NCLAT Affirms Resolution Professional's compliance with legal obligations and rejects personal liability for payments made to the Asset Preservation Team (APT).
National Company Law Appellate Tribunal (NCLAT), Principal Bench comprising Justice Ashok Bhushan (Chairperson) and Barun Mitra (Technical Member) was hearing an appeal and affirmed that payments made to the Asset Preservation Team (APT) during the CIRP of Jet Airways were lawful and within the RP's authority, emphasizing they were approved CIRP costs and did not constitute double payment, thereby dismissing the appeal challenging the NCLT's order.
The National Company Law Appellate Tribunal (NCLAT) recently adjudicated an appeal challenging an order issued by the National Company Law Tribunal (NCLT), Mumbai Bench, in MA No.3387 of 2019. This appeal stemmed from proceedings under the Corporate Insolvency Resolution Process (CIRP) initiated against Jet Airways (India) Ltd. following the cessation of its operations in April 2019.
The crux of the matter involved 103 employees who formed the Asset Preservation Team (APT) during the CIRP. These employees sought lump-sum payments for their services, which were approved by the Committee of Creditors (CoC). Subsequently, their claims were reflected as NIL in the third List of Creditors published by the Resolution Professional (RP).
In response, the appellant filed MA No.3387 of 2019, seeking clarification on the settlements with the 98 employees, the legality of payments made, and the personal liability of the RP for these payments. The appellant contended that such payments amounted to double payments and were not in line with the Resolution Plan approved by the Adjudicating Authority.
After several hearings, the NCLT dismissed MA No.3387 of 2019, holding that the RP acted within the bounds of the authority conferred by the CoC in making the lump-sum payments to the APT members. The Tribunal emphasized that these payments were necessary to retain essential personnel during the CIRP and were approved as part of the CIRP costs. It further clarified that the payments did not constitute double payment as the APT members waived their claims to unpaid salaries in exchange for the lump-sum amounts.
The appellant subsequently appealed this decision to the NCLAT, arguing that the settlements with the APT members were not adequately disclosed and were unjustified under the law. The NCLAT, after considering the submissions and affidavits filed by both parties, upheld the NCLT's decision. The appellate tribunal found no grounds to interfere with the lower court's ruling, asserting that the RP's actions were lawful and conducted with the approval of the CoC.
In conclusion, the NCLAT dismissed the appeal, affirming that the RP did not breach any legal obligations in making payments to the APT members and that there was no basis to hold the RP personally liable for these payments. The judgment clarified that the APT members would not receive further payments under the approved Resolution Plan but remained entitled to receive provident funds and gratuity as per earlier tribunal rulings.
Vikas Mehta, Ms. Anshula Grover, Mayan Prasad, Kartik Pandey Ms Nitika Grover, Advocates were present for the Appellant, while Arun Kathpallia, Sr. Advocate with Raghav Chadha Dhiraj Kumar Totala, Nishant Upadhyay, Ankit Pal And Ajay Raj, Advocates were available for the Respondent.
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