NCLAT upholds resolution plan implementation despite lapsed Air Operation Certificate and missed deposit deadline

The NCLAT upheld the Adjudicating Authority's order dated 13.01.2023 confirming that the Successful Resolution Applicant (SRA) fulfilled condition precedents under Clause 7.6.1 of the Resolution Plan. The tribunal rejected the appellant's contention that the lapse of Air Operation Certificate on 20.05.2022 invalidated the plan, noting the certificate was valid when the implementation application was filed and order passed. The SRA's failure to deposit Rs.150 crores by 31.01.2024 as directed by SC only meant forfeiture of benefits from appellant's offer, not plan failure. The tribunal directed implementation within 90 days, including charge creation over Dubai properties, payment to workers/employees, and re-issuance of Air Operation Certificate.

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Issues Involved:

1. Whether the Successful Resolution Applicant (SRA) completed all condition precedents on 20.05.2022.
2. Whether condition precedents as per Clause 7.6.1 of the Resolution Plan were achieved by the SRA.
3. Whether the order dated 13.01.2023 by the Adjudicating Authority is sustainable.
4. Impact of the lapse of the Air Operation Certificate on the implementation of the Resolution Plan.
5. Whether the direction of the Supreme Court to infuse Rs.150 crores by 31.01.2024 was based on the Appellant's affidavit dated 16.08.2023.
6. Consequences of the SRA's failure to infuse Rs.150 crores by 31.01.2024.
7. Grounds for directing the liquidation of the Corporate Debtor under Section 33(3).
8. Way forward towards implementation of the Resolution Plan.

Summary:

Issue 1, 2, 3, and 4:

The Tribunal upheld the order dated 13.01.2023 by the Adjudicating Authority, confirming that the SRA completed all condition precedents on 20.05.2022. The conditions included validation of the Air Operator Certificate (AOC) by DGCA and MoCA, submission and approval of the business plan, slots allotment approval, international traffic rights clearance, and approval of demerger of ground handling business. Despite the lapse of the AOC, it was valid when the order was passed, and the lapse was due to the Lenders' obstructionist attitude.

Issue 5, 6, and 7:

The Supreme Court's direction to infuse Rs.150 crores by 31.01.2024 was based on the Appellant's affidavit dated 16.08.2023. The SRA's failure to infuse the amount does not lead to the failure of the Resolution Plan or liquidation of the Corporate Debtor. The Tribunal rejected the Appellant's contention that non-deposit of Rs.150 crores should lead to liquidation, stating that the Appeals must be decided on merits.

Issue 8: Way Forward

1. Exclusion of Time: The Tribunal directed exclusion of time till the date of the judgment for achieving the implementation of the Resolution Plan.
2. Documentation of Security of Dubai Property: The Lenders and SRA were directed to complete the creation of charge over Dubai properties within 30 days, with SRA bearing all expenses.
3. Completion of Payment of Rs.350 Crores: The Tribunal held that SRA completed the first tranche payment of Rs.350 crores by adjusting the Rs.150 crores PBG.
4. Share Reconstitution: Steps for share reconstitution as per the Resolution Plan were directed to be completed forthwith.
5. First Tranche Payment to Creditors: The Chairman of the Monitoring Committee was directed to make disbursement of the first tranche payment to creditors, including workmen and employees, within 30 days after the creation of security.
6. Workmen Dues: The SRA undertook to make payment of Rs.12 crores towards provident fund dues upfront along with payments under the Plan.
7. AOC: The SRA was directed to apply for re-issue of the AOC, with the DGCA and MoCA instructed to expedite the process.
8. Closing Date: The closing date was set as the 90th day from the judgment, on which the Corporate Debtor would be handed over to the SRA.

Role of MC Lenders:

The Tribunal criticized the Lenders for their obstructionist attitude and failure to take positive steps for the implementation of the Resolution Plan, emphasizing the need for a collaborative approach to ensure the revival of the Corporate Debtor and the payment of dues to workmen and employees.

Conclusion:

The Tribunal disposed of the Appeals by upholding the order dated 13.01.2023, directing steps for the creation of security, adjustment of PBG, share reconstitution, and payment to creditors and workmen, setting a closing date for the handover of the Corporate Debtor to the SRA.

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