NCLT Mumbai (20.06.2019) in State Bank of India v/s Jet Airways (India) Limited [CP 2205 (IB)/MB/2019,] AA while admitting the application under section 7 of the Code, observed as under;
# 21. ……….It is also important to note that there is no provision and mechanism in the I&B Code, at this moment, to recognise the judgment of an insolvency court of any Foreign Nation. Thus, even if the judgment of Foreign Court is verified and found to be true, still, sans the relevant provision in the I&B Code, we cannot take this order on record.
# 27. ….. 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.
# 29. 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.
# 31. 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.
Excerpts of the order;
# 1. The Company Petition bearing CP No. 2205/2019 is filed by State Bank of India, Petitioner / Financial Creditor under Section 7 of Insolvency and Bankruptcy Code, 2016 (I&B Code) for initiation of Corporate Insolvency Resolution Process (CIRP) against Jet Airways (India) Limited, Corporate Debtor /Respondent.
# 7. The Petitioner has submitted that the aggregate amount of default as on 15.06.2019 is ₹462,39,38,604.55. This figure represents the total overdrawn amount over the sanctioned limit of the cash credit facilities granted by the Financial Creditor to the Corporate Debtor as on 15.05.2019. The total cash credit facilities granted and utilised by the Corporate Debtor as on 15.05.2019 was to the tune of ₹967,60,38,604.55. The aggregate Cash Credit Sanctioned limit in respect of the Cash Credit Facilities granted to the Corporate Debtor is to the tune of ₹505.21 Cr. Accordingly, the Default amount is stated to be arrived at by reducing the aggregate cash credit sanctioned limits from this amount, i.e.Rs 976,60,38,604.55.
# 8. It is stated that the default has occurred because these amounts have remained overdrawn for more than 30 days (i.e. over the sanctioned working capital limits), and 15.06.2019 has been taken as the date of crystallisation of this default (i.e. 30 days from 15.05.2019).
# 10. The Petitioner has annexed repayment history report of the Corporate Debtor issued by Central Repository of Information on Large Credits (CRILC) dated 31.05.2019 to show the default in repayment of loan amount by the Corporate Debtor.
# 16. ……. We are also informed that most of the Key Managerial Personnel of the Corporate Debtor has resigned in May 2019 and the Board of Directors is not functioning. In such circumstances, no one has appeared on behalf of the Corporate Debtor. The corporate debtor has not filed any objection despite service of notice.
# 19. The total amount of debt granted to the Corporate Debtor by the Petitioner alone stands at ₹1795.21 Cr. There are several other Financial Creditors who have also granted a loan to the Corporate Debtor. Thus, the Corporate Debtor has a huge outstanding Debt.
# 21. During the hearing on 20.06.2019, this bench was apprised that insolvency proceedings against the Corporate Debtor have already been initiated and a translated copy of the judgment of NOORD-HOLLAND DISTRICT COURT dated 21.05.2019 was placed before us by the Practising Company Secretary appearing on behalf of the Foreign Court appointed Administrator in Bankruptcy. It is to be noted that the said Judgment is not submitted on affidavit neither the Original/Certified copy of the Judgment is submitted along with the translated copy. It is also important to note that there is no provision and mechanism in the I&B Code, at this moment, to recognise the judgment of an insolvency court of any Foreign Nation. Thus, even if the judgment of Foreign Court is verified and found to be true, still, sans the relevant provision in the I&B Code, we cannot take this order on record.
# 22. It is pertinent to mention that Mr. R. Mulder, Administrator in Bankruptcy of Jet Airways (India) Ltd in Noord Holland District Court has filed a written submission in the capacity of Intervenor stating that vide judgement dated 21.5.2019, Hon’ble Noord Holland District Court, Trade, Sub-district and Insolvency, passed an order of bankruptcy against Jet Airways (India) Limited (hereinafter, "Corporate Debtor") in Petition Number: C/ 15/288017/ FT RK 19/ 540R as per the provisions of Bankruptcy Act prevailing in the Netherlands. The Hon'ble Court appointed Mr R. Mulder as the Administrator in bankruptcy of the Corporate Debtor by the said Judgment. A copy of the said judgement (translated. version) is enclosed.
