Electrolux Home Products Inc. vs Videocon Industries Limited

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2022 Supreme(Online)(NCLAT) 14

Page 1 of 213 NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI Company Appeal (AT) (Ins.) No. 503 of 2021 IN THE MATTER OF: Bank of Maharashtra Stressed Asset Management Branch Janmangal 4^th Floor, 45/47, Mumbai Samachar Marg, Opposite to Stock Exchange, Fort, Mumbai – 400 001 Through its General Manager, Mrs. Chitra Datar Zonal Manager Delhi …Appellant Vs. 1.Videocon Industries Ltd. …Respondent No.1 2.Videocon Telecommunications Limited …Respondent No.2 3.Evans Fraser & Company (India) Limited …Respondent No.3 4.Millennium Appliances (India) Limited …Respondent No.4 5.Applicomp India Limited …Respondent No.5 6.Electroworld Digital Solutions Limited …Respondent No.6 7.Techno Kart India …Respondent No.7 8.Century Appliances Limited …Respondent No.8 9.Techno Electronics Limited …Respondent No.9 10.Value Industries Ltd. …Respondent No.10 11. PE Electronics Ltd …Respondent No.11 12. CE India Ltd. …Respondent No.12 Page 2 of 213 13.Sky Appliances Ltd. …Respondent No.13 All aforesaid Respondent Nos. 1-13 Through their Resolution Professional, Mr. Abhijit Guhathakurta, Flat No.701, A Wing, Satyam Springs, CTS No. 272A/2/1, Off BSD marg, Deonar, Mumbai, City, Maharashtra – 400 088 And having his CIRP Correspondence address at Deloitte Touche Tohmatsu India LLP Indiabulls Finance Centre, Tower 3, 27^th Floor, Senapti Bapat Marg, Elphinstone Road (West), Maharashtra 400 013 14. Committee of Creditors of the Consolidated CIRP of Resolution Process of Videocon Group Companies as Consolidated by order dated 08^th August, 2019 Through State Bank of India being The Lead Member of the CoC; …Respondent No.14 15.Twinstar Technologies Limited 3^rd Floor, IFFCO Tower, Pl No.3, Sector 39, Gurugram, Gurgaon, Haryana – 122 002, India …Respondent No.15 Present: For Appellant: Mr. Vikas Singh, Sr. Advocate, Ms. Garima Prashad, Sr. Advocate Mr. Chaitanya B. Nikte, Mr. Ayush Negi, Mr. Rajiv K. Virmani, Mr. Abhinav Agrawal, Mr. Prakash Singh, Mr. Prasad Sarvankar, Mr. Sumedh Ruikar, Mr. Gaurav Jain, Mr. Atul Malhotra, Mr. Karan Valecha, Ms. Sneha Bhange, Advocates for Appellant Bank of Maharashtra For Respondents: Mr. Abhinav Vasisht, Senior Advocate with Mr. Anoop Rawat, Ms. Meghna Rajadhyaksha, Mr. Page 3 of 213 Zeeshan Khan, Mr. Vaijayant Paliwal, Ms. Radhika Indapurkar, Ms. Mohana Nijhawan, Mr. Chaitanya Safaya, Mr. Bryan Pillai, Ms. Moulshree Shukla, Ms. Ishani Mookherjee, Ms. Priya Singh, Mr. Ameya Gokhale, Advocates for R1 to 13
Mr. Tushar Mehta, Solicitor General of India with
Mr. Bishwajit Dubey, Mr. Madhav Kanoria, Ms.
Surabhi Khattar, Mr. Kanu Agarwal, Mr. Prafful
Goyal, Advocates for R-14, COC.
Mr. Harish Salve, Sr. Advocate, Mr Gopal Jain,
Senior Advocate, Mr Diwakar Maheshwari, Advocate
and Mr Shreyas Edupuganti, Advocate for R-15.
