Foreign Court Order Cannot Withhold Insolvency Process; NCLT Admits SBI's Resolution Application Against Jet Airways [Read Order]
The National Company Law Tribunal Mumbai bench on Thursday admitted the insolvency petition filed by State Bank of India against grounded airlines company Jet Airways.The top public sector bank of India filed the application under Section 7 of the Insolvency and Bankruptcy Code stating that the airlines had defaulted payment of nearly Rs. 469 crores.Admitting the plea against Jet Airways,...
The National Company Law Tribunal Mumbai bench on Thursday admitted the insolvency petition filed by State Bank of India against grounded airlines company Jet Airways.
The top public sector bank of India filed the application under Section 7 of the Insolvency and Bankruptcy Code stating that the airlines had defaulted payment of nearly Rs. 469 crores.
Admitting the plea against Jet Airways, the NCLT bench presided by V P Singh and Ravikumar Duraiswamy appointed Ashish Chhawchharia as Interim Resolution Professional. The IRP has been told to take over the assets of the carrier. The tribunal also asked the IRP to submit a status report on the resolution process every fortnight. The first status report is to be submitted on July 5, 2019.
The Tribunal observed that the matter was of "national importance" and the revival at the earliest of the corporate debtor, which has more than 20,000 employees, was "essential".
Notably, the NCLT also rejected an intervention application filed by a trustee appointed by a Netherlands Court, who pointed out that Noord Holland District Court had passed an order of bankruptcy against Jet on May 21. The intervenor submitted that it has appointed the Indian law firm, Kesar Dass B. & Associates, to assist in taking control of the Corporate Debtor and its assets in India under the bankruptcy law on the Netherlands and therefore sought for dropping the resolution process here, to avoid multiplicity of proceedings.
Rejecting the intervention, the Tribunal said that Sections 234-235 of IBC, 2016, which deal with cross border insolvency process, was yet to be notified.
"Therefore, we as the Adjudicating Authority are not empowered to entertain the order passed by the foreign jurisdiction in the case, where the registered office of the Corporate Debtor company is situated in India, and the jurisdiction specifically lies with this court. Therefore, we cannot pass any order to withhold the Insolvency proceedings pending in our court based on the order of insolvency passed by any other jurisdiction, which is not authorised to pass order for the company, which is registered in India and the jurisdiction solely lies with this court".
It was also added that in the absence of reciprocal arrangements under the yet to be notified Sections 234-235 of IBC, the foreign court could not have declared an India-registered company bankrupt, and hence the order of Netherlands court was a nullity.
It said :
"In this case, the Indian Government has no such reciprocal arrangement with the Government of Netherland. Therefore, none of the courts has any jurisdiction to pass an order under IBC, where the assets and properties of the Corporate Debtor are situated in a country outside their country".
"The question of running two parallel proceedings does not arise. The order passed by Noord Holland District Court, Netherland for the company registered in India is nullity ab-initio".
Jet's total debt to banks is Rs 8,700 crore. It owes another Rs 10,000 crore to operational creditors and Rs 4,000 crore in salaries and statutory dues.
It stopped operations in April.
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