# 23. It is further contended by the applicant Intervener that on the appointment as the Administrator of the Corporate Debtor, Mr R. Mulder informed the Corporate Debtor and the Chairman, State Bank of India of the initiation of bankruptcy proceedings against the Corporate Debtor. Mr Mulder has appointed the Indian law firm, Kesar Dass B. & Associates, as his legal advisor to assist him in India in taking control of the Corporate Debtor and its assets, under the bankruptcy law on the Netherlands. The initiation of said bankruptcy proceedings has been widely reported by the Indian media.
# 24. It is further contended by the Intervener that the Counsels of the Administrator apprised this Tribunal regarding the existing order of Insolvency and appointment of Administrator. The contention of the Administrator is as under:
a. Admission of application(s) and passing order of commencement of insolvency against the Corporate Debtor when the insolvency process has already been commenced against the Corporate Debtor one month ago in another jurisdiction will create a peculiar situation of two insolvency proceedings running in parallel against the same Corporate Debtor leading to complications and delays in resolution Of insolvency.
b. The Administrator appointed by a competent court in the Netherlands and Interim Resolution Professional appointed by the Adjudicating Authority will compete to take control and possession of assets, in India and other jurisdictions, which is neither in the interest of smooth functioning of the insolvency process nor in the interest of the stakeholders including the creditors.
c. The above situation will create uncertainty and unpredictability of the outcome and impair the chances of attracting potential resolution applicants for the Corporate Debtor.
d. Even though the provisions of law, Section 234 and Section 235 of the IBC have not been given effect to by the Central Government, there is no bar or prohibition under the IBC for the Adjudicating Authority recognising the insolvency proceedings in a foreign jurisdiction.
e. The provisions of sections 13, 14 and 44-A of the Code of Civil Procedure, 1908 do not apply to insolvency proceedings. They deal with the procedure of recognition and enforcement of foreign judgments/ decree/orders etc. An insolvency proceeding is not a money decree which requires recognition and enforcement. It is also not against the public policy of India as the Administrator will act by the substantive principles of IBC in his dealing with the insolvency process of the Corporate Debtor.
f. The Judgment dated 21 May 2019 has been passed by the court of competent jurisdiction is final and binding on the Corporate Debtor and lenders. Despite notice (supra), the Corporate Debtor and State Bank of India have not filed any appeal against the judgement, till date.
g. Two parallel proceedings are likely to obstruct smooth and uninterrupted, sustainable and certain proceedings. Also, they are likely to stand in the way of expeditious outcome of the process.
# 25. The objections raised by the Intervener is based on the order passed by the Noord Holland District Court, Netherland.
# 26. It is pertinent to mention that Section 234-235 of IBC, 2016 deals with the matter regarding the agreement with foreign countries and the letter of request to a country outside India in the insolvency Resolution Process where the assets of the corporate debtor exist outside India.
# 27. The above provision of IB Code is yet to be notified hence not enforceable. 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.
# 28. The contention of the Intervener is that peculiar situation will arise by running two parallel proceedings against the same corporate debtor, and it will lead to complications and delays in resolution of insolvency is not sustainable. It is to be clarified that the order of the foreign court is a nullity in the eye of law and such order cannot be given effect.
# 29. 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.
# 31. 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.
# 32. Based on the objections filed by the Intervener, proceedings of Insolvency, in this case, can’t be kept pending.
# 33. It is also important to the point out that this matter is of National Importance. The Corporate Debtor company has more than 20,000 employees, and its revival at the earliest by a viable Resolution Plan is essential. Therefore, the proceeding of this court cannot be stayed or withhold even for a single day based on the order passed by any foreign court, which is a nullity in the eye of law.
