TMI Blog2021 (6) TMI 1089X X X X Extracts X X X X X X X X Extracts X X X X ..... PROFESSIONAL OF AIRCEL LTD. AND DISHNET WIRELESS LTD. ANR., TELECOM REGULATORY AUTHORITY OF INDIA VERSUS AIRCEL LTD. ANR. TATWA TECHNOLOGIES LTD. VERSUS VIJAY KUMAR IYER ANR., TELECOM REGULATORY AUTHORITY OF INDIA VERSUS DISHNET WIRELESS LTD. ANR. [ 2021 (4) TMI 1300 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] the spectrum continued to be with the Telecom Company during the CIRP. In the instant case the slots cannot be regarded as present economic resource of the Corporate Debtor. That being an important factor, is squarely lacking in the case of the Corporate Debtor. Whether the slots could be considered as an asset of the Corporate Debtor? - HELD THAT:- Slots are airport specific and are dependent upon the Airline s operating rights. The mechanism of allotment of slots, though integral to an operating airline, is a very complex and dynamic process upon which the entire flight schedule of an airport depends. The allotment of slots and their usage is like a constantly changing jigsaw puzzle. A single slot therefore could not be left or kept idle. The slots vacated by one Airline would have to go to another Airline for optimum utilisation of the slots an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al to the successful implementation of the Plan. Thus, the effective date also depends upon the conditions being fulfilled. Despite the effective date being uncertain the CoC has approved the same. Considering the peculiarity of the facts and totality of the circumstances, we feel it appropriate to agree with such decision of the CoC and its fiscal prudence, subject to the following. The Resolution Plan doesn t take into account the dues of the employees and workmen during the CIRP period in view of the fact that except for 50 employees retained as Asset Preservation Team of the Corporate Debtor none of the other employees or workmen were under the employment of the Corporate Debtor nor did they work for the Corporate Debtor during that period. Decision in that regard appears to be reasonable based on the principle of no work no pay . The instant Resolution Plan meets the requirements of Section 30(2) of the Code and Regulations 37 and 38 of the Regulations. The Resolution Plan is not in contravention of any of the provisions of Section 29A of the Code and is in accordance with law. The same needs to be approved as provided under Section 31 of the Code - Application allowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 12(2) of the Code for extension of CIRP period by 90 days. The said Application was allowed by this Tribunal vide order dated 20.12.2019 and the CIRP period of the Corporate Debtor was extended till 15.03.2020. e. On 17.12.2019, the CoC cancelled and annulled the First Round of the process and approved authorized the RP to issue a fresh invitation of EoI and Form G for submission of resolution plan for the Corporate Debtor. Subsequently, the Applicant published fresh advertisements on 22.12.2019 (Second Round) for invitation of EoIs. Synergy Aerospace Corporation (Synergy) Prudent ARC Limited (Prudent) were the PRAs. However, no resolution plan was received from either of them. f. Further, to maximise the value of the Corporate Debtor, the CoC in its 8th meeting held on 18.02.2020 authorised the RP to initiate fresh round of EoI process. Accordingly Form G was published on 20.02.2020 (Third Round), wherein the last date for submission of EoI was 23.02.2020 and for submission of resolution plan was 09.03.2020. Pursuant to such invitation, the Applicant received three EoIs from the following PRAs: i. JSC Far East Development Fund (FEDF); ii. Synergy; and iii. P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of resolution plan was 11.07.2020. In view of the request received from PRAs on 09.07.2020, the CoC approved authorized the RP to extend the time for submission of resolution plan to 21.07.2020. On 21.07.020, the Applicant received 2 (two) resolution plans from the following resolution applicants: (i) Jalan Fritsch Consortium; and (ii) Imperial Consortium. k. Subsequently, at the 17th meeting of the CoC held on 03.10.2020, the Applicant placed before the CoC both the resolution plans which were voted upon by the CoC from 05.10.2020 to 17.10.2020 in accordance with Regulation 39 of the Regulations. l. The Resolution Plan dated 21 September, 2020 submitted by Jalan Fritsch Consortium as amended by the version dated 30 September, 2020 and as supplemented and amended by the addendum dated 2 October, 2020 along with the exemptions and waivers sought (Resolution Plan) was approved by the CoC with a majority of 