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  • Hindustan Oil Exploration Company’s appeal to gain control of interest in Kharsang Oil Field dismissed by the Supreme Court

    Published on February 8, 2021

    New Delhi: Listed oil company, Hindustan Oil Exploration Company (HOEC)’s attempt to jeopardize implementation of the Resolution Plan completed in Sept 2020 was struck down by the Supreme Court on January 28, 2021. HOEC’s appeal to gain control of the interest in Kharsang Oil Field in Arunachal Pradesh was dismissed by the apex court after it was previously dismissed by NCLT’s Allahabad Bench for the third time on Dec 21, 2020. The latest dismissal comes after a series of appeals made by HOEC since 2018 were repeatedly dismissed by the NCLAT and NCLT.

    To push JEKPL Pvt Ltd, part of the Jubilant group, closer to liquidation, HOEC has been repeatedly approaching various rungs of the judiciary system to obtain a favourable result. This was designed to allow HOEC to gain control of its participating interest in Kharsang Field in Arunachal Pradesh which has a capacity of producing 800 barrels of oil per day, at no cost through one of its offshore subsidiaries.

    NCLAT anticipated this attempt in March 2020 when it dismissed HOEC’s petition for the second time against the order of the Allahabad Bench of NCLT in Feb 2020. The order also declared Invenire Energy as the successful resolution applicant in the second round of bidding that concluded in June 2019. The second round of bidding only happened due to a protest lodged by HOEC when the verdict of the NCLT Allahabad Bench went against them and instead Invenire Energy was declared as the successful resolution applicant in Dec 2017. During the third dismissal of its appeal in December 2020, the Hon’ble NCLT, stated that the cause of the dismissal was due to the lack of any legal standing.

    HOEC’s multiple attempts at taking advantage of the legal system to try to gain controlling interest in Kharsang Field date back to as far as 2017. During that time, JEKPL holding an 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 Bank, and Central Bank of India and it had no operational creditors. Two companies, one a listed oil company, Hindustan Oil Exploration Company (HOEC) and a private equity SPV, Invenire Energy, emerged as interested parties. In December 2017, after going through the due process post submission of final bids, Invenire Energy emerged as the successful resolution applicant, with endorsement by the CoC. Hon’ble NCLAT, Allahabad Bench, passed the award on Dec 2017 declaring Invenire Energy as the successful resolution applicant.

    Post endorsement by the CoC, the financial creditors comprising of State Bank of India, EXIM and Central Bank of India have received the entire consideration of INR 123 crores and 100% shareholding of JEKPL has been transferred to Invenire Energy as on Sept 30, 2020 and its nominees have also been appointed as Directors on the Board of JEKPL. The present dismissal by the Supreme Court puts a finality to the legal saga which has been going on since 2017 on the ownership of JEKPL.