Resolution plan compliance under insolvency law assessed on the relevant date; interim payment default did not justify liquidation.

A resolution plan under the Insolvency and Bankruptcy Code was assessed on the relevant compliance date, and the conditions precedent were found satisfied on the basis of the air operator certificate, slots arrangement, and the contingent nature of international traffic rights. Non-deposit of the amount required under a separate interim arrangement was not treated as proof that the approved plan had failed, and liquidation was declined. The plan was therefore held implementable, and further directions were issued for security over Dubai properties, adjustment of the performance bank guarantee, re-constitution of shareholding, payment of workmen and creditor dues, re-issue of the air operator certificate, and completion of closing formalities.

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Issues: (i) Whether the successful resolution applicant had complied with all conditions precedent under the resolution plan as on 20.05.2022 and whether the order dated 13.01.2023 was liable to be set aside; (ii) Whether non-deposit of Rs.150 crores by 31.01.2024 in terms of the Supreme Court's interim arrangement meant that the resolution plan had failed and liquidation under Section 33(3) of the Insolvency and Bankruptcy Code, 2016 should follow; (iii) What consequential directions were required for implementation of the resolution plan.

Issue (i): Whether the successful resolution applicant had complied with all conditions precedent under the resolution plan as on 20.05.2022 and whether the order dated 13.01.2023 was liable to be set aside.

Analysis: The conditions precedent under Clause 7.6.1 were examined issue-wise. The air operator certificate stood valid when the dispute arose and its issuance, read with the certification process and the contemporaneous record, supported compliance of the business plan requirement. The slots condition was treated as satisfied since the plan did not require restoration of all historic slots and the slots sought for operations had been secured. The international traffic rights condition was held to be contingent on compliance with applicable law and could arise only after recommencement of operations. The lapse of the air operator certificate during prolonged litigation did not undo compliance as on the relevant date.

Conclusion: The finding that the conditions precedent were satisfied was upheld, and the challenge to the order dated 13.01.2023 failed.

Issue (ii): Whether non-deposit of Rs.150 crores by 31.01.2024 in terms of the Supreme Court's interim arrangement meant that the resolution plan had failed and liquidation under Section 33(3) of the Insolvency and Bankruptcy Code, 2016 should follow.

Analysis: The Supreme Court's order dated 18.01.2024 was treated as confined to the temporary arrangement arising from the lenders' affidavit and the permitted substitution of PBG adjustment. It was held that the direction to deposit Rs.150 crores was not an adjudication on the merits of the pending appeal and did not, by itself, establish contravention of the approved resolution plan. Liquidation could not be ordered merely on the basis of failure to comply with that interim arrangement.

Conclusion: The resolution plan was not held to have failed, and no case for liquidation was made out.

Issue (iii): What consequential directions were required for implementation of the resolution plan.

Analysis: Since the plan was found to be validly implementable, further steps were required to complete the implementation framework. The Court directed creation of security over the Dubai properties, adjustment of the performance bank guarantee towards the first tranche payment, re-constitution of shareholding, payment of workmen and creditor dues from the first tranche, re-issue of the air operator certificate, and completion of the closing process within the stipulated time.

Conclusion: The appeals were disposed of with implementation directions, while the impugned order was sustained.

Final Conclusion: The resolution plan was held capable of implementation, liquidation was declined, and all concerned parties were required to take coordinated steps to complete the remaining milestones.

Ratio Decidendi: A resolution plan approved under the Insolvency and Bankruptcy Code, 2016 must be assessed on the relevant compliance date, and subsequent litigation-induced delays or a failure to comply with a separate interim arrangement do not, without more, establish failure of the plan or justify liquidation; instead, the Court may mould relief to secure implementation and revival of the corporate debtor.

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