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TMI Blog2023 (6) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... ity' ('National Company Law Tribunal', Bengaluru Bench). 2. The 'Adjudicating Authority' ('National Company Law Tribunal', Bengaluru Bench), while passing the 'impugned order' in IA No. 198 of 2020 in CP (IB) No. 180 / BB / 2018, at Paragraph Nos. 5 & 6, had observed the following: 5. "In terms of Section 60 of Code, the Adjudicating Authority shall be NCLT having territorial jurisdiction over the place, where the registered office of Corporate Persons is located. By conjointly reading the above provisions, the ultimate objective of Code is either to resolve the issue by way of Resolution Plan or to dissolve the Corporate Debtor, as expeditiously as possible. If the facts and circumstances of a case, justify there would not serve any purpose to keep the Corporate Debtor under regular CIRP proceedings, and thereafter under Liquidation proceedings, under the provisions of Code, the Adjudicating Authority, by exercising its inherent powers conferred under the Code, can pass appropriate order(s) in the interest of speedy justice. 6. The above facts and circumstances of the Case fully justified, that there would be no useful purpose be served, by placing the Corporate Debtor under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Appellant points out that the Appellant had already got sufficient infrastructure, to support the 'Corporate Debtor', and that 'Booking Engine', 'Ground Support Equipment', 'Ground Power Unit', 'Push back Truck', 'Baggage Trollies', 'Water Cart', 'Toilet Cart', 'Engineering Trestles', 'Tractor', 'Buses', etc., are readily available with the Appellant and in short, there is no requirement of creating new infrastructure, unlike the new Startups. 7. The Learned Counsel for the Appellant proceeds to take a stand that the 'Corporate Debtor' has a 'No Objection Certificate', obtained from the Ministry of Civil Aviation Sector and that the Company has to go through the rigorous scrutiny, checks, etc., to secure the same, from the 'Ministry'. As a matter of fact, the Appellant / Promoter, has an experience of more than 20 years in Airline Sector, more particularly the track record of the successfully running the Airlines with three Aircrafts with 29 Sectors per day, and has an exclusive and extensive exposure and experience in the field. 8. The Learned Counsel for the Appellant brings it to the notice of this 'Tribunal' that the 'Appellant / Company', being the 'Service Industry', woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orporate Insolvency and Resolution Process', was initiated and the same is pending before the 'Adjudicating Authority' / 'Tribunal'. 14. According to the Appellant, the Respondents by not considering the aforesaid Order, made in Comp. App No. 1 of 2020, by the 'Appellate Authority', had proceeded for the early 'Dissolution' of the 'Corporate Debtor', inspite of knowing that the 'Appellant', is endeavouring his best, to secure 'Funding' amidst this 'Covid-19' pandemic. 15. The Learned Counsel for the Appellant comes out with a plea that the Appellant had submitted his 'Expression of Interest', through email dated 07.01.2020, and was finding a suitable Investor, to fund the Company. In the interregnum, the 'Lockdown' was imposed because of Covid-19 and from 24.03.2020 to 03.05.2020, there was a complete travel restrictions, and that, the 'Appellant, could not secure an 'Investment', from 'Any Source', on account of the 'uncertainty' and 'turmoil', created in the Country. But the Appellant, had secured an 'Investment', after negotiating with the 'Dubai' based 'Corporation'. 16. The Learned Counsel for the Appellant points out that the '1st Respondent / Resolution Professional', had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter dated 27.09.2018 of the Under Secretary to the Government of India, Ministry of Civil Aviation, is only a 'No Objection Certificate', granted to the 'Appellant / Managing Director' of the 'Corporate Debtor' / 'Air Pegasus Private Limited', and the said 'No Objection Certificate', cannot be treated as the permission to operate and that the 'Permit' ('AOP'), is different from that of the 'No Objection Certificate'. 22. According to the 1st Respondent / Resolution Professional, the mere fact that 'No Objection Certificate', granted to Mr. Shyson Thomas, Managing Director of the 'Corporate Debtor', by itself does not 'Revive' the 'Air Operator Permit', dated 23.03.2016 (expired on 23.03.2020) nor it guaranteed the grant of 'AOP', because of the fact that the conditions specified for an 'Issuance of AOP' are entirely different than mere grant of 'No Objection Certificate', to an 'Individual'. 