The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), while adjudicating an appeal filed in Punjab National Bank v Mr. Ashish Chhawchharia & Ors., has held that the Resolution Professional had incorrectly reduced the Punjab National Bank's admitted claim of Rs. 956 Crores to...
The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), while adjudicating an appeal filed in Punjab National Bank v Mr. Ashish Chhawchharia & Ors., has held that the Resolution Professional had incorrectly reduced the Punjab National Bank's admitted claim of Rs. 956 Crores to Rs. 752 Crores. The Bench has set aside the reduction of claim. Further, the Bench has directed the Successful Resolution Applicant of Jet Airways (India) Ltd. to bear the liability of paying additional amount to PNB from the amount reserved under Resolution Plan.
Background Facts
State Bank of India had filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 ("IBC"), seeking initiation of Corporate Insolvency Resolution Process ("CIRP") against Jet Airways (India) Ltd. ("Corporate Debtor"). The Corporate Debtor was admitted into CIRP on 20.06.2019.
Punjab National Bank ("Appellant") being a financial creditor of the Corporate Debtor, had filed its revised claim of Rs. 956.21 Crores with the Resolution Professional. The said claim was admitted by the Resolution Professional on 07.01.2020. However, the Resolution Professional reduced the claim to Rs. 747.94 Crores on 22.09.2020. The reduction was done on the ground of invocation of Shares of the Corporate Debtor Pledged to the Appellant.
Thereafter, Jalan Fritesch Consortium had submitted a Resolution Plan for the Corporate Debtor and the Committee of Creditors (CoC) had approved the Plan. The Appellant filed an interim application before the Adjudicating Authority, praying for a direction to the Resolution Professional to reverse its decision of reducing the Appellant's claim. Nonetheless, before the said interim application could be decided, the Adjudicating Authority on 22.06.2021 approved the Resolution Plan of Jalan Fritesch Consortium. The Appellant filed an appeal before the NCLAT seeking either setting aside of the order dated 22.06.2021; or to reinstate the erroneously reduced 'admitted claim' of the Appellant by the Resolution Professional.
Contentions Of The Appellant
The Appellant argued that after the Resolution Professional had admitted its claim of Rs. 956 crores as on 20.08.2019, it could not have reduced the same to Rs. 754 crores on 25.09.2020. The revision of claim could not have been done after submission of the final Resolution Plan by both prospective Resolution Applicants. The Resolution Professional had no jurisdiction to review and revise an admitted claim.
Contentions Of Resolution Professional
The Resolution Professional argued that the Appellant being an Assenting Financial Creditor to the approved Resolution Plan, cannot be allowed to challenge the approval of the Resolution Plan. The Appellant voted for Resolution Plan, wherein Rs.747.94 crores has been admitted as Appellant's claim. The Appellant having exercised its commercial wisdom in approving the Plan, was estopped from questioning the approved Resolution Plan.
Decision Of The NCLAT
The Bench observed that the Appellant never acquiesced to the reduction of its claim. Appellant was throughout agitating the same before the CoC and had filed a separate Application before NCLT which remained pending. Therefore, no estoppel can be pressed against the Appellant in so far as reduction of claim by Rs.202.90 crores is concerned.
The Bench directed the following:
- "It is held that Appellant is entitled to their accepted admitted claim of Rs.956.21 crores. Reduction of their claim by Resolution Professional is set aside.
- 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.
- The liability of payment of additional amount to the Appellant in consequence of directions as above, shall be borne by Resolution Applicant from amount reserved under the Resolution Plan."
The appeal was accordingly disposed off.
Case Title: Punjab National Bank v Mr. Ashish Chhawchharia & Ors.
Case No.: Company Appeal (AT) (Insolvency) No. 584 of 2021
Counsel For Appellant: Mr. R. Venkatramani, Sr. Advocate with Mr. Piyush Beriwal, Mr. Ankit Raj, Chitvan Singhal, Ms. Divya Srivastava, Mr. Praveen Vignesh, Advocates for PNB.
Counsel for Applicants in I.A. 2720/21: Mr. Sunil Aggarwal, Sr. Standing Counsel Mr. Tushar Gupta, Jr. Standing Counsel Mr. Parinay Gupta, Advocate.
Counsel for Respondents: Mr. Malhar Zatakia, Mr. Dhiraj Kumar Totala, Ms. Aditi Bhansali, Ms. Tanya Chib and Mr. Parimal Kashyap, Advocates for RP (AZB & Partners) Mr. Raghav Chadha, Advocate. Mr. Abhinav Vashisht, Sr. Advocate with Ms. Vishrutyi Sahni, Ms. Aishna Jain, Advocates for R-3.
Mr. Krishnendu Datta, Sr. Advocate with Mr. Rajat Sinha, Mr. Burjis Shabir, Ms. Srishty Kaul, Mr. Anant Singh, Mr. Aashish Vats, Advocates for SRA.
Mr. Raunak Dhillon, Ms. Isha Malik and Ms. Niharika Shukla, Advocates for Respondent No.2. Mr. Sunil Aggarwal, Mr. Tushar Gupta, Mr. Sumit Kr. Advocates.