In March 2017, JEKPL an oil and gas holding interest in prolific Kharsang Oil Field, located in North East, was referred to the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC). Its Committee of Creditors (CoC) included State Bank of India, EXIM, and Central Bank of India and it had no operational creditors. In pursuing the appointment of RP two companies, one an India public sector oil company and another, a privately funded oil company emerged as interested parties. Final bids were invited for JEKPL in December 2017 with the private oil company emerging as the successful resolution applicant, with endorsement by the CoC for more than the qualifying the majority.
Hon’ble NCLAT, Allahabad Bench, passed the award on Dec 2017 declaring the private oil company as the successful resolution applicant and it became one of the rare cases where the timeline of 270 days as envisaged in the then IBC was complied with. However, the public oil company cried foul and challenged the NCLT Award before NCLAT in Feb 2018. CoC agreed to the direction of Hon’ble NCLAT issued on Jan 23, 2019, for the appointment of another Resolution Professional and sought revised from both the public and private oil company.
In the second bidding round which was concluded on June 2019, the private oil company once again emerged as the successful resolution applicant and CoC unanimously voted in favour of the Resolution Plan submitted by them, which envisaged upfront payment of INR 123 crores to the financial creditors. NCLT, Allahabad Bench again passed an order on Feb 2020, declaring the private oil company as the successful resolution applicant.
However, the public oil company once again challenged the award before Hon’ble NCLAT. On March 2020, Hon’ble NCLAT dismissed the petition filed by it for lacking any legal standing. It was apparent that the public oil company’s plan had been to force JEKPL into liquidation and then through one of its offshore subsidiaries gain control of JEKPL’s participating interest in Kharsang Field at nil value. Such an outcome would have caused a loss of INR 123 crores to the Public Sector Banks involved.
Implementation of the Resolution Plan of the private oil company was completed in Sept 2020. Financial Creditors comprising of State Bank of India, EXIM and Central Bank of India received cash consideration of INR 123 crores and 100% shareholding of JEKPL was transferred to the private oil company. Its nominees were appointed as Directors on the Board of JEKPL.
But the public oil company is still not satisfied with the final result and wants to further create hindrances in the process. It seems to be overly smitten by its desire to acquire JEKPL at nil consideration. To further its narrow corporate agenda, much to the disadvantage to the Public Sector Banks, it yet again approached NCLAT for a third time, on Nov 2, 2020, post completion of the implementation of the private oil company’s Resolution Plan, to challenge that the resolution plan, so implemented be rendered null and void. On this occasion, NCLAT could see through the public oil company’s standing as an unsuccessful resolution applicant and its nature of time and again making moves to obstruct the CIRP. It passed a well-reasoned landmark judgment on November 17, 2020, dismissing the appeal of HOEC and ensuring that failed resolution applicants should not be allowed to hold hostage the process of corporate revival.