99.22% votes in favour while 0.01% dissented and 0.77% abstained. Resolution Plan of Imperial Consortium received only 8.57% votes in favour. m. On 22.10.2020, the Applicant in accordance with the terms of Request for Resolution Plan (RFRP) document, issued the L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29A of the Code. Mr. Jalan and Mr. Fritsch have furnished to the Applicant Affidavits in terms of Section 29A of the Code along with a list of their connected persons as part of this Resolution Plan. 5. The salient features of the Resolution Plan are as under. A. FINANCIAL PROPOSAL SUMMARY: Heads Particulars Amount (in ₹.) Payment terms Within 180 days from effective date After 180 days from effective date CIRP Costs CIRP COST 25 Cr 100% - Assenting FCs* ₹. 195 Cr + up to ₹. 185 Cr + Guaranteed NPV of ₹.391 Cr (using the discount rate specified in the Evaluation Matrix) ₹. 40 Cr of Positive Cash Balance 9.5% equity in Jet 2.0 (5th Yr Value ̴ ₹. 3,485 Cr) 7.5% equity in JPPL Upside on Aircrafts + ATR Inventory + Spares + BKC Property (if given) Savings on CIRP Costs Savings on airport and parking charges Savings on Contingency Fund All payments are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tutions outside India. The mode of finance and utilization is as under: Infusion Timelines (in days) Amount (in ₹.) Purpose/Utilization As Equity As ECB* Upfront (within 180 days) 350,00,00,000 - CIRP Costs, Contingency Fund, Payment to Financial Creditors, Operational Creditors, Other Creditors, and other stakeholders, working capital for business, Misc. Admin Expenses 181-365 days 250,00,00,000 - Working capital for business, Portion of funds can be used for acquiring Etihad s stake in JPPL; making payments to creditors if the Successful RA is inclined in advancing any payment timelines Year 2 - 175,00,00,000 Remaining payment to Financial Creditors, Misc. expenses for general corporate and day-to-day operations, in compliance with the extent ECB Regulations. After Year 2 - 600,00,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the bank account of the Corporate Debtor (including amounts estimated to be received subsequently) are sufficient to cover the CIRP cost (excluding parking charges, rental charges, employee dues, taxes etc). Accordingly, the SRA has set aside a sum of ₹. 25 Crores as CIRP cost towards payment of any such costs until the Approval Date. Any expenses incurred by the Corporate Debtor from the Approval Date until the Effective Date will be incurred out of the positive bank balance of the Corporate Debtor. e. It is submitted that if the airport and parking charges are over ₹.245 Crores, then amounts over and above ₹. 245 Crores will be first paid out of ₹. 25 Crores reserved as CIRP cost (if there are no outstanding CIRP cost) and then out of the positive cash flows of the Corporate Debtor. Any amounts over and above such amounts will be shared between the SRA and the Assenting Financial Creditors in equal proportion. f. The Resolution Plan states that if the CIRP cost is less than the estimated amounts and the airport dues are less than ₹. 245 Crores, then the differential amounts will be paid by the SRA to the Assenting FCs, which amounts are over an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubscription Amount together with such Redemption Premium which ensures a Guaranteed NPV of ₹. 391 Crores as of Effective Date for the AFCs. The NCDs will be secured by Mortgage over Dubai Property No. 1, Mortgage over Dubai Property No. 2, Mortgage over Dubai Property No. 3 (Commercial Property located at Plot No. 1290, Jebel Ali Industrial First, Dubai, UAE) valued over ₹. 50 Crores and Floating charge by way of hypothecation on India POS Credit Card receivables of the Corporate Debtor for ₹. 350 Crores or the total outstanding dues of the AFCs, whichever is lower. iv. Upside on Sale of Aircrafts - The SRA will pay to the AFCs an upside on sale of 11 aircrafts (Five 777s; Three 737s; and Three A330s) owned by the Corporate Debtor through issue of 6,00,000 Series B ZCBs of the face value of ₹. 1,000/- each, aggregating to ₹. 60 Crores which can be redeemed after the closing date and within 365 days from the effective date. The ZCBs will be secured by 11 Aircrafts of the Corporate Debtor (mentioned above) which are intended to be sold. The upside amount will be calculated in the following manner: a) Base Value of Aircrafts has been taken at S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en taken at ₹. 50 Crores i.e. no amounts are payable when Spares are sold for amounts up to ₹. 50 Crores, other than face value of ₹. 