23. The Learned Counsel for the 1st Respondent brings it to the notice of this 'Tribunal', that mere grant of 'No Objection Certificate' dated 27.09.2018, will not wish away the fact that the 'Corporate Debtor' on the date of Order dated 24.06.2020, as admitted by the 'Corporate Debtor', in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the absence of further relevant and material averments, the stand taken by the Appellant that he was 'unaware', about the 'Agenda' of the 'Committee of Creditors Meeting' and the 'Minutes of the 6th CoC', is nothing, but an 'afterthought'. 28. The Learned Counsel for the 1st Respondent submits that an 'Adjudicating Authority' / an 'Appellate Tribunal', may not interfere with the 'Commercial Wisdom' of the 'Committee of Creditors', to prevent an 'Aberration of Justice'. 29. The Learned Counsel for the 1st Respondent points out that the 'Adjudicating Authority' / 'Tribunal', had rightly passed the 'impugned order' dated 24.06.2020 in IA No. 198 of 2020 in CP (IB) No. 180/BB/2018, in regard to the 'Dissolution' of the 'Corporate Debtor', after the 'Dissolution' of the 'Corporate Debtor', was 'approved', by the 'Financial Creditor', with '100% Voting Rights'. 2nd Respondent's Pleas : 30. The Learned Counsel for the 2nd Respondent contends that the 2nd Respondent / Bank in the 6th CoC Meeting, that took place on 29.05.2020, having regard to the fact that (a) there were 'No Realisable Financial Assets', and the only one 'Intangible Valuable Asset', in the nature of 'Air Operator Per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporate Persons) Regulations, 2016. This point has been dealt with in the case of Essar Steel (supra). We have quoted above the relevant passages from this judgment. 28. The Appellate Authority has, in our opinion, proceeded on equitable perception rather than commercial wisdom. On the face of it, release of assets at a value 20% below its liquidation value arrived at by the valuers seems inequitable. Here, we feel the Court ought to cede ground to the commercial wisdom of the creditors rather than assess the resolution plan on the basis of quantitative analysis. Such is the scheme of the Code. Section 31(1) of the Code lays down in clear terms that for final approval of a resolution plan, the Adjudicating Authority has to be satisfied that the requirement of sub-section (2) of Section 30 of the Code has been complied with. The proviso to Section 31(1) of the Code stipulates the other point on which an Adjudicating Authority has to be satisfied. That factor is that the resolution plan has provisions for its implementation. The scope of interference by the Adjudicating Authority in limited judicial review has been laid down in the case of Essar Steel (supra), the relevant passa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the NCLAT. The submission is that this Court may set aside the order passed by the Tribunal and relegate the parties in both the cases, before the NCLT for considering the proceedings afresh in light of the amended provision reducing the threshold requirement of percent of voting share of financial creditors to 66%. We are afraid, it is not possible for us to exercise powers under Article 142 of the Constitution which will result in issuing directions in the teeth of the provisions as applicable to the cases on hand. We, therefore, decline to accede to this request. Having answered the core issues and to avoid prolixity, we do not wish to dilate on the exposition in other reported decisions relied upon by the counsel. 66. As a result, we hold that the NCLAT has justly concluded in the impugned decision that the resolution plan of the concerned corporate debtor(s) has not been approved by requisite percent of voting share of the financial creditors; and in absence of any alternative resolution plan presented within the statutory period of 270 days, the inevitable sequel is to initiate liquidation process under Section 33 of the Code. That view is unexceptional. Resultantly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the commercial decision taken by CoC by a thumping majority of 84.36%. 