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2024 (1) TMI 1021 - SC - Insolvency and BankruptcyApproval of Resolution Plan - conditions precedent pending before the NCLAT - adjustment of a Performance Bank Guarantee (PBG) - HELD THAT - Conditional on compliance with the three conditions, SBI stated that it would be willing to withdraw both the company appeals which were pending before the NCLAT as well as the Civil Appeals which were pending before this Court, details of which were set out in the affidavit. The offer which was made by SBI on behalf of the lenders had to be complied with as it stood in the event that the SRA sought the benefit of the offer. According to the SRA, the PBG was liable to be released on adjustment in terms of the Resolution Plan. This is a matter which would have to await an adjudication by NCLAT in the pending appeal. The impugned order of the NCLAT, on the other hand, allowed the plea of the SRA for adjustment and consequential release of the PBG at the interlocutory stage. Infusion of Rs 350 crores, as envisaged in the affidavit, could not have been substituted with a direction for adjustment of the PBG, at that stage. Infusion meant that the third tranche has to be paid in the same manner. Adjustment of the PBG was not permissible. SBI has stated that the lenders have been saddled with huge recurring expenditure every month to maintain the remaining airline assets of the Corporate Debtor. The lenders have been embroiled in litigation before the NCLT and NCLAT with little progress on this ground towards implementing the resolution plan. Such a state of affairs cannot be permitted to continue interminably as it defeats the very object and purpose of the provisions of and timelines under the IBC. The timely resolution of insolvency cases is vital for sustaining the effectiveness and credibility of the insolvency framework. Therefore, concerted efforts and decisive actions are imperative to break the deadlock and ensure the expeditious implementation of the resolution plan. The order dated 28 August 2023 of the NCLAT is modified in part and, hence, the permission which was granted to the SRA to adjust the last tranche of Rs 150 crores against the PBG - The NCLAT is requested to endeavour an expeditious disposal of the appeal by the end of March 2024. The appeals are accordingly disposed of.
Issues Involved:
1. Compliance with Conditions Precedent under the Resolution Plan. 2. Dispute over the Effective Date. 3. Implementation of the Resolution Plan. 4. Payment Obligations and Adjustment of Performance Bank Guarantee (PBG). Issue-wise Summary: 1. Compliance with Conditions Precedent under the Resolution Plan: The Resolution Plan for Jet Airways Limited required the Successful Resolution Applicant (SRA) to fulfill five conditions precedent, including validation of the Airline Operator Permit, submission and approval of the Business Plan, slot allotment approval, international traffic rights clearance, and approval of the demerger of the ground handling business. The NCLT determined that the SRA had complied with these conditions, allowing the SRA to take control of the Corporate Debtor from 16 November 2022. However, the lenders, represented by SBI, disputed this compliance, leading to ongoing appeals. 2. Dispute over the Effective Date: The SRA and the consortium of lenders, led by SBI, disagreed on whether the conditions precedent were fulfilled, with the SRA claiming compliance and proposing 20 May 2022 as the effective date. The NCLT supported the SRA's position, but the lenders contested this, resulting in further legal proceedings. 3. Implementation of the Resolution Plan: The NCLT's order on 13 January 2023, which allowed the SRA to implement the Resolution Plan, was challenged by SBI. The NCLAT declined to stay this order and extended the implementation timeline until 31 August 2023. The lenders agreed to a course of action if the SRA infused Rs. 350 crores by 31 October 2023 and adhered to the plan's terms, including employee payments. 4. Payment Obligations and Adjustment of Performance Bank Guarantee (PBG): The Resolution Plan required the SRA to pay Rs. 350 crores in three tranches, with the last tranche of Rs. 150 crores being disputed. The NCLAT allowed the SRA to adjust this amount against the PBG, but SBI contested this, arguing that "infuse" meant actual payment, not adjustment. The Supreme Court held that the NCLAT erred in permitting the adjustment and directed the SRA to deposit the remaining Rs. 150 crores by 31 January 2024, keeping the PBG in effect pending the final appeal outcome. Conclusion: The Supreme Court modified the NCLAT's order, requiring the SRA to deposit Rs. 150 crores without adjusting the PBG and directed an expeditious disposal of the appeal by the NCLAT by March 2024. Pending applications were disposed of accordingly.
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