50 Crores. b) 80% upside of any amounts realized from the sale of Spares will be shared with the AFCs as redemption premium, if any. c) Costs and charges towards effecting such sale, including airport parking charges, brokerage, warehousing charges (if any), maintenance costs etc. accruing with effect from the Approval Date until the actual date of sale and not exceeding 12% of the sale consideration will be reduced from the sale price before payment. vii. Upside on BKC Property - The SRA proposes to pay to the AFCs an upfront payment of ₹. 10 Crores for the BKC Property and pay all savings derived out of settlement towards airport and parking charges below ₹. 245 Crores. In addition, if BKC Property is sold for an amount over and above ₹. 245 Crores in next 2 years (or if the SRA decides to retain the BKC Property for the use of the Corporate Debtor), then 50% of the upside value will be shared with the AFCs. viii. 9.5% Equity Stake in Jet Airways - The SRA proposes to issue to the AFCs, an equity stak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proposes to offer 100% stake held by the Corporate Debtor in Jet Lite to the AFCs on the Approval Date. If this proposal is not acceptable to AFCs, then the SRA shall liquidate Jet Lite immediately after the Approval Date. III. Treatment of Dissenting Financial Creditors: The SRA undertakes that any Dissenting Financial Creditor would be paid the liquidation value due to them in priority to other financial creditors in terms of Section 30(2) of the Code read with Regulation 38(1)(b) of the Regulations, out of the amounts reserved for the Financial Creditors in terms of this Resolution Plan. IV. Treatment of Employees and Workmen: a. It is submitted that Corporate Debtor currently has large number of employees and workmen on its payrolls, who are otherwise not required for the day-to-day affairs of the Corporate Debtor and hence the RP did not account the salaries and other benefits due to such employees (estimated at approx. ₹. 715 Crores as of September 2020) as CIRP cost. However, the SRA makes the following gratuitous proposal for the employees and workmen of the Corporate Debtor, which if acceptable, can be made available to the employees and workmen aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebtor. Such payments will be made within 180 days from the Effective Date and the manner of payment and process will be detailed on the website of the Corporate Debtor. a. Cash payment for employees - The SRA proposes to pay a token sum of ₹. 11,000 in cash to each employee of the Corporate Debtor. b. Cash payment for workmen - The SRA proposes to pay the following to each workman of the Corporate Debtor: i. ₹. 11,000/- cash to each workmen of the Corporate Debtor. ii. ₹. 5,100/- cash as medical expense reimbursement for the parents of the workmen of the Corporate Debtor. iii. ₹. 5,100/- cash as school fee reimbursement for children of the workmen of the Corporate Debtor. iv. Stationary (notebooks, school bags etc.) collectively valued at ₹. 1,100/- for children of the workmen of the Corporate Debtor. v. One-time mobile phone recharge of ₹. 500/- for the workmen of the Corporate Debtor. c. The above-mentioned cash payment will be made out of the Contingency Fund (₹. 8 Crores) reserved by the SRA. Additional amounts, if required, will be utilized out of the proceeds of sale of assets received by the Corporate Debtor. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... testing or challenging its approval by the Adjudicating Authority (the Authority) and/or its implementation in the manner approved by the Authority. If the above proposal is not accepted by the employees and workmen within 30 days from the Approval Date, then no other creditor will have the right to seek such benefits or any part thereof and such proposal shall stand withdrawn. After expiry of the said period of 30 days from the Approval Date, the equity stake of 0.50%, and cash payments of up to ₹. 8 Crores currently earmarked for employees and workmen will be given to the AFCs. The proposal with respect to ticket credits, equity stake in AGSL and handover of IT assets shall revert to the Corporate Debtor and no other creditor will be entitled to it. After expiry of 30 days from the Approval Date or upon non-receipt of necessary approvals, the SRA shall have the discretion to deal with its equity stake in AGSL in the manner deemed appropriate by it without causing any prejudice to implementation of the Resolution Plan. b. The SRA proposes to pay a fixed sum of ₹. 