Punjab National Bank Seeks A Stay On Jet Airways Insolvency Resolution Plan
The National Company Law Appellate Tribunal has agreed to hear the state-run lender’s plea against approval of the airline’s resolution plan, which threatens to delay resumption of its services after nearly two years. The lender’s grouse is a Rs 202-crore reduction from its submitted claim during the insolvency process.
PNB Objects To Reduction Of Claims
The bank, in its petition, told the NCLAT it had first submitted a claim of Rs 956 crore in 2019, which was admitted by the resolution professional. It was reduced to Rs 745 crore by September 2020.
Additional Solicitor General Aman Lekhi appeared for Punjab National Bank and argued that the approval of the plan was in complete contravention of the law.
PNB had invoked pledged shares of the airline. The resolution professional adjusted the value of the claim to the extent of the fair market value of the shares on the day PNB invoked the pledged shares.
PNB said invocation and transfer of shares in the name of the lender doesn't make it a shareholder of the corporate debtor. The bank said the airline's resolution plan reduced PNB's claim even though it was a financial creditor.
The treatment of appellant under the resolution plan which is a public owned financial institution similar to shareholding of promoters and Etihad which is a related party is violative of the provisions of the Code and discriminatory.Petition by Punjab National Bank
The bank has also questioned the conduct of the resolution professional in the case.
’IBC Gives No Adjudicatory Powers To Resolution Professional’
The bank said the duty of the resolution professional is limited to collating claims against the company undergoing insolvency resolution, and has no jurisdiction to adjudicate upon the claim.
The petition pointed to earlier judgments of the Supreme Court in this regard, which make it clear the resolution professional cannot adjudicate on the claims.
The petition by PNB said the airline's resolution professional acted in complete contravention of the provisions of the Insolvency and Bankruptcy Code.
The only time a claim can be revised is as per Regulation 14 of the Corporate Insolvency Regulations Regulations. The provision says a claim can be revised on the basis of any additional information that the resolution professional comes across.
It doesn't authorise the respondent to adjudicate upon the claim of the Appellant by applying the ratio of judgment rendered by Hon’ble NCLAT and reduce the admitted claim of the Appellant wherein in the relied upon judgment the facts and circumstances are completely different.Petition by Punjab National Bank
The resolution plan for Jet Airways was approved by the National Company Law Tribunal in June. The committee of creditors had approved the resolution plan submitted by a consortium led by Dubai-based entrepreneur Murari Lal Jalan and Kalrock Capital. The approval had the consent of Punjab National Bank.
In Its petition, PNB has argued that when it came to granting consent to the plan it was faced with "Hobson’s choice".
The petition argues that the claim of Punjab National Bank was reduced very close to the finalisation of the resolution plan and date of the voting by the committee of creditors.
The bank told the bench that it was faced with a choice of receiving lesser amount on its claims if it chose to dissent against the resolution plan. The petition also requests the appellate tribunal to decide on whether differential treatment of financial creditors can be allowed.
The resolution professional for Jet Airways informed the bench that they will oppose the plea by Punjab National Bank and that there had been no irregularity of process in this case.
The appellate tribunal said it would need to hear the arguments in detail and issued notice on the bank’s plea.
The NCLAT, however, didn't stay the implementation of the resolution plan. The arguments on a stay will be heard on Sept. 21.