Jet Airways Insolvency: NCLT Denies Workers Unions’ Plea
The National Company Law Tribunal has rejected applications of Jet Airways (India) Ltd.’s workers unions seeking a copy of the resolution plan submitted by a consortium led by Dubai-based entrepreneur Murari Lal Jalan and Kalrock Capital.
A bench comprising Janab Mohammed Ajmal and V Nallasenapathy, who heard the case through video conferencing, observed that a resolution plan can only be presented to the creditors’ committee or the adjudicating authority for its approval. Insolvency code doesn’t contemplate sharing of the plan with any other entity, the tribunal said while dismissing the plea.
This order comes after three unions — the National Aviators’ Guild, representing more than 1,000 pilots, Jet Aircraft Maintenance Engineers Welfare Association and the Jet Airways Cabin Crew Association, together representing 70% of the airline’s ground staff — moved the NCLT seeking a stay on any final order until their plea was decided by the tribunal.
Jet Airways was once India’s largest national carrier by market value. A consortium of 26 lenders led by State Bank of India had initiated insolvency proceedings against the airline after it defaulted on its loan obligations. The plea was admitted by the NCLT in June 2019 and Ashish Chawchharia was appointed as its resolution professional. A resolution plan submitted by the Jalan-Kalrock consortium was approved in October last year.
Workers Being Affected Parties Must Get A Copy Of The Plan, Unions Argued
The three unions requested the NCLT to pass an order directing the resolution professional to share the full copy of the resolution plan, along with valuation and other reports prepared by Alvarez and Marsal. Further, they also sought an approval to participate in the proceedings before the tribunal.
They argued that:
- Jet Airways’ resolution professional refused the unions’ plea for a copy of the resolution plan citing confidentiality. Employees of the airlines were interested in its resolution and remained on payroll despite financial hardships.
- As the approval or rejection of the plan may adversely affect the employees, they must be made aware of the plan.
- And lastly, the insolvency code requires dissemination of the resolution plan to the applicants.
Gaurav Joshi, senior advocate representing the resolution professional, argued that the IBC requires the resolution professional to ensure confidentiality of a plan. It doesn’t state that all creditors deserve to be heard during its approval. And lastly, the applications are an attempt to derail the insolvency resolution process of the company.
Citing judgments of the apex court, the tribunal dismissed the unions’ argument and noted that some of them were operational creditors. Being so, their role was very limited in the resolution process and hence, they are not eligible to intervene in the insolvency process.