52 Crores to the Workmen / Employees towards settlement of all the claims made by them, including to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he RP has not accounted such salaries and other benefits as CIRP cost. iv. The Corporate Debtor will offer 76% of its shareholding in AGSL to the Employees Trust and retain the remaining 24% shareholding. If the Trust fails to exercise or refuses to accept such offer within 30 (thirty) days from the Approval Date or challenges the implementation of this Resolution Plan, then the Corporate Debtor will retain 100% shareholding in AGSL as indicated supra. V. Treatment of Operational Creditors: a. Liquidation Value It is stated by the SRA that the net worth of the Corporate Debtor would be insufficient to cover even the debts of the Financial Creditors in full. Therefore, the liquidation value due to the Operational Creditors including government dues, taxes or the other creditors or stakeholders (including dues to employee other than workmen), is presumed to be NIL. Further, in any case, if the liquidation value due to the Operational Creditors is not NIL, then the SRA undertakes that the liquidation value due to the Operational Creditors shall be paid and shall be given priority in payment over the Financial Creditors, within 175 days from the Effective Date. It is als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against redemption of such vouchers must be completed within 30 Days of the Corporate Debtor recommencing (Jet 2.0) its domestic operations. vii. Tickets can be availed during April-June Quarter and AugustOctober Quarter on any sector where Jet 2.0 flies. d. Settlement of Dutch Administrator s claim The SRA will settle the outstanding claims of the Dutch Administrator, if any, against payment of a maximum sum of ₹. 10,000/- subject to Dutch laws. VI. Treatment of Other Creditors (other than financial and operational creditors): It is submitted that if the Corporate Debtor was to be liquidated, the amount that would have been payable for all of these claims would have been NIL. In the estimate of the SRA, the liquidation value that is payable to the Government Agencies is also NIL. However, the SRA has earmarked ₹ 10,000/- for creditors (other than financial and operational creditors). VII. Treatment of existing shareholders other than public shareholders: The SRA proposes to pay a fixed sum of ₹. 10,000/- to the existing shareholders of the Corporate Debtor other than public shareholders (i.e., the existing promoters, Etihad and financia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SRA in equal proportion. vii. If the SRA decides to retain the ownership of the BKC Property, then at the end of Year 2, the SRA will pay to the AFCs, 50% of the market value of BKC Property (over and above ₹. 245 Crores). The market value will be derived by a Tier 1 Brokerage Firm appointed by the Asset Sales Committee (ASC) on a willing buyer and willing seller basis and the entire sale process will be run under the overall supervision of the ASC. viii. This proposal regarding the BKC Property is subject to the SRA being given a clear and marketable title thereto, free and clear of all past litigations and encumbrances. ix. All payments to the AFCs (over and above ₹. 245 Crores) will be made after deducting the following amounts: - all costs associated in facilitating such sale including valuation and brokerage, - stamp duty, - statutory charges, and - all applicable taxes. 2. BKC Property not part of resolution It is stated that if the CoC decides to retain the BKC Property as a non-core asset and not offer it as part of this resolution process as proposed above, then the SRA will not pay the upfront sum of ₹. 10 Crores to the AFCs as envisage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this reduction, the shareholding pattern of the Corporate Debtor will be: Proposed No. of Shares Share Capital (In ₹.) Shareholding % Face Value (In ₹.) Promoters - - - - Etihad - - - - Financial Institution - - - - Public Shareholders 2,83,99,346 2,83,99,346 100% 1.00 Total 2,83,99,346 2,83,99,346 100% c. Consolidation of Share Capital: Immediately upon the Reduction in Share Capital, the shares shall be consolidated into equity shares with face value of ₹. 