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TMI Blog2019 (6) TMI 1028X X X X Extracts X X X X X X X X Extracts X X X X ..... lution Professional‟ (hereinafter R.P.) Mr. Anuj Jain having appointed vide an Order dated 06.06.2018 titled as State Bank of India (Financial Creditor) Vs. Videocon Industries Limited (Corporate Debtor) (C.P. (IB)-02/(MB)/2018) passed u/s. 7 of the Insolvency Code. 1.1. The reason for filing this Miscellaneous Application, as explained, is that a Notice dated 22.10.2018 was issued by Union of India, Ministry of Petroleum & Natural Gas (Exploration Division) Shastri Bhawan, New Delhi -110 001 (Respondent No.2), demanding quote, "3. You are, therefore, advised to assign and allocate 100% of the Sale Proceeds/ Oil and Gas Invoices in favour of Government, with immediate effect for recovering the provisional sum of US $314 million together with applicable interest towards the unpaid Government share of Profit Petroleum. You are also advised to remit the above assigned amount to Pay and Accounts Officer (PAO), Ministry of Petroleum and Natural Gas (MoPNG) under intimation to this office." unquote. This demand notice/ letter is issued to the followings:- 1. Chairman, CPCL, 536, Anna Salai, Teynampet, Chennai, 2. Chairman, MRPL, GF, Mercantile House, 15KG MARG, New Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , DGH vide letter dated 15.5.2014 has intimated this Ministry that M/s. Cairn India Limited (CIL), Ravva Singapore Pte Ltd (ROS), Videocon Industries Limited (VIL) and ONGC have made short payment of Government‟s share of Profit Petroleum (PP) in the Ravva Field. The break-up of the profit petroleum of USD 314 million that is liable to be paid is as under: "Items ONGC 40% PI CIL 22.50% PI ROS 12.50% PI VIL 25% PI Total ONGC Carry 64 35 71 170 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 award", meaning thereby partly in favour of the VIL and partly in favour of GoI. The GoI had acted upon that part of the Aw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 issued by Ministry of Petroleum. It is informed that the Sale Proceeds are receivable from Chennai Petroleum Corporation, Mangalore Refinery, GAIL (India) Limited and Bharat Petroleum (hereinabove made Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... troleum 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 Ltd.). ("Cairn Energy") and Ravva Oil (Singapore) Pte Ltd. ("Ravva Singapore") (together "the Contractor") for the development of a specified offshore area in the Bay of Bengal. Under the Production Sharing Contract, the Applicant and other entities (not parties to the present proceedings) undertook the task of development of the offshore fields to enable crude oil productio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 Applicant (VIL) is under obligation to enforce the said Award as per Part II of the Arbitration and Conciliation Act, 1996 (Arbitration Act). The Award is declared but it is not enforceable being not a decree of any Court. A fact has also been mentioned that the Applicant (VIL), Cairn Energy and Ravva Singapore filed OMP (EFA) (Comm) No. 15/2016 in the Hon'ble Delhi High Court seeking recognition and enforcement of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty 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 John along with Advocate Anurag Ahluwalia and Mr. N.P. Puranik, Dy. G.M.-C.F. appeared. Case laws relied upon are as under:- 1) 2012 SCC OnLine Del 3610 [Hindustan Petroleum Cor. Ltd. v. M/s. Videocon Industries Ltd. and Ors] And [Union of India and Anr. (O.M.P. 223/2006) v. Videocon Industries Ltd. and Ors.] Order dated 13.07.2012 ; 2) 2006 SCC OnLine Bom 545: (2006) 5 Bom CR 155: (2006) 3 Arb LR 510 [Bombay High Court (O.S.) Noy Vallesina Engineering Spa Versus Jindal Drugs Limited] Order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) under Ravva PSC." unquote. Being an urgent and directly affecting the source of revenue generation of the Debtor Company, the Resolution Professional has preferred this Miscellaneous Application and the main Prayer is that the operation of the impugned Letter-cum-Notice dated 22.10.2018 issued by Union of India be stayed. 5.3. It is worth to reiterate, although already referred in foregoing paragraphs, that previously a Notice was issued on 10.07.2014 by the Ministry of Petroleum, wherein with reference to Production Sharing Contract dated 28.10.1994 signed with Cairne India Limited, Ravva Singapore, ONGC a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 revolving around an attempt of GoI, Ministry of Petroleum for recovery of the very amount of 118 Million US Dollar was thwarted by granting Interim Restrain Order in the year 2014 by the Arbitral Tribunal of India. 6. Now again vide a Notice of 22.10.2018, almost on identical lines, GoI, Ministry of Petroleum has issued Notice for recovery/ collection of USD 118 Million from VIL. On the face of it, the impugned Notice of 22.10.2018 is nothing but a repetition of an earlier attempt. If the fresh attempt is similar then naturally the outcome shall also be identical. Before giving a final verdict it is quite appropriate to deal with the contentions of both the sides. 6.1. From the side of the Government of India a legal question has been raised that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 applicable on this Corporate Debtor. 8. In the light of the foregoing detailed discussion it is judicious to direct the concerned Government authority not to press or implement the impugned Notice dated 22.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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