With Company Appeal (AT) (Ins.) No. 505 of 2021 IN THE MATTER OF: IFCI Ltd. Financial Creditor, (A Government of India Undertaking) A Company registered under the Companies act, 1956 having its registered Office at: IFCI Tower, 61, Nehru Place, New Delhi …Appellant Vs. 1.Videocon Industries Ltd. …Respondent No.1 2.Videocon Telecommunications Limited …Respondent No.2 3.Electroworld Digital Solutions Limited …Respondent No.3 4.Value Industries Limited …Respondent No.4 5.Techno Kart India Limited …Respondent No.5 Page 4 of 213 6.Applicomp India Limited …Respondent No.6 7.Sky Appliances Limited …Respondent No.7 8. Techno Electronics Limited …Respondent No.8 9. Millennium Appliances(India) Ltd …Respondent No.9 10.Century Appliances Ltd. …Respondent No.10 11. Evans Fraser & Company(India) Ltd. …Respondent No.11 12. PE Electronics Ltd. …Respondent No.12 13.CE India Ltd. …Respondent No.13 All aforesaid Respondent Nos. 1-13 Through their Resolution Professional, Mr. Abhijit Guhathakurta, Deloitte Touche Tohmatsu India LLP Indiabulls Finance Centre, Tower 3, 27^th Floor, Senapti Bapat Marg, Elphinstone Road (West), Maharashtra 400 013 14. Committee of Creditors of the Consolidated CIRP of Resolution Process of Videocon Group Companies as Consolidated by order dated 08^th August, 2019 Through State Bank of India being The Lead Member of the CoC; …Respondent No.14 15.Twinstar Technologies Limited 3^rd Floor, IFFCO Tower, Pl No.3, Sector 39, Gurugram, Gurgaon, Haryana – 122 002, India …Respondent No.15 Present: Page 5 of 213 For Appellant: Mr. Vikas Singh, Sr. Advocate, Mr. Tanuj Sud, Mr. Ajay Kumar, Ms. Harshita Ahluwalia, Advocates For Respondents: Mr. Abhinav Vasisht, Senior Advocate with Mr. Anoop Rawat, Ms. Meghna Rajadhyaksha, Mr. Zeeshan Khan, Mr. Vaijayant Paliwal, Ms. Radhika Indapurkar, Ms. Mohana Nijhawan, Mr. Chaitanya Safaya, Mr. Bryan Pillai, Ms. Moulshree Shukla, Ms. Ishani Mookherjee, Ms. Priya Singh, Mr. Ameya Gokhale, Advocates for R1 to 13
Mr. Tushar Mehta, Solicitor General of India with
Mr. Bishwajit Dubey, Mr. Madhav Kanoria, Ms.
Surabhi Khattar, Mr. Kanu Agarwal, Mr. Prafful
Goyal, Advocates for R-14, COC.
Mr. Harish Salve, Sr. Advocate Mr Gopal Jain,
Senior Advocate, Mr Diwakar Maheshwari, Advocate
and Mr Shreyas Edupuganti, Advocate for R-15.
With Company Appeal (AT) (Ins.) No. 529 of 2021 IN THE MATTER OF: Small Industries Development Bank of India SIDBI Towers, 15, Ashok Marg, Lucknow – 226 001 Through its Assistant General Manager, Mr. Mukesh Kumar …Appellant Vs. 1.Videocon Industries Ltd. …Respondent No.1 2.Videocon Telecommunications Limited …Respondent No.2 3.Evans Fraser & Company (India) Limited …Respondent No.3 4.Millennium Appliances (India) Limited …Respondent No.4 5.Applicomp India Limited …Respondent No.5 Page 6 of 213 6.Electroworld Digital Solutions Limited …Respondent No.6 7.Techno Kart India …Respondent No.7 8.Century Appliances Limited …Respondent No.8 9.Techno Electronics Limited …Respondent No.9 10.Value