10/- each (Consolidation of Share Capital). Any fractional entitlements of equity shares resulting from such consolidation shall be rounded off to the nearest whole integer. An indicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he steps for capital restructuring that shall be undertaken. It was further clarified that, as evident from the tables provided in para E(c) E(d) above, the restructuring also contemplates a further consolidation of public shareholding from 28,39,935 shares to 2,83,993 shares and consequent restructuring of capital. This reflects the SRA's proposal for public shareholders that for every 100 shares held by the public shareholders, they will be entitled to 1 (one) share in Jet 2.0. f. Further submitted that, the equity shares issued by the Corporate Debtor shall be subject to lock-in of 1 (one) year (except public shareholders, shares allotted to workmen and employees and shares allotted to the AFCs) from the date of such issuance or for such additional period as may be required under applicable laws. g. Further stated that, the SRA shall ensure that the public shareholding in the Corporate Debtor is restored to at least of 10% within a maximum period of 18 months and subsequently to 25% within a maximum period of 3 years, in each case from the date of first tranche issuance of equity shares to the SRA. The SRA proposes to restore the public shareholding in the Corporat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Setting up the Contingency Fund Z + 170 13. Cancellation of Shares (excluding Public Shares) Z + 170 14. Reconstitution of Share Capital as per Clause 7.4.2 Z + 170 15. Steps towards issuance of equity shares as per Clause 7.4.3 Z + 170 16. Payment of CIRP Costs as per Clause 6.4.1. Z + 170 17. Payment to the Operational Creditors (Workmen and Employees, including Authorized Representatives of Workmen and Employees) Z + 175 18. Payment to all the Operational Creditor (other than Workmen and Employees) Z + 175 19. Payment to Other Creditors and Stakeholders Z + 175 20. Payment to Dissenting Financing Creditors Z + 176 21. 1st Tranche payment to Financial Creditors Z + 180 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sale of assets of the Corporate Debtor as proposed in this Resolution Plan. The duties of the ASC shall be in accordance with clause 7.8.8 of the Resolution Plan. H. PERFORMANCE BANK GUARANTEE: It was clarified that as required under the RFRP, the SRA shall provide PBG for a total sum of ₹. 150 Crores. The PBG will be provided in two parts, with the first PBG of ₹. 47.5 Crores provided within 7 days from the date of receipt of LoI and the PBG for the remaining sum of ₹.102.5 Crores provided on the Effective Date. Consequently, the SRA has furnished PBG of ₹. 30 Crores from State Bank of India and ₹. 17.50 Crores from ICICI Bank (totalling to ₹. 47.5 Crores). I. COMPLIANCE OF MANDATORY CONTENTS OF RESOLUTION PLAN UNDER THE CODE AND THE REGULATIONS: The Applicant has conducted a thorough compliance check of the Resolution Plan in terms of the Code as well as Regulations 38 and 39 of the Regulations and has submitted his Form H under Regulation 39(4). The Plan is in compliance with the provisions of the Code and the Regulations. 6. The Applicant submits that the Resolution Plan meets the requirement of Section 30(1) (2) of the Cod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trol of the business of the company during its term (clause 7.8 and 7.9) [Regulation 38(2)(b)]. n) Provides for the adequate means for supervising its implementation (clause 7.8 and 7.9) [Regulation 38(2)(c)]. o) The resolution plan addresses the cause of default (clause 5.1 read with 7, 8 and Appendix 12) [Regulation 38(3)(a)]. p) It demonstrates that the plan is feasible and viable (clause 8, 8.2, 8.3.1 read with Appendix 12 and Appendix 13) [Regulation 38(3)(b)]. q) The resolution plan contains all the provisions for its effective implementation (clause 7.7, 7.8 and 7.9) [Regulation 38(3)(c)]. r) The resolution plan contains the provisions for approvals required and the timeline for the same (clause 7.5 to 7.9) [Regulation 38(3)(d)]. s) The Plan demonstrates the Resolution Applicant s capability to implement the plan (clause 6.4.10 read with 6.5, Appendix 12 and Appendix 13) [Regulation 38(3)(e)]. 7. Approvals, Waivers and Extinguishments: The SRA has sought various approvals, waivers and extinguishments from this Tribunal as more particularly specified in clause 10 of the resolution plan, which are in the nature of automatic approvals and reliefs from va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the right to recover the dues for the period prior to the effective date of trade. It is a trading of limited nature with the trading being permitted only between companies eligible to trade and the Buyer satisfying the eligibility criteria. 