Participating Interest In Oil Block Qualifies as 'Property' Under IBC: NCLT Mumbai
The National Company Law Tribunal (NCLT) at Mumbai has ruled that rights under Production Sharing Contracts are “property” under the Insolvency and Bankruptcy Code. As a result, a company's participating interest in an onshore oil block must be treated as an asset during insolvency and cannot be excluded from resolution.
A coram of Judicial Member Sushil Mahadeorao Kochey and Technical Member Prabhat Kumar dismissed an application filed by Pan India Consultants Pvt Ltd seeking exclusion of the Participating Interest (PI) held by Frost International Ltd in an onshore oil block in the Cambay Basin from the insolvency process. It observed:
“The intangible rights being license or commercial rights of similar nature are Properties under the definition contained in Recovery of Debts Due to Banks and Financial Institutions Act, 1993, and Property, in terms of Section 3(27) of the Code, includes every description of property, the intangible rights being license or commercial rights of similar nature falls with the definition of Property on combine reading of Section 3(27) of Code and Section 2(jb) of Recovery of Debts Due to Banks and Financial Institutions Act, 1993.”
"Since, the bundle of rights and interests in the Oil Block acquired by the Corporate Debtor, in terms of PSC, are intangible rights in nature of a license as well as commercial rights, those rights falls within the definition of Property under the Code," it added
The application was filed during the CIRP of Frost International, which commenced on February 9, 2023, on a petition filed by Bank of India. Pan India Consultants argued that the oil block rights were sovereign in nature, vested in the Government of India, and governed by contractual arrangements under the PSC and Joint Operating Agreement, and hence could not be treated as assets of the corporate debtor.
The tribunal noted that Frost International was vested with a bundle of enforceable rights under the PSC, including exploration, development and production rights, which were commercial and intangible in nature. It held that such rights squarely fall within the inclusive definition of property under the IBC and must be taken into custody by the resolution professional.
It further observed that a government notification dated June 14, 2023, merely excluded the application of the moratorium to such contracts and did not exclude these rights from the resolution process itself.
Finding no merit in the plea for exclusion or assertion of pre-emptive rights, the tribunal dismissed the application.
Case Title: Pan India Consultants Pvt Ltd vs Amit Chandrakant Shah & Anr.
Case Citation: 2026 LLBiz NCLT (MUM) 47
Case Number: IA 4589 of 2025 In CP IB 973 of 2020
For Applicant: Advocates Ashish Mishra, Amay Shivalkar, Arman, Angad, Armaan Grewal
For Respondents: Advocates Gayatri, Jash Shah, Astha Ojha, Prateek Kumar