NCLAT upholds aircraft sale proceeds distribution through escrow account under approved resolution plan

NCLAT dismissed appeal challenging adjudicating authority's orders regarding aircraft sale proceeds and resolution plan approval. The tribunal held that directing sale proceeds to be deposited in escrow account and distributed per approved resolution plan adequately protected all stakeholders' interests. Court rejected appellant's attempt to recover dues outside resolution plan framework. Sale process for three aircraft with existing letters of intent was properly concluded, while process for remaining two aircraft was directed to be reinitiated. Workmen and employees' PF and gratuity dues remained protected under resolution plan provisions.

---

---

Issues Involved:
1. Jurisdiction of Adjudicating Authority under Section 60(5) of IBC.
2. Validity of the sale process of aircrafts initiated by the Monitoring Committee.
3. Rights of workmen and employees regarding unpaid provident fund and gratuity dues.

Summary:

Issue 1: Jurisdiction of Adjudicating Authority under Section 60(5) of IBC
The Appellant contended that the Adjudicating Authority lacked jurisdiction to entertain the application filed by Ace Aviation under Section 60(5) of the Insolvency and Bankruptcy Code (IBC). However, the Tribunal observed that the sale process initiated by the Monitoring Committee was in accordance with the approved Resolution Plan, thus falling within the jurisdiction of the Adjudicating Authority. The application filed by Ace Aviation arose out of the insolvency process, and the Tribunal held that the Adjudicating Authority had the jurisdiction to decide the matter.

Issue 2: Validity of the Sale Process of Aircrafts Initiated by the Monitoring Committee
The Monitoring Committee initiated the sale process for the aircrafts owned by Jet Airways as per the Resolution Plan. The sale process was kept in abeyance by an email dated 11.11.2022. Ace Aviation filed an application to declare the communication keeping the sale process in abeyance as wrongful and to direct the continuation of the sale process. The Tribunal upheld the Adjudicating Authority's order directing the completion of the sale process for three aircrafts for which Letters of Intent (LoIs) were issued and to reinitiate the process for the remaining two aircrafts. The Tribunal found no error in the Adjudicating Authority's decision, emphasizing that delaying the sale would further diminish the value of the aircrafts.

Issue 3: Rights of Workmen and Employees Regarding Unpaid Provident Fund and Gratuity Dues
The Appellant, representing the workmen and employees, sought a stay on the sale of the Corporate Debtor's assets until their outstanding provident fund and gratuity dues were paid. The Adjudicating Authority directed that the proceeds from the sale of the aircrafts be deposited in an escrow account and dealt with in accordance with the approved Resolution Plan, which includes the claims of workmen and employees. The Tribunal upheld this decision, noting that the interests of the workmen and employees were protected and their dues would be addressed as per the Resolution Plan.

Conclusion:
The Tribunal dismissed both appeals, affirming the Adjudicating Authority's orders dated 17.10.2023 in IA Nos. 3747 of 2022 and 883 of 2023. The sale process of the aircrafts was to be completed, and the proceeds were to be deposited in an escrow account for distribution in accordance with the approved Resolution Plan. The Tribunal found no grounds to interfere with the Adjudicating Authority's decisions.

---