62. Next question for consideration would be whether spectrum can be subjected to proceedings under the I B Code. In this regard the nature of the resource has to be kept in view while determining whether same can be subjected to insolvency/ liquidation proceedings. It having been found that the Telecom Licence and right to use spectrum are assets of the Licensee/ Corporate Debtor falling within the purview of Section 18 and 25 of the I B Code for purposes of control and custody in the hands of Interim Resolution Professional/ Resolution Professional during CIRP Proceedings, be it seen that the Telecom Licences and right to use spectrum being assets of the Corporate Debtor are covered under moratorium slapped under Section 14 of the I B Code as a sequel to the admission of an application seeking triggering of the CIRP. Explanation to Section 14(1) and sub-section (2A) introduced in Section 14 (inserted by Amending Act 1 of 2020 w.e.f 28 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as an asset of the Corporate Debtor, it would be pertinent to mention that slots can only be allotted to an airline in operation with a valid Air Operating License (AOL) and operating flights from a particular Airport. Slots are airport specific and are dependent upon the Airline s operating rights. The mechanism of allotment of slots, though integral to an operating airline, is a very complex and dynamic process upon which the entire flight schedule of an airport depends. The allotment of slots and their usage is like a constantly changing jigsaw puzzle. A single slot therefore could not be left or kept idle. The slots vacated by one Airline would have to go to another Airline for optimum utilisation of the slots and the capacity of the airport. 14. The allotment of slots is guided by the Guidelines for Slot Allocation (May 2013) (the guidelines) issued by the MoCA. The relevant extracts may be reproduced below. I) Definitions SLOT is a permission given by a coordinator for a planned operation to use the full range of airport infrastructure necessary to arrive or depart at a Level three airport on a specific date and time. Classification of Airports: For the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted. 5. These guidelines forms the slot allocation and management standard for Indian coordination, and should therefore be duly noted and implemented in full by all affected Indian airports and air carriers using such airport infrastructure. The Guidelines have been formatted to reflect international based practice and in accordance with the recommendations of the IATA Worldwide Slot Guidelines (WSG), as amended twice yearly. The WSG is the globally adopted standard for efficient slot allocation to optimize the use of severely congested airport infrastructure worldwide. 6. These guidelines are expected to maximize efficiency in the process of slot allocation, promote sustainable competition and encourage growth of air connectivity to remote and inaccessible regions of the country, while ensuring viability of operations of the airlines. III) Practice in India: A historical perspective 1. 2. Recommendations of the Task Force: The recommendations of the Task Force where accepted by the Government in the Year 2005 subject to the following: (i) (ii) For grandfather rights a standard slot adherence 80% of allotted slots must be followed. (iii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the summer and winter seasons with the concerned Coordinator of the Level 3 airport. The actual deadline for filing of this request would be as stated in the IATA WSG Coordination Calendar, around mid-October for the ensuring summer season (which starts on the last Sunday of March) and midMay for the ensuring winter season (which starts on last Sunday of October). 5. Initial Submissions must include requests for all domestic and international slots that an airline intends to operate during the season, including flights at the beginning of the season that originate in the preceding season. 6. If a coordinator notices that an airline has failed to apply for a historic slot, then the coordinator should immediately ask the airline to clarify its submission. If the airline falls to respond within 24 hours, then the slot may be allocated to another airline. Slot Allocation Priorities: 16. The criteria for allocation of slots available in the slot pool to various airlines should be as under: i) New Entrants: an airline requesting a series of slots at an airport on any day where, if the airlines request were accepted, it would hold fewer than 5 slots at that airp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver of the airlines activities. The airline its legal representative or the responsible licensing authority should keep the coordinator informed of the airline status. iv) If dialogue has not been initiated within a reasonable deadline set by the coordinator and if there is not legal protection linked to bankruptcy then the coordinator should reallocate the slots. 