NCLT New Delhi: NCLT Rejects Insolvency Petition Filed By Wilmington Trust Against Spicejet Ltd.
The National Company Law Tribunal ('NCLT') New Delhi, comprising Justice Shri Mahendra Khandelwal (Judicial Member) and Shri Rahul Bhatnagar (Technical Member) has declined Wilmington Trust's application to initiate the Corporate Insolvency Resolution Process ('CIRP') against SpiceJet Limited. The CIRP application has been rejected on the premise that for the Insolvency and Bankruptcy...
The National Company Law Tribunal ('NCLT') New Delhi, comprising Justice Shri Mahendra Khandelwal (Judicial Member) and Shri Rahul Bhatnagar (Technical Member) has declined Wilmington Trust's application to initiate the Corporate Insolvency Resolution Process ('CIRP') against SpiceJet Limited. The CIRP application has been rejected on the premise that for the Insolvency and Bankruptcy Code, 2016 ('IBC'), a clear distinction is required between the Owner, Lessor, Assignee, Trustee, to being recognized as Operational Creditor in terms of provision of IBC.
Background Facts:
On 26.05.2023, Wilmington Trust SP Services (Dublin) Limited (Operational Creditor) filed a CIRP application against SpiceJet Limited (Corporate Debtor) under Section 9 of the IBC. The application has been filed for a total amount due to be UD$11,184,198. No express date of default is mentioned as the debt became due and payable on different dates in respect of several invoices raised by the Operational Creditor on different dates.
NCLT Verdict:
The NCLT New Delhi dismissed the CIRP and held that for the purposes of IBC, a clear distinction is required between the Owner, Lessor, Assignee, Trustee, with respect to being recognized as Operational Creditor in terms of provision of IBC.
The Directorate General of Civil Aviation had for sake of convenience in day to day business operations with various authorities in India mentioned them as Lessor/Owner without clarifying that they are trustees.
It pointed out that the Applicant's claim is of a Trustee or Lessor on the basis of the Lease Agreement with the Corporate Debtor for the lease of one Boeing 737-800 Aircraft to the Corporate Debtor. However, the Lease Agreement records that Wilmington is “not acting in its individual capacity but solely as a trustee”. Wilmington throughout was not acting in its individual capacity, but as a trustee.
The Tribunal noted that an Operational Creditor is a person to whom an operational debt is owed and to whom an operational debt is legally assigned or transferred. It observed that the definition clause of the Lease Agreement defines “Trust Agreement” as a “the trust agreement entered into between Wilmington (as trustee) and Participant (as trustor) establishing Lessor. Therefore, being a Trustee, Wilmington, even in its individual capacity, does not qualify to be an “Operational Creditor”.
Further, presently, the Lease was amended whereby it is mentioned that “…original beneficial owner under the Trust Agreement, that is, BOC Aviation (Ireland) Limited ('BOCA'), has sold its beneficial interest in the Aircraft and transferred its interest in the Trust Agreement to Klaatu Aircraft Leasing (Ireland) Ltd.. ('Klaatu')” Thus, proving that the Operational Creditor is not vested with the beneficial interest qua the aircraft and the same has been transferred from BOCA to Klaatu, now Aircastle (Ireland) Ltd. (“Aircastle”).
The invoices also show that the payments were owed to Klaatu (Aircastle) and not the Operational Creditor. No debt has been evidenced as per Section 5(20) of IBC and neither the operational debt is owed to the instant applicant, nor it has been legally assigned or transferred to the instant applicant. Thus, the Applicant is not a 'Operational Creditor'.
NCLT observed that IBC proceedings being summary in nature, NCLT cannot adjudicate the genuineness of the Lease document. Further, It is a settled law that ownership of the Trust property is vested in the beneficiary and not in the trust or trustees.
In conclusion, NCLT New Delhi observed that the Applicant is a trustee and neither in its individual capacity nor the beneficiary of the transaction, thus, no documents substantiate the Applicant's claim as an assignee or transferee and does not constitute 'Operational Creditor'. Thus, the CIRP petition is not maintainable.
Case Title: Wilmington Trust SP Services (Dublin) Ltd. vs. SpiceJet Ltd.
Case No.: CP IB NO. 349/(ND)/2023
Counsel for Applicant: Mr. Ritesh Singh, Mr. Ajay Kumar, Mr. Navneet K. Singh, Ms. Anchal Nanda, Mr. Hetram Bishnoi, Advs.
Counsel for Respondent: Mr. Krishnendu Datta, Sr. Adv. with Mr. Sanjay Gupta, Ms. Sharmistha Ghosh, Mr. Rajat Sinha, Advs.