Industries Ltd. …Respondent No.10 11. PE Electronics Ltd …Respondent No.11 12. CE India Ltd. …Respondent No.12 13.Sky Appliances Ltd. …Respondent No.13 All aforesaid Respondent Nos. 1-13 Through their Resolution Professional, Mr. Abhijit Guhathakurta, Flat No.701, A Wing, Satyam Springs, CTS No. 272A/2/1, Off BSD marg, Deonar, Mumbai, City, Maharashtra – 400 088 And having his CIRP Correspondence address at Deloitte Touche Tohmatsu India LLP Indiabulls Finance Centre, Tower 3, 27^th Floor, Senapti Bapat Marg, Elphinstone Road (West), Maharashtra 400 013 14. Committee of Creditors of the Consolidated CIRP of Resolution Process of Videocon Group Companies as Consolidated by order dated 08^th August, 2019 Through State Bank of India being The Lead Member of the CoC; …Respondent No.14 15.Twinstar Technologies Limited 3^rd Floor, IFFCO Tower, Pl No.3, Sector 39, Gurugram, Gurgaon, Page 7 of 213 Haryana – 122 002, India …Respondent No.15 Present: For Appellant: Mr. Vikas Singh, Sr. Advocate, Mr. Chaitanya B. Nikte, Mr. Ayush Negi, Mr. Prasad Sarvankar, Mr. Sumedh Ruikar & Ms. Sneha Bhange, Advocates for appellants For Respondents: Mr. Abhinav Vasisht, Senior Advocate with Mr. Anoop Rawat, Ms. Meghna Rajadhyaksha, Mr. Zeeshan Khan, Mr. Vaijayant Paliwal, Ms. Radhika Indapurkar, Ms. Mohana Nijhawan, Mr. Chaitanya Safaya, Mr. Bryan Pillai, Ms. Moulshree Shukla, Ms. Ishani Mookherjee, Ms. Priya Singh, Mr. Ameya Gokhale, Advocates for R1 to 13 Mr. Tushar Mehta, Solicitor General of India with Mr. Bishwajit Dubey, Mr. Madhav Kanoria, Ms. Surabhi Khattar, Mr. Kanu Agarwal, Mr. Prafful Goyal, Advocates for R-14, COC. Mr. Harish Salve, Sr. Advocate Mr Gopal Jain, Senior Advocate, Mr Diwakar Maheshwari, Advocate and Mr Shreyas Edupuganti, Advocate for R-15. With Company Appeal (AT)(Insolvency) No. 545 of 2021 In the matter of: Electrolux Home Products Inc. 1, Fusionopolis Place, #07-10, Galaxis, Singapore - 138522 ....Appellant Vs. 1. Videocon Industries Ltd. Through its Resolution Professional Centre, Off Mahakali Caves Road, MIDC, Marol Bus Depot, Andheri (E), Mumbai – 400 093 ...Respondent No.1 2. Twin Star Technologies Limited, Page 8 of 213 3^rd Floor, IFFCO Tower, Plot No.3, Sector 29 Gurugram, Harayana – 122 002 …Respondent No.2 Present: For Appellants: Mr. Nakul Dewan, Sr. Advocate with Mr. Rajendra Barot Ms. Neerja Balakrishnan, and Ms. Apoorva Gupta, Advocates. For Respondent: Mr. Abhinav Vasisht, Sr. Advocate Ms. Meghna Rajadhyaksha with Ms. Radhika Indapurkar, Mr. Vaijayant Paliwal, Mr. Bryan Pillai, Mr. Anoop Rawat, Mr. Zeeshan Khan, Ms. Moulshree Shukla, Ms. Priya singh, Ms. Ishani Mookherjee Advocates for RP, R-1. Mr. Gopal Jain, Sr. Advocate with Mr. Diwakar Maheshwari, Mr. Karan Mehta and Ms. Shreyas Edupuganti, Advocates for R-2. Mr. Tushar Mehta, Solicitor General, with Biswajit Dubey, Ms. Surabhi Khattar and Mr. Madhav Kanoria Mr. Kanu Agarwal and Mr. Prafful Goyal Advocates for COC. With Company