9. Slots of an airline after merger and acquisition. i) When an airline is merged or acquired by another airline the series of slots held by this airline will be transferred to the acquiring airline. ii) The historic slots held by the merged or acquired airline will be transferred to the acquiring airline which will enjoy the historicity of these slots as if it itself had held these slots. The Affidavit submitted by MoCA also outlines the Aeronautical Circular 03 of 2017 pertaining to the matter are reproduced below for ready reference:- 3.4 If an Airline starts using the rights allocated to it initially but subsequently discontinues or curtails operations, it shall immediately inform the Ministry of Civil Aviation and DGCA about such discontinuance or curtail operation. If resumption is not planned wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly get reverted / restored to the Corporate Debtor. In this connection reference is made to the letter dated 30.05.2019 of the MoCA to the Chairman of the State Bank of India (Financial Creditor). The relevant extract is as under. 3(c) With regard to Protection of existing slots allotted to Jet Airways at domestic airports especially at New Delhi and Mumbai) it is informed that crisis of Jet Airways and suspension of flights has caused inconvenience to many air passengers. Ministry is seized of this matter to reduce the inconvenience of passengers and facilitate induction of additional capacity. It has been decided to allot some of the slots vacated by Jet Airways to other Airlines on purely temporary basis, for a period of 3 months. 4. In order to ensure that the slots are allocated in most equitable and transparent manner a committee has been constituted by the Government comprising of DGCA and Joint Venture / Pvt. Airlines / Slot Co-ordinators. This Committee would be allocating slots on temporary basis for 3 months only. 5. The historic rights of Jet Airways, as per the provisions of the extant MoCA, Guidelines for slots allocations will be protected. These slots w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing would be prejudicial to their as well as public interest, more so when the Corporate Debtor / SRA is yet to commence operations and prove its worth in operating an Airline. 21. It is further submitted by the learned senior counsel appearing for the SRA that the advertisement / press release for disinvestment of Air India, a Government of India undertaking, clearly mentioned that the slots allocated in favour of the Air India could be made available to the company / entity that would take over the behemoth. Thus, it is canvased that there is no reason why such treatment should not be meted out to the Corporate Debtor. 22. No documents however been placed to substantiate and to verify the terms and conditions expressed in relation to the transfer, if any, of the slots, presently held by Air India. Even otherwise the entity / company that would take it over would inherit what the Air India presently has. It can have no claim over what Air India, or for that matter any entity, does not have dominion over. The analogy could not be extended to the Corporate Debtor, in as much as the Corporate Debtor had been divested of these slots w.e.f. 17.04.2019 when it ceased operations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd when they are sought, so that the Airlines takes off the ground and possibly regain its lost glory. 25. Even otherwise the Corporate Debtor immediately after the approval of the Resolution Plan would not be utilising all the slots. It can only seek slots as and when it had the Aircraft and the attendant wherewithal and logistical support in place, which according to the Resolution Plan would be in phases. Therefore, the SRA would periodically seek allocation of slots and we are confident that the authorities concerned would consider them favourably. 26. It is submitted by the learned senior counsel for the SRA that the eligibility of 80% for historic precedence in the next season cannot be applied to it as it ceased its operation before the closure of the summer season. Precisely for the same reason the historicity could not have been protected as in order to gain historicity the Airline had to utilise more than 80% of the allocation. Moreover, the principle would only apply to the slots in the following season and successive seasons. The same could not be applied to the Airline operating after a hiatus of two years. The intervening insolvency would not be a saving factor. