Why Adani is fighting to keep IVRCL’s IOT Utkal stake out of liquidation

IOT Utkal Energy Services Ltd is an SPV incorporated in 2009 to set up crude and product storage facilities on a build-own-operate-transfer basis for IOCL’s 15 MMTPA grassroot refinery at Paradip, Odisha, under a BOOT agreement dated 28 June 2010 running 15 years. It was a 71.57% subsidiary of Indian Oiltanking Ltd (IOTL).In November 2022 APSEZ agreed to acquire Oiltanking India GmbH’s 49.38% stake in IOTL for ₹1,050 crore, together with an additional 10% direct equity stake in IOT Utkal.

Both completed on 31 January 2023. IOTL was renamed IndianOil Adani Ventures Ltd. IOC and APSEZ each hold 49.99% of IAVL, and IOT Utkal’s debt is rated IND AAA with cash flows ring-fenced for project debt and no recourse to the parent.

So IOAVL is simultaneously IOT Utkal’s holding company and, since January 2023, a direct co-shareholder alongside IVRCL — which has been in liquidation since July 2019. Adani inherited a bankrupt minority partner in a strategic PSU-facing asset.

What IOAVL wants

IA No. 816 of 2026 before NCLT Hyderabad seeks to exclude IVRCL’s 9.7 crore IOT Utkal shares from the liquidation estate. The tribunal’s 20 May 2026 order did not decide that — it directed the liquidator to disclose the litigation to prospective bidders, which is why it appears in the fifth e-auction process note rather than as a carve-out.

The substantive pleadings aren’t in the public domain. I couldn’t find the IA or any reporting on it, so what follows is the shape of the argument, not a report of it.

The plausible grounds are some combination of: Section 36(4)(a), that the shares are held in trust or subject to a third-party beneficial interest; a shareholders’ agreement containing pre-emption, ROFR or an insolvency-triggered call option, so that IVRCL holds bare legal title only; or a pledge of sponsor shares to the project lenders, which for a ring-fenced AAA project SPV would be near-standard — and if the security hasn’t been relinquished under Section 52(1)(a), the shares are outside the estate regardless of IOAVL’s application.

The commercial motive is straightforward whatever the pleading says. A going-concern sale of IVRCL transfers its investments in subsidiaries, associates and JVs to an unknown bidder. That would hand a stake in an IOCL-facing BOOT asset to whoever wins a distressed auction, with no counterparty consent. For a JV whose other halves are a Maharatna PSU and APSEZ, that is not a passive concern.

Why it matters to the auction

There is already a directly relevant ruling in this same liquidation. In Raghava Square Pvt Ltd vs IVRCL Ltd, NCLT Hyderabad held that procedural requirements under liquidation Regulation 21A cannot be construed to extend the scope of the liquidation estate to include assets of a subsidiary of the corporate debtor. That is the same principle Clause 2.4 of the process note codifies — only the investment transfers, never what sits beneath it. IOAVL is pushing one step further: that even the investment shouldn’t transfer.

Note also the timing. A 15-year BOOT term from June 2010 runs out around mid-2025, meaning the transfer leg may already be live or imminent. What the 9.7 crore shares are actually worth depends heavily on whether the tankage reverts to IOCL and on what terms — which cuts directly at the ₹1,090.98 crore reserve price and at bidder appetite. Four failed auctions and a reserve price down from ₹1,654.47 crore suggest the market is already discounting perimeter uncertainty of exactly this kind.

Also Read: Seven years, five auctions, two defaulting bidders: How IBC failed IVRCL Ltd