NCLT Bengaluru Admits Charter Aircraft Service Provider 'Deccan Charters' Into Insolvency
The National Company Law Tribunal (“NCLT”), Bengaluru Bench, comprising of Shri K. Biswal (Judicial Member) and Shri Manoj Kumar Dubey (Technical Member), has admitted Deccan Charters Pvt. Ltd. into Corporate Insolvency Resolution Process (“CIRP”) under IBC, over a default of Rs. 9,82,24,077/-. Mr. Manish Kumar has been appointed as the Interim...
The National Company Law Tribunal (“NCLT”), Bengaluru Bench, comprising of Shri K. Biswal (Judicial Member) and Shri Manoj Kumar Dubey (Technical Member), has admitted Deccan Charters Pvt. Ltd. into Corporate Insolvency Resolution Process (“CIRP”) under IBC, over a default of Rs. 9,82,24,077/-. Mr. Manish Kumar has been appointed as the Interim Resolution Professional.
Deccan Charters is a Bengaluru based company which operates chartered helicopters and fixed wing aircrafts and also provides services such as aircraft maintenance, aircraft management and aviation training.
Background Facts
Deccan Charters Pvt. Ltd. (“Corporate Debtor”) is engaged in the business of chartered helicopters and fixed wing aircrafts, aircraft maintenance, aircraft management and aviation training. The Corporate Debtor is promoted by Captain G.R. Gopinath.
In 2017, Shaishav Shah & Family (GSEC) and Himanshu Shah & Family (Monarch Group) expressed their interest to participate in Commuter Airline Business of the Corporate Debtor, known as 'Air Deccan'.
Accordingly, GSEC-Monarch formed a Joint Venture company named as GSEC Monarch Deccan Aviation Pvt. Ltd. (“GMDAPL”).
In 2018, the Corporate Debtor availed a loan of Rs. 5 Crores from Krone Finstock Pvt. Ltd. (“Financial Creditor”). The Loan Agreement stated that the borrower shall not assign any of its obligation without prior approval of the Lender.
In 2019, the Corporate Debtor and GMDAPL entered into a Business Transfer Agreement (“BTA”). Under the BTA, GMDAPL agreed to undertake 100% of assets and liabilities of “Air Deccan” and settle the loan availed by the Corporate Debtor.
On 04.05.2022, the Financial Creditor filed an application under Section 7 of IBC seeking initiation of Corporate Insolvency Resolution Process (“CIRP”) against the Corporate Debtor, over a default of Rs. 9,82,24,077/-.
The Corporate Debtor argued that the debt repayment obligation has been transferred to GMDAPL as per the BTA. The Corporate Debtor had intimated the Financial Creditor regarding the transfer of business to GMDAPL and no objections were received. Therefore, the transfer of business and obligations is deemed to be approved by the Financial Creditor. The Corporate Debtor further argued that the NCLT cannot adjudicate upon contractual disputes between the parties.
NCLT Verdict
The Bench observed that the case did not concern adjudication of dispute pertaining to validity and cancellation of the Business Transfer Agreement. Further, the existence of a dispute is immaterial in proceedings under Section 7 of IBC.
It was noted that the Corporate Debtor has invoked the arbitration clause in the Loan Agreement and has filed an application before the High Court for appointment of Arbitrator. The Bench held that the existence of an arbitration clause in Loan Agreement is not an impediment in admission of a petition under Section 7 of IBC.
The Bench has initiated CIRP against the Corporate Debtor and Mr. Manish Kumar has been appointed as the Interim Resolution Professional.
Case title: Krone Finstock Private Limited v Deccan Charters Private Limited
Case No.: CP (IB) No.145/BB/2022
Counsel for Petitioner: Shri Vijay B.N.H., Adv
Counsel for Respondent: Shri Anandodaya Mishra., Adv
Click Here to Read/Download Order