BPCL resolution plan in the CIRP of VOVL.
2. Whether the foreign oil and gas assets held through VOVL's subsidiaries should be treated as assets of VIL and included in VIL's consolidated CIRP.
3. Whether the pendency of appeals before the Supreme Court warranted keeping the resolution plan approval in abeyance.

Order: The application was dismissed in its entirety. The Tribunal found no merit in the applicant's claims and held that the applicant lacked standing, was engaging in abuse of process, and that no stay or injunction existed to halt the VOVL CIRP.


Analysis of the Judgment

1. The Locus Standi Question — A Firm Boundary for Erstwhile Promoters

The central pillar of this judgment is the Tribunal's categorical finding on locus standi. The Tribunal noted that Mr. Dhoot was merely a guarantor, shareholder, and former director of VIL — not of VOVL, the Corporate Debtor in whose CIRP the application was filed. Since VIL's shareholding in VOVL had already been transferred to SBI Cap Trustee Company Limited following invocation of the pledge by lenders, VIL itself retained no ownership rights or control over VOVL.

The Tribunal relied on established NCLAT precedents — Jaydeep Ghosh v. Neeraj Agarwal (2023) and Dr. Ravi Shankar Vedam v. Tiffins Barytes Asbestos and Paints Limited (2023) — to reinforce that suspended directors and shareholders have no standing to challenge resolution plan approvals. Once CIRP is triggered, management vests in the Resolution Professional, and shareholders' remedies, if any, arise only during liquidation. This reasoning aligns with the broader IBC jurisprudence that seeks to prevent erstwhile promoters from using procedural mechanisms to interfere with resolution processes they may have caused.

2. The Foreign Oil and Gas Assets Dispute — A Recurring and Rejected Claim

A significant portion of the case involved the applicant's persistent contention that the offshore oil and gas assets held through VOVL's step-down subsidiaries (particularly in Brazil) were beneficially owned by VIL and should be consolidated into VIL's CIRP. The Tribunal traced the extensive litigation history on this point and arrived at a decisive conclusion.

The NCLAT had already stayed the NCLT order dated 12.02.2020 that had directed inclusion of these offshore assets in VIL's CIRP. More importantly, when the Twinstar resolution plan approval was challenged before the NCLAT, the appellate body specifically rejected the applicant's ground regarding non-inclusion of VOVL's offshore assets. The Tribunal correctly observed that the applicant's contention that VIL is the beneficial owner of these assets had been examined and rejected at the appellate level, and no contrary order from the Supreme Court existed.

The judgment also highlighted a significant inconsistency in the applicant's conduct: in I.A. No. 681/2022, the applicant had sought exclusion of Brazilian oil and gas assets from the VOVL CIRP, while simultaneously arguing in the present application that these very assets should be included in the VIL CIRP. The Tribunal rightly characterized this as impermissible approbation and reprobation — a party cannot take contradictory positions in different proceedings to suit their convenience.

3. The Time-Bound Nature of CIRP — No Indefinite Hold for Pending Litigation

The Tribunal reinforced the principle that CIRP is a time-bound process under the IBC. The applicant's argument that pending appeals before the Supreme Court should compel this Tribunal to keep the resolution plan approval in abeyance was firmly rejected. The Tribunal noted the well-settled legal position that mere filing of an appeal does not result in an automatic stay. In the absence of any explicit stay or injunction on the VOVL CIRP proceedings, there was no legal basis to halt the resolution process.

This is particularly significant given that the VOVL CIRP had already been extended multiple times due to pandemic-related delays and jurisdictional complexities involving multiple countries. Any further delay would have undermined the objective of value maximization — a core tenet of the IBC framework.

4. Abuse of Process — A Pattern of Serial Litigation

Perhaps the most pointed observation of the Tribunal was its characterization of the applicant's conduct. The Tribunal noted that the applicant had filed multiple applications across different proceedings — MA No. 2385/2019, MA No. 3944/2019 (dismissed for non-prosecution without any restoration attempt), CA(AT)(Ins.) No. 650/2021, I.A. No. 681/2022, and the present I.A. No. 3896/2023 — all essentially revolving around the same core issue of offshore asset inclusion. The Tribunal observed that the applicant, having been at the helm of companies now burdened with over Rs. 60,000 crores of debt, appeared to be employing every available procedural tool to derail the insolvency process.

This observation serves as a strong judicial signal that the NCLT will not permit erstwhile promoters to use serial litigation as a strategy to obstruct corporate resolution under the IBC.

5. The Coordinate Bench Argument — Contextual Relevance Matters

The applicant argued that since the order dated 12.02.2020 was passed by a coordinate bench of the same Tribunal, this Bench should not take a contrary view. The Tribunal disposed of this argument by noting crucial contextual differences: the 12.02.2020 order was passed without noticing that VOVL was already in CIRP since 08.11.2019, and the earlier interim order of 22.08.2019 was passed before VOVL's CIRP had even commenced. Changed circumstances and the subsequent NCLAT stay of the 12.02.2020 order made the coordinate bench doctrine inapplicable in this context.

Key Takeaways

The judgment reinforces several important principles under the IBC framework. First, erstwhile promoters and suspended directors have clearly defined boundaries under the Code and cannot use the garb of protecting creditor interests to interfere with ongoing CIRP proceedings of related entities. Second, the doctrine of approbation and reprobation applies squarely in insolvency proceedings — parties cannot take contradictory positions across multiple applications. Third, the time-bound nature of CIRP will be zealously guarded by tribunals, and pendency of appeals without express stay orders will not be permitted to hold up resolution. Finally, the judgment sends a firm message against serial and strategic litigation designed to frustrate the resolution process — conduct the Tribunal views as a gross abuse of process.

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