“The judgment is set aside,” said the National Company Law Appellate Tribunal, beginning the denouement of an acquisition saga that might well result in Hindustan Oil Exploration Company (HOEC) bagging an Arunachal Pradesh oil field it had thought lost.

The Appellate Tribunal, on August 14, set aside an earlier order of the National Company Law Tribunal, which in December last year awarded the Kharsang field to a rival bidder, Atyant Capital, a Chennai-headquartered equity fund.

The Kharsang field produces 800 barrels of oil a day. Four companies own interests in the field — Oil India (40 per cent), Geopetrol (25 per cent), JEKPL Pvt Ltd, part of the Jubilant group of the Bhartias (25 per cent) and a company called GeoEnpro (10 per cent).

The HOEC bought Geopetrol about three months ago and, therefore, already has 25 per cent interest in Kharsang. It also owns half of GeoEnpro, therefore it indirectly has another 5 per cent interest in Kharsang — the other half of GeoEnpro is owned by JEKPL.

The story that unfolds now is about the acquisition of JEKPL, which has self-declared insolvency and initiated resolution process under the Insolvency and Bankruptcy Code, 2016. JEKPL owes banks about ₹1,200 crore.

Whoever acquires JEKPL will get 25 per cent interest in the Kharsang field. HOEC, which not only has a foot in the field but also is present in other fields in the North- East, has been very keen.

However, things did not go well for HOEC. It is learnt that there were only two bidders for JEKPL – HOEC, and a Chennai-based private equity company Atyant Capital (which, incidentally, counts Balaji Telefilms among its investees.)

From documents in the possession of BusinessLine , it transpires that HOEC bid ₹160 crore, while Atyant offered ₹135 crore. But at a meeting of the Committee of Creditors, on November 30, 2017, the Resolution Professional, Mukesh Mohan, suddenly decided to throw open the issue for bidding.

Atyant Capital said it would bid ₹1 crore more than HOEC. HOEC seems to have objected to the sudden launch of verbal auctioning and walked out of the proceedings, saying that, being a listed company, it could not offer counter-bids without taking its board’s approval first.

Legal tangle

The Resolution Professional would have none of it, and declared Atyant Capital the successful bidder, for ₹161 crore. However, noticing that successful bidder had not, as required, submitted his ‘resolution plan’ within two days, HOEC on December 6, gave a revised proposal, raising its bid to ₹175 crore. Even as HOEC approached the Appellate Tribunal for redress, another legal point raised its head. Exim Bank, which had taken a ‘counter corporate guarantee’ from JEKPL for a loan given to another company of the Jubilant group, appealed against being excluded from the group of creditors. The Resolution Professional, Mukesh Mohan, had agreed to the other creditors’ stand that a ‘guarantee’ was not a ‘loan’.

Exim Bank too approached the Appellate Tribunal. In its order of August 14, the Appellate Tribunal set aside the NCLT order, on two grounds. First, Exim Bank had been “wrongly rejected” as a creditor, and, second, HOEC’s claim had been “wrongly not considered”. The NCLAT said that in the “absence of Exim Bank”, the Committee of Creditors was “not competent” to consider any resolution plan.

It has also said that there should not be any “re-bidding”, “the respective Resolution Plans (of both Atyant and HOEC) having already been opened.”

So, unless some legal issues crop up, it is HOEC’s ₹175 crore against Atyant’s ₹161 crore. A decision is expected in a month’s time.

Importance of the field

An oil field producing 800 barrels a day is no big deal. Why, then, the keen fight? The answer is, while the oil produced now comes from shallow depths (2,000 feet), data shows the possibility of a deeper prospect, which could be big.

While Atyant’s Rahul Saraogi could not be contacted, HOEC’s Managing Director P Elango declined to comment until the matter was fully resolved. 

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