NCLAT Upholds Liquidation Of Go Airlines, Permits Submission Of Compromise/Arrangement Within 90 Days Of Liquidation Order

The Tribunal clarified that the revival of the Corporate Debtor through a scheme of compromise or arrangement under Section 230 of the Companies Act, 2013 remains open during the first 90 days from the date of the liquidation order, in line with Regulation 2B of the Liquidation Regulations.

Brief Facts

Go Airlines (India) Ltd. (“Corporate Debtor”), incorporated on 29.04.2004, was engaged in the airlines business and had been running the low cost airlines under the brand name “GoAir” for the last 17 years. It was renamed to “GoFirst”.

Since the year 2022, the Corporate Debtor started defaulting towards payment to vendors and aircraft lessors. Thirty-four percent of aircraft were grounded in the year 2022. The Corporate Debtor stopped operations and passed a Resolution to file an Application before the NCLT, New Delhi under Section 10 of the Insolvency and Bankruptcy Code, 2016 (“IBC”). The Section 10 Application was allowed by the NCLT on 10.05.2023.

The Committe of Creditors (“CoC”) on 23.07.2024 resolved to liquidate the Corporate Debtor. The CoC found that no compliant Resolution Plan have been received. The Resolution for liquidation of the Corporate Debtor was passed with 100% vote share.

The NCLT by the impugned order dated 20.01.2025 allowed the Liquidation application and appointed Mr. Dinkar T Venkatasubramanian as Liquidator. The Appeals were filed challenging the impugned order.

Submissions

Shri Krishnendu Dutta, Senior Counsel for the Appellant, submitted that liquidation of the Corporate Debtor ought to be a measure of last resort and that all possible steps must be taken to explore the revival of the Corporate Debtor as a going concern. He relied upon Regulation 32 and 32A of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, to contend that the Liquidator is under an obligation to first endeavor the sale of the Corporate Debtor or its business as a going concern. He placed reliance on the judgment of the Supreme Court in Arun Kumar Jagatramka v. Jindal Steel and Power Limited & Anr. to emphasize that Regulation 32A(1) reflects the legislative importance placed on preserving the Corporate Debtor as a going concern.

Shri Ritin Rai, Senior Counsel for the Respondent No.1 (Liquidator), submitted that no compliant Resolution Plan was received during the CIRP, and hence, the CoC, in its commercial wisdom and with 100% voting share, resolved to proceed with the liquidation of the Corporate Debtor.

Observations

The Tribunal held that the decision of the CoC to liquidate the Corporate Debtor was clearly in exercise of powers vested in the CoC under Section 33(2).

The Tribunal noted that Regulation 39C provides for 'Assessment of sale as a going concern'. Regulation 39C(1) requires that the CoC while deciding to liquidate the Corporate Debtor, may recommend that the Liquidator first explore sale of the Corporate Debtor as a going concern under Regulation 32 (e) of IBBI (Liquidation Process) Regulation 2016 or sale of the business of the Corporate Debtor as a going concern.

The Tribunal held that the Resolution had been passed by the CoC after considering all relevant facts and statutory provisions, including Regulation 39BA and 39C.

The Tribunal placed reliance upon the judgment in Arun Kumar Jagatramka vs. Jindal Steel and Power Ltd. and Ors., where the Supreme Court held that the amendment made in Section 230 of the Companies Act, which provides for compromise and arrangement, can be proposed by the Liquidator appointed under the IBC. Regulation 2B in the Liquidation Process Regulation added subsequently provided for submission of scheme of compromise and arrangement to the Liquidator.

“There can be no quarrel to the proposition …. that revival of the CD can also be done by mode of compromise and arrangement.”, the Tribunal held.

The Tribunal dismissed the appeal subject to liberty to the Appellant to submit a scheme for compromise and arrangement as per Regulation 2B of the Liquidation Process Regulation. The Tribunal stated that the compromise or arrangement can be considered within 90 days from the date of the liquidation order dated 20.01.2025 i.e. until 20.04.2025.

Case Title: Busy Bee Airways Pvt. Ltd. vs. Dinkar T Venkatasubramanian, Liquidator, Go Airlines (India) Ltd. & Ors.

Case Number: Company Appeal (AT) (Insolvency) No.124 of 2025 with Company Appeal (AT) (Insolvency) No.175 of 2025 with Company Appeal (AT) (Insolvency) No.244 of 2025

For Busy Bee Airways Pvt. Ltd.: Mr. Krishnendu Dutta, Sr. Advocate with Mr. Apoorv Agarwal, Ms. Prachi Darji, Ms. Saloni Singh, Ms. Alina Mathew, Mr. Tushar Gadia, Ms. Ritika Prasad, Mr. Kamakshraj Singh and Mr. Abhiraj Das, Advocates.

For Respondents : Mr. Ritin Rai, Sr. Advocate with Ms. Pratiksha Mishra, Mr. Shreyas Endupuganti, Advocates for Liquidator, Go Airlines (India) Ltd.

For Bhartiya Kamgar Sena Mumbai: Ms. Priya Singh, Mr. Gaurav Singh and Mr. Bhanukaran Singh Jodha, Advocates.

For Capt. Arjun Dhawan: Ms. Priya Singh, Mr. Gaurav Singh, Mr. Bhanukaran Singh Jodha, Mr. Mrinal Dave and Ms. Shriya Agarwal, Advocates.

Mr. Dheeraj Nair, Mr. Angad Baxi, Ms. Vishrutyi Sahani and Ms. Fatema Kachewala, Advocates for CoC.

Date of Order: 04.04.2025