The owner and licensor of the building that houses Jet Airways (India) Ltd.’s corporate headquarters in Mumbai’s Andheri moved the National Company Law Tribunal today to get the property back.
Luckystar Property Holdings sought directions to prevent the airline and the resolution professional from “interfering” with its repossession of the office property.
This comes after tribunal admitted an insolvency petition against the cash-strapped airline on June 20 and imposed a moratorium on the institution of suits or proceedings and recovery of dues against Jet Airways.
The tribunal will hear the matter on Aug. 8.
Janak Dwarkadas, the counsel representing Lucky Star, argued:
- The building currently housing the headquarters of Jet Airways was licensed by Luckystar to Jet Airways under a leave and license agreement, entailing payment of monthly license fees by the airline.
- Jet was bound to make monthly payments for license fees under the agreement failing which the agreement would stand automatically cancelled. Jet failed to make timely payments for the license fees for two months due to which a notice was issued on May 7 with a thirty-day payment deadline.
- Jet failed to make the payments on or before June 7, following which Luckystar had to cancel the leave and license agreement. Thus, Jet ceased to be licensee prior to the imposition of the moratorium period. However, it has continued to deny possession of the office space to Luckystar.
- Under the insolvency code, a resolution professional is required to take control of all movable and immovable assets belonging to the corporate debtor after initiation of corporate insolvency resolution process. However, such assets don’t include any property belonging to a third party or a property held in trust by the corporate debtor. Possession of any asset must be a rightful possession.
- Exercising rights beyond the subsistence of license agreement and continuing with unlawful possession of the asset would amount to trespass . Rights of property owners are affected due to this.
- The order of moratorium imposed by the tribunal wouldn’t affect Luckystar’s rights and ownership on the licensed office space. Appropriation of property belonging to a third party isn’t an objective of the Insolvency and Bankruptcy Code.
- Luckystar had to set off Jet’s security deposit against its pending dues for license fees. Therefore denial of possession by Jet and its RP on the grounds of pending refund of security deposit by Luckystar is incorrect.
A counsel representing Jet Airways’ employee associations sought directions of the tribunal for payment of one month’s salary to its employees. In response, the NCLT directed the resolution professional to discuss payment of employees’ salaries with the committee of creditors, stating the payment of salary is important for survival of Jet and its employees.
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