157. It is further to be noted, that after the resolution plan of Kalpraj was approved by NCLT on 28.11.2019, Kalpraj had begun implementing the resolution plan. NCLAT had heard the appeals on 27.2.2020 and reserved the same for orders. It is not in dispute, that there was no stay granted by NCLAT, while reserving the matters for orders. After a gap of five months and eight days, NCLAT passed the final order on 5.8.2020. It could thus be seen, that for a long period, there was no restraint on implementation of the resolution plan of Kalpraj, which was duly approved by NCLT. It is the case of Kalpraj, RP, CoC and Deutsche Bank, that during the said period, various steps have been taken by Kalpraj by spending a huge amount for implementation of the plan. No doubt, this is sought to be disputed by KIAL. However, we do not find it necessary to go into that aspect of the matter in light of our conclusion, that NCLAT acted in excess of jurisdiction in interfering with the conscious commercial decision of CoC. 158. It is also pointed out, that in pursuance of the order dated 5.8.2020 passed by NCLAT, CoC has a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of the 'Corporate Debtor' / 'M/s. Air Pegasus Private Limited', on the basis that the 'Corporate Debtor', had committed 'Default' for a Sum of USD 1,51,387.36 (US Dollars One Hundred Fifty One Thousand Three Hundred and Eighty Seven and Thirty Six Cents only). 41. After contest, the 'Adjudicating Authority' / 'Tribunal', in main CP (IB) No. 180 / BB / 2018 (preferred by the 'Petitioner / Operational Creditor'), on being satisfied with the reasons mentioned by the Petitioner to initiate 'CIRP', by exercising its powers, as per Section 9 (5) (i) of the I & B Code, 2016, had 'admitted' the main Petition, by initiating the 'CIRP', against the 'Corporate Debtor', by appointing an 'Interim Resolution Professional', and declared 'Moratorium', etc. 42. In the 'Reply' of the 1st Respondent / Resolution Professional to the main TA (AT) No. 8 of 2021 (Comp. App (AT) (CH) (INS.) No. 925 of 2020), it was mentioned that the 'Appellant', had failed to submit the 'Resolution Plan', within the time limit stipulated i.e., by 10.02.2020, despite the email was sent by the '1st Respondent / Resolution Professional' to the Appellant on 13.01.2020. Also that, the 'Notice' of the '6th Meeting o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the 'Appellant' / 'Promoter' (as Writ Petitioner), the 1st Respondent / Resolution Professional, had averred that as per One Time Settlement Proposal Letter dated 09.09.2019, and in terms of the One Time Settlement Sanction Letter, the Appellant / Promoter, was to 'repay' the 'Agreed Sum', by 09.03.2020, prior to the 'Corona Pandemic'. However, according to the 1st Respondent, the One Time Settlement Proposal was cancelled, because of the non-compliance with any of the terms of the Sanction by him, including the 'payment of One Time Settlement Amount', etc., and in fact, the 'One Time Settlement' stood cancelled and as such, the 'Appellant' on account of his breach of the 'One Time Settlement', cannot place reliance on the same. 50. In the teeth of the ingredients of the I & B Code, 2016, the Appellant, had to furnish the 'Resolution Plan', within the prescribed time period and having failed in this regard, the 'Adjudicating Authority' / 'Tribunal', had passed the 'impugned order' dated 24.06.2020 in IA No. 198 of 2020 in CP (IB) No. 180 / BB / 2018, as per the tenets of the I & B Code, 2016. 51. It may not be out of place for this 'Tribunal', to make a pertinent mention that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on for NCLT and NCLAT, functioning as the adjudicatory authority and appellate authority under the IBC respectively, from judicially interfering in the framework envisaged under the IBC. As we have noted earlier in the judgment, the IBC was introduced in order to overhaul the insolvency and bankruptcy regime in India. As such, it is a carefully considered and well thought out piece of legislation which sought to shed away the practices of the past. The legislature has also been working hard to ensure that the efficacy of this legislation remains robust by constantly amending it based on its experience. Consequently, the need for judicial intervention or innovation from NCLT and NCLAT should be kept at its bare minimum and should not disturb the foundational principles of the IBC....." 52. The Insolvency Resolution Process under the I & B Code, 2016, is a 'Time Bound Process', and the 'Appellant / Promoter', having failed to project the 'Resolution Plan', within the specified time limit and later, the 1st Respondent / Resolution Professional, is not to accept any Plan. 53. Suffice it for this 'Tribunal', to make a pertinent mention that in the absence of any 'Asset(s)' / the 'Reso ..... X X X X Extracts X X X X X X X X Extracts X X X X
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