Appeal (AT) (Ins.) No. 650 of 2021 IN THE MATTER OF: Venugopal Dhoot R/o Dhoot Bungalow Station Road, Aurangabad – 431 001 …Appellant Vs. 1. Abhijit Guhathakurta Resolution Professional of Videocon Industries Ltd Page 9 of 213 Videocon Telecommunications Ltd Evans Fraser & Co. (India) Ltd. Millennium Appliances (India) Ltd. Applicomp (India) Ltd. Electroworld Digital Solutions Ltd. Techno Kart India Ltd. Century Appliances Ltd. Techno Electronics Ltd. Value Industries Ltd. PE Electronics Ltd. CE India Ltd. Sky Appliances Ltd Address: Unit No.502, kaatyayni Business Centre Off Mahakali Caves Road, MIDC, Marol Bus Depot Andheri (E), Mumbai, 400 093 …Respondent No.1 2.Committee of Creditors Videocon Industries Ltd Videocon Telecommunications Ltd Evans Fraser & Co. (India) Ltd. Millennium Appliances (India) Ltd. Applicomp (India) Ltd. Electroworld Digital Solutions Ltd. Techno Kart India Ltd. Century Appliances Ltd. Techno Electronics Ltd. Value Industries Ltd. PE Electronics Ltd. CE India Ltd. Sky Appliances Ltd. Through their counsel Cyril Amarchand Mangaldas …Respondent No.2 3.Twinstar Technologies Limited Resolution Applicant 3^rd Floor, IFFCO Tower, Pl No.3, Sector 39, Gurugram, Gurgaon, Haryana – 122 002, India …Respondent No.3 Page 10 of 213 Present: For Appellant: Mr. Arun Kathpalia, Sr. Adv. & Mr. Krishnendu Datta, Sr. Adv. with Mr. Sandeep S Ladda, Advocate & Mr. Yashvardhan, Advocate for the Appellant For Respondents: Mr. Abhinav Vasisht, Senior Advocate with Mr. Anoop Rawat, Ms. Meghna Rajadhyaksha, Mr. Zeeshan Khan, Mr. Vaijayant Paliwal, Ms. Radhika Indapurkar, Ms. Mohana Nijhawan, Mr. Chaitanya Safaya, Mr. Bryan Pillai, Ms. Moulshree Shukla, Ms. Ishani Mookherjee, Ms. Priya Singh, Mr. Ameya Gokhale, Advocates for R1
Mr. Tushar Mehta, Solicitor General of India with
Mr. Bishwajit Dubey, Mr. Madhav Kanoria, Ms.
Surabhi Khattar, Mr. Kanu Agarwal, Mr. Prafful
Goyal, Advocates for R-2
Mr Gopal Jain, Senior Advocate, Mr Diwakar
Maheshwari, Advocate and Mr Shreyas Edupuganti,
Advocate for R-3
Page 11 of 213
Mr. Tushar Mehta, Solicitor General of India with
Mr. Bishwajit Dubey, Mr. Madhav Kanoria, Ms.
Surabhi Khattar, Mr. Kanu Agarwal, Mr. Prafful
Goyal, Advocates for R-14, COC.
Mr. Harish Salve, Sr. Advocate, Mr Gopal Jain,
Senior Advocate, Mr Diwakar Maheshwari, Advocate
and Mr Shreyas Edupuganti, Advocate for R-15.
Mr. Tushar Mehta, Solicitor General of India with
Mr. Bishwajit Dubey, Mr. Madhav Kanoria, Ms.
Surabhi Khattar, Mr. Kanu Agarwal, Mr. Prafful
Goyal, Advocates for R-14, COC.
Mr. Harish Salve, Sr. Advocate Mr Gopal Jain,
Senior Advocate, Mr Diwakar Maheshwari, Advocate
and Mr Shreyas Edupuganti, Advocate for R-15.
Mr. Tushar Mehta, Solicitor General of India with
Mr. Bishwajit Dubey, Mr. Madhav Kanoria, Ms.
Surabhi Khattar, Mr. Kanu Agarwal, Mr. Prafful
Goyal, Advocates for R-2
Mr Gopal Jain, Senior Advocate, Mr Diwakar
Maheshwari, Advocate and Mr Shreyas Edupuganti,
Advocate for R-3

