2019 (8) TMI 1720 - AT - Insolvency and Bankruptcy

Validity of demand notice - seeking assignment and allocation of 100% of the Sale Proceeds/Oil and Gas Invoices in favour of Government - recovery of provisional sum towards the unpaid Government share of Profit Petroleum - HELD THAT - As per procedure the amount in question has been deposited with the Videocon Industries Limited (Corporate Debtor) in the light of the Joint Operation Agreement and Production Sharing Contract - It is true that the demand notice has no relevancy with the award and the Resolution Professional cannot rely on the award for the purpose of deciding whether it is payable to the Union of India or not, during the Corporate Insolvency Resolution Process . The Adjudicating Authority rightly held that it was concern about the enforcement of the provision of Section 14 of the I B Code as per which after declaration of Moratorium prohibition is enforced from recovery of any amount from the 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 order of Moratorium is passed. However, it is open to the Corporate Debtor to recover any amount as per law and award, if any, passed in its favour - The Adjudicating Authority rightly held that the Ministry of Petroleum can lodge its claim for any legally enforceable right of recovery through Resolution Professional , thereby not rendered it remediless. Chennai Petroleum Corporation Ltd. ; Mangalore Refinery and Petrochemicals Limited ; GAIL (India) Limited and Bharat Petroleum Corporation Ltd. have been rightly restrained from remitting the amount from the sale proceeds to the Union of India, which are due to the Corporate Debtor during the pendency of the Moratorium . Appeal dismissed.

Summary

Issues:
1. Validity of Demand Notice issued by the Union of India Ministry of Petroleum & Natural Gas during Corporate Insolvency Resolution Process.
2. Interpretation of Production Sharing Contract terms regarding profit petroleum.
3. Jurisdiction of the Adjudicating Authority during the Moratorium period.

Issue 1: Validity of Demand Notice
The Appellate Tribunal considered the Demand Notice issued by the Union of India Ministry of Petroleum & Natural Gas during the Corporate Insolvency Resolution Process against Videocon Industries Limited. The Resolution Professional filed a Miscellaneous Application under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, arguing that the Corporate Debtor cannot be asked to part with any amount during the Moratorium period. The Adjudicating Authority allowed the plea, directing the Government authority not to press or implement the Demand Notice during the Insolvency proceedings and Moratorium period, ensuring the Ministry of Petroleum could lodge its claim through the Resolution Professional.

Issue 2: Interpretation of Production Sharing Contract
The Tribunal analyzed the Production Sharing Contract terms regarding profit petroleum ownership. The Union of India claimed entitlement to the profit share based on Article 28.1 of the Contract, asserting that profit petroleum falls under its share. The Resolution Professional argued that the profit petroleum does not fall under the Union of India's share, relying on the Joint Operation Agreement and the Contractor's obligations. The Tribunal found that the Demand Notice did not relate to recovery from the Corporate Debtor and that reliance on Arbitral Tribunal awards was not conclusive until executed as per the Arbitration Act.

Issue 3: Jurisdiction of the Adjudicating Authority
Regarding the jurisdiction of the Adjudicating Authority during the Moratorium period, the Tribunal upheld the Authority's decision to stay the Demand Notice and restrain remittance of sale proceeds to the Union of India from Chennai Petroleum Corporation Ltd., Mangalore Refinery and Petrochemicals Limited, GAIL (India) Limited, and Bharat Petroleum Corporation Ltd. The Tribunal affirmed that the Ministry of Petroleum could lodge its claim through the Resolution Professional, ensuring the Corporate Debtor's rights during the resolution process. The Tribunal dismissed the appeal, emphasizing that the Moratorium prohibits recovery from the Corporate Debtor, maintaining the status quo during the resolution process.

This detailed analysis of the judgment provides insights into the legal intricacies surrounding the Demand Notice, Production Sharing Contract interpretation, and the Adjudicating Authority's jurisdiction during the Moratorium period.