Judgment Summaries (NCLT) – In the matter of Videocon Industries

  December 22, 2021

In the matter of Videocon Industries Limited (Mumbai Bench (08.08.2019))



In this matter, 15 applications were filed before NCLT’s Mumbai Bench, some in favour of consolidation of insolvency proceedings of the Videocon group companies, and some against such consolidation. The Tribunal observed that a blanket view declaring that the entire group was fit to be consolidated simply because they were connected or controlled by common management, was not possible. The Tribunal noted that each unit or subsidiary should be examined on its merits. Many factors needed to be considered to distinguish the units into two categories:

  1. A category/classification of those cases can be made where the business operations are so dove-tailed that their management, deployment of staff, production of goods, distribution system, arrangement of funds, loan facilities etc. are so intricately interlinked that segregation may result in an unviable solution. Over and above, most important is that if segregated, the possibility of restructuring or the option of maximisation of value of assets become so bleak which shall overweigh the consolidation. 
  2. The other category/ classification can be of such group cases where the accounts are interlinked and due to the existence of debt agreement, the liabilities have become common but assets are identifiable. Hence, on segregation the independent structure of each unit shall survive which shall also result into viable profitable restructuring proposals. Therefore, in this category of cases, although for the limited purpose of signing of certain documents through which loan facilities might have been commonly availed but that can be segregated so that the assets and liabilities are identifiable separately thus facilitating a good investor.” (Para 82)


Keeping the above in view, the Tribunal ordered that the assets and liabilities of 13 Videocon companies out of the group of 15 should be substantively consolidated. The Tribunal laid down the following parameters while consolidating the 13 companies:

(i) common control; (ii) common directors; (iii) common assets; (iv) common liabilities; (v) inter-dependence; (vi) interlacing of finance; (vii) pooling of resources; (viii) co-existence for survival; (ix) intricate link of subsidiaries; (x) intertwined accounts; (xi) inter-looping of debts; (xii) singleness of economics of units; (xiii) Interdependence due to intertwined consolidated accounts; (xiv) cross-shareholding; (xv) Common pooling of resources, etc. (Para 78). 

The Tribunal clarified that this was not an exhaustive list. However, the existence of these points would help in examining whether in a particular case the question of ‘consolidation’ was worth consideration. Accordingly, the present matter was disposed of.


Full text of the order accessible here.

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