JUDGEMENT

DR. ASHOK KUMAR MISRHA, TECHNICAL MEMEBR Contents:

SL No.	Particulars	Para No.	Page No.
A.	Brief Background	04-08	12-16
B.	Submissions by the parties	09-18	17-174
C.	Analysis of facts, law and reasons	19-49	174-212
D.	Conclusion	50	213

Page 12 of 213

SL No.	Particulars	Para No.	Page No.
A.	Brief Background	04-08	12-16
B.	Submissions by the parties	09-18	17-174
C.	Analysis of facts, law and reasons	19-49	174-212
D.	Conclusion	50	213

1. All these appeals have been filed by the ‘Appellants' under Section 61 of the ‘Insolvency and Bankruptcy Code, 2016’ (in short ‘Code’) against the impugned order dated 08.06.2021 passed by the ‘Adjudicating Authority’ (National Company Law Tribunal, Mumbai Bench, Court No.II at Mumbai) in IA No. 196/2021 in CP (IB) No. 02/MB/C-II/2018 and CP (IB) 01/MB/C-II/2018 and CP (IB) 508/MB/C-II/2018 and CP (IB) 509/MB/C-II/2018 and CP (IB) 507/MB/C-II/2018 and CP (IB) 511/MB/C-II/2018 and CP (IB) 510/MB/C-II/2018 and CP (IB) 562/MB/C-II/2018 and CP (IB) 512/MB/C-II/2018 and CP (IB) 560/MB/C-II/2018 and CP (IB) 528/MB/C-II/2018 and CP (IB) 564/MB/C-II/2018 and CP (IB) 563/MB/C-II/2018 wherein the ‘Adjudicating Authority’ has approved the ‘Resolution Plan’ submitted by ‘Resolution Applicant’ - ‘Twin Star Technologies Limited’.

2. Since all these appeals have sought basically to quash and set aside the impugned order dated 08.06.2021 of the Adjudicating Authority, it was thought fit and proper to be heard together and disposed off by a common judgment. Accordingly, we are proceedings in the matter. 3. Vide order dated 19.07.2021, this Tribunal has stayed the impugned order and directed status quo ante as before passing of the impugned order to be maintained. Resolution Professional will continue to manage the Corporate Debtor as per provisions of the Code.

A. Brief background Page 13 of 213

4. The available record reveals that ‘Videocon Group’ was founded in the year 1984 and commenced its business from Marathwada region which expanded across India and worldwide. In the initial stage, this group was involved in local television manufacturing. The same was diversified in multiple business portfolio in oil and gas, retail, telecom, insurance and real estate sector. The ‘Videocon Industries Limited’ (VIL) is a listed company on the ‘National Stock Exchange’ (NSE) and the ‘Bombay Stock Exchange’ (BSE) with its promoter group holding 62.27% share. A ‘consortium of bankers’ led by ‘State Bank of India’ (SBI) has rendered its financial debt facilities to the Videocon group. It is also observed that the Videocon’s telecom business obtained 21, 2G telecom licenses from the then prevailing government which was cancelled at a later date and this impacted the Videocon’s Telecom business. They were repaying the agreed instalments to the consortium of lenders till 2015. VIL and ‘Bharat Petroleum Corporation Limited’ jointly bought oil and gas assets through “joint venture”. It also reflects that from May, 2016, the VIL alongwith 13 others companies of Videocon groups were classified as ‘SMA – 2’ due to late payment of instalments in the year 2016 onwards.

5. It is also reflected from the ‘Appeal Paper book’ that VIL and its other group companies (12 domestic subsidiary) and their lenders entered into a ‘Syndicated Rupee Term Loan Agreement’ dated 08.08.2012 as-obligor - co-obligator on the one hand and the banks and financial institutions as the group of lenders with SBI as Page 14 of 213 Facility Agent and SBICaps Trustee Company Limited as the onshore Security Trustee. Entities of Videocon group with respective orders were under CIRP and the action taken by the lead bank i.e. SBI under Section 7 of the Code and few companies who are also part of the group, certain ‘Operational Creditors’ (OC) had filed insolvency petition.

List of 13 Videocon group companies taken from Form- H- Compliance Certificate given by RP at 70 of the Appeal paper book in CA(AT) (Ins) No. 505 of 2021.

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