NCLAT Sets Aside Order Of Resolution Professional Reducing Claim Of PNB By 202 Crore In Insolvency process against Jet Airways

The National Company Law Appellate Tribunal (NCLAT) comprising the Chairman, Justice Ashok Bhushan and Technical Member Barun Mitra has set aside the order of the National Company Law Tribunal which approved the Resolution Plan of Resolution Professional reducing the claim of Punjab National Bank (PNB) by 202.09 crores in the Corporate Insolvency Resolution Process (CIRP) of Jet Airways India Limited.

The Counsel representing the PNB argued that the Resolution Professional (RP) after having admitted the claim of Rs. 956 crores earlier could not have reduced the same to Rs.754 crores on later as the same was done after submission of the final Resolution Plan by both prospective Resolution Applicants. He argued that the cases relied on by the RP for reducing the amount, was set aside by the Supreme Court in 2022. He also placed on record the minutes which showed that PNB had objected to the reduction of claim in the meeting of the committee of creditors.

The counsel appearing for the RP argued that the appellant is not entitled to any relief because the appellant is Assenting Financial Creditor to the Resolution Plan and cannot be allowed to challenge the approval of the Resolution Plan and that the appellant voted for Resolution Plan, wherein Rs.747.94 crores have been admitted as Appellant’s claim and PNB having exercised its commercial wisdom in approving the Plan is estopped from questioning the approved Resolution Plan.

The counsel representing the Committee of Creditors and the successful resolution applicant agreed with the arguments made by the counsel for the resolution professional.

The NCLAT was also considering the intervention application filed by the Income Tax Department. The counsel representing the RP and successful resolution applicant opposed the application on the ground that the intervenor was not part of CIRP. The NCLAT allowed the intervenor, however, taking note of the decision of the Supreme Court, the tribunal said that the intervenor is only entitled to address arguments in support of one or the other side.

The NCLAT agreed with the arguments of the appellant that the decision relied on by the RP was set aside by the Supreme Court and noted that

“In view of the law laid down by Hon’ble Supreme Court in PTC India Financial Services Ltd., the reason for reduction of the claim of the Appellant by RP is knocked out. The declaration of law by the Hon’ble Supreme Court has to be treated as law of the land at all relevant times including the date when claim was reduced by the RP.”

The NCLAT noted that the claim of the Appellant was reduced by the Resolution Professional on 25th September 2020 and the appellant had raised objections to such reductions in the subsequent meetings in October. The tribunal also noted that the appellant had filed an application objecting to the reduction of their claim by Rs.202.90 crores and that the application was pressed and was listed for hearing, but unfortunately could not be adjudicated when Adjudicating Authority passed the order on 22.06.2021 approving the Resolution Plan

The NCLAT while allowing the appeal, accepted the claim of Rs. 956.21 crores, and set aside the reduction of a claim by the Resolution Professional while noting that

“We, thus, are satisfied that Appellant never acquiesced to the reduction of their claim and they were throughout agitating the same even before the CoC and has even filed a separate Application, which remained pending. In view of the aforesaid, no estoppel can be pressed against the Appellant in so far as reduction of claim of Rs.202.90 crores is concerned. As noted above, apart from the aforesaid factum of reduction of their claim, no other part of Resolution Plan has been objected by the Appellant, who has already voted in favour of the Plan”

The NCLAT also noted that

“The Appellant shall be entitled for distribution under the Resolution Plan as per their admitted claim of Rs. 956.21 crores, however, without affecting in any manner the payments to other Financial Creditors both Assenting and Dissenting Financial Creditors and other stake holders.”

Mr. R. Venkatramani, Sr. Advocate with Mr. Piyush Beriwal, Mr. Ankit Raj, Chitvan Singhal, Ms. Divya Srivastava, Mr. Praveen Vignesh, appeared for PNB

Mr. Sunil Aggarwal, Sr. Standing Counsel Mr. Tushar Gupta, Jr. Standing Counsel Mr. Parinay Gupta, appeared for the Income Tax Department

AZB Partners appeared for the Resolution Professional

Mr. Abhinav Vashisht, Sr. Advocate with Ms. Vishrutyi Sahni, Ms. Aishna Jain, appeared for the committee of creditors of Jet Airways

Case Title: Punjab National Bank vs. Mr. Ashish Chhawchharia & Ors.