IFCI Ltd, a Delhi-based lender, filed a petition with the National Company Law Tribunal (NCLT) to stop the other lenders from selling Videocon Industries' oil assets and consumer durables company separately. While the debt of oil assets has been classified as Videocon Industries' consolidated debt, the value of oil assets is not included in VIL's resolution, according to IFCI, which is one of Videocon Industries' lenders. IFCI, SBI and Bank of Maharashtra, which together own 4% of the voting shares in the Committee of Creditors, have also filed an appeal in the NCLAT against VIL's debt settlement, claiming that the recovery is insignificant and that the resolution is unfair.
In the instant case titled IFCI Ltd. v. Golf Technologies (P.) Ltd the issues raised before the NCLAT for clarification were:
Whether the adjudicating authority was right in dismissing the applications under Section 7?
Whether the date of sale holds more significance?
With regard to the first issue, the NCLAT held that the Adjudicating Authority erred in rejecting said section 7 application, and that since an application under section 7 filed against the principal borrower was rejected prior to the impugned order issued in the case of the corporate debtor, the Adjudicating Authority should have taken up the matter filed against the principal borrower first, and once it was admitted, no other case against the corporate debtor should have been entertained for the same amount as the same debt amount.
With regard to the second issue, it is evident that the date of share sale, not the date of invocation, is important. Furthermore, due credit has been made in respect of the sale of shares, as evidenced by page numbers 130 and 137 of the paper book of the Summary of outstanding amount, which shows that more than Rs.25 crores were deposited in the account of the 'Corporate Debtor.'
It was also noticed that the pledged shares were called in before the principal borrower went into default. Furthermore, the default amounted to more than Rs.12 crores, which was a significant sum that the corporate debtor had to pay.