# 37. In light of the above scheme and objects of the I&B Code and the stakes involved in the Corporate Debtor, the prompt disposal of this application is essential, and any further delay or deferment, in this case, would be against the objective of the I&B Code.
# 38. The Petitioner has proposed the name of Mr Ashish Chhawchharia, a registered insolvency resolution professional having Registration Number [IBBI/IPA-001/IP-P00294/2017-18/10538] as Interim Resolution Professional, to carry out the functions as mentioned under I&B Code, and given his declaration; no disciplinary proceedings are pending against him.
# 39. The CP 2205/2019 filed under sub-section (2) of Section 7 of I&B Code, 2016 is complete. The existing financial debt of more than rupees one lakh against the corporate debtor and its default is also proved. Accordingly, the petition filed under section 7 of the Insolvency and Bankruptcy Code for initiation of corporate insolvency resolution process against the corporate debtor deserves to be admitted.
ORDER
This petition filed under Section 7 of I&B Code, 2016, filed by State Bank of India, Financial Creditor / Petitioner, under section 7 of I&B Code against Jet Airways (India) Limited, Corporate Debtor for initiating corporate insolvency resolution process at this moment admitted.
The counsel appearing for the Operational Creditor was present during the hearing today and has expressed his support and consent to the CP 2205/2019 being admitted under section 7of I&B Code. In view order for Admission of CP 2205/2019 under section 7 of I&B Code, the CP 1968/2019 and CP 1938/2019 filed under section 9 of I&B Code becomes infructuous and therefore dismissed. The Petitioners in CP 1968/2019 and CP 1938/2019 are at liberty to file their claim before the resolution professional appointed in CP 2205/2019.
We further declare moratorium u/s 14 of I&B Code with consequential directions as mentioned below:
I. That this Bench as a result of this prohibits:
a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority;
b) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein;
c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;
d) the recovery of any property by an owner or lessor where such property is occupied by or in possession of the corporate debtor.
II. That the supply of essential goods or services to the corporate debtor, if continuing, shall not be terminated or suspended or interrupted during the moratorium period.
III. That the provisions of sub-section (1) of Section 14 of I&B Code shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator.
IV. That the order of moratorium shall have effect from the date of this order till the completion of the corporate insolvency resolution process or until this Bench approves the resolution plan under sub-section (1) of section 31 of I&B Code or passes an order for the liquidation of the corporate debtor under section 33 of I&B Code, as the case may be.
V. That the public announcement of the corporate insolvency resolution process shall be made immediately as specified under section 13 of I&B Code.
VI. That this Bench at this moment appoints Mr Ashish Chhawchharia, a registered insolvency resolution professional having Registration Number [IBBI/IPA-001/IP-P00294/2017-18/10538] as Interim Resolution Professional to carry out the functions as mentioned under I&B Code, the fee payable to IRP/RP shall comply with the IBBI Regulations/Circulars/Directions issued in this regard
# 40. The IRP/RP is further directed to submit his fortnightly Progress report to expedite the CIRP of the Corporate Debtor without delay of even a single day. Considering the matter being of National Importance and the Corporate Debtor has been one of the largest private sector airlines, the huge number of work force of more than 20,000 employees, large number of flights, having international operations and the important sector in which the Corporate Debtor is operating, serving both Domestic and International markets,thus we direct the IRP/RP to make every possible effort to complete the corporate insolvency process at the earliest possible time . We also direct the IRP/RP to take control of all assets of the Corporate Debtor immediately and submits his first progress report by 5.7.2019.
# 41. It is also to be pointed out that that the IBC provision provides for 180 days for completion of the CIRP. But every effort should be made by the IRP/RP, and members of CoC to expedite the matter and try to finalise the resolution plan on the fast track mode and they should not preferably wait for the completion of the statutory period of 180/270 days timeline permissible under IBC.
# 42. IRP is directed to proceed in the matter with immediate effect without being influenced by order of the Noord Holland District Court, Netherland and file the progress report every fortnightly.
------------------------------------------------------
No comments:
Post a Comment