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d or in the possession of . One manner of reading this clause is to state that whether recovery is sought by an owner or lessor, the property should either be occupied by or be in the possession of the corporate debtor. The difficulty with this interpretation is that a lessor would not normally seek recovery of property occupied by a tenant having leased the property, a transfer of property has taken place in favour of a tenant, possession of which would then have to be recovered. This xxx xxxxxx 11. Regard being had to the aforesaid authorities, it is clear that when recovery of property is to be made by an owner under Section14(1)(d), such recovery would be of property that is occupied by a corporate debtor. xxx xxx xxx 15. The conspectus of the aforesaid judgments would show that the expression occupied by would mean or be synonymous with being in actual physical possession of or being actually used by, in contradistinction to the expression possession , which would connote possession being either constructive or actual and which, in turn, would include legally being in possession, though factually not being in physical possession. 31. In any view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to do. It could accordingly be ordered so. Failing which the SRA / Corporate Debtor would be at liberty to approach this Authority for appropriate orders with regard to extension of the timeline, as would be deemed proper. That would help prevent the SRA from the frustration of automatic withdrawal referred to in clause 7.6.4 of the Resolution Plan. 34. The SRA has proposed to provide future credits to the passengers for flying within a window period of 30 days to be registered within 180 days of the effective date. In our considered opinion the window period of 30 days appears to be quite negligible in the present circumstances and the pandemic. People the world over are jittery of travelling, more so by Air. Under such a situation most of the prospective passengers may not avail the sop within the period of 30 days. That would also be prejudicial to their interest. Besides considering the various conditions precedent there is possibility that the SRA would not be in a position to commence flight operations within 30 days of the 180th day of the effective date. The same was also discussed during the hearing and the SRA as well as the Applicant had agreed to extend the windo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as approved by CoC meets the requirements specified in Section 30(2) of the Act. The Hon ble Court observed that the role of the NCLT is no more and no less . The Hon ble Court further held that the discretion of the Adjudicating Authority is circumscribed by Section 31 and is limited to scrutiny of the Resolution Plan as approved by the requisite percent of voting share of financial creditors. Even in that enquiry, the grounds on which the Adjudicating Authority can reject the Resolution Plan is in reference to matters specified in Section 30(2) when the Resolution Plan does not conform to the stated requirements. 39. In CoC of Essar Steel (supra) the Hon ble Apex Court clearly laid down that the Adjudicating Authority would not have power to modify the Resolution Plan which the CoC in their commercial wisdom have approved. In para 42 Hon ble Court observed as under: Thus, it is clear that the limited judicial review available, which can in no circumstance trespass upon a business decision of the majority of the Committee of Creditors, has to be within the four corners of section 30(2) of the Code, insofar as the Adjudicating Authority is concerned, and section 32 read w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to passengers and employees workmen shall be one year from the Effective Date. The beneficiaries shall however, get themselves registered within 180 days from the effective date to avail the facility. f. As far as the permits held by the Corporate Debtor and the rights and benefits accrued therein, the Corporate Debtor (under the new Management) shall approach the authorities concerned for renewal and that the same may have to be considered by them favourably, subject to relevant Law and Rules, so that the implementation of Plan becomes smooth. g. With regard to the reliefs and concessions sought by the Resolution Applicant in respect of the Corporate Debtor, the Monitoring Committee or the new Management, as the case maybe, may approach the respective authorities and departments for such reliefs. The authorities concerned may favourably consider such applications as deemed proper under law, keeping in view the object of resolution of the Corporate Debtor as envisaged in the Code and various pronouncements of the Hon ble Apex Court. h. The DGCA and the MoCA shall consider the Application / Representation of the Corporate Debtor for renewal / grant of Airport Operating P ..... X X X X Extracts X X X X X X X X Extracts X X X X
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