CASE CONCERNING THE INSOLVENCY OF JET AIRWAYS

NCLT ORDER

A petition was filed by State Bank of India under Section 7 of the IBC for initiation of CIRP
process against Jet Airways (India) Limited. The debtor owed around 8,700 crore rupees to
banks, 10,000 crore rupees to operational creditors and 4,000 crore rupees in salary and
statutory dues.

However, the NCLT was informed that insolvency proceedings against the debtor had already
been initiated through an order of the Noord-Holland District Court dated 21 May, 2019. The
NCLT Mumbai bench had ruled that it only had Jurisdiction over the case and had rejected the
Dutch Court’s request for access to Jet Airways’ financials.

This was done on the ground that under the IBC code, the Debt Resolution Process can only
take place in India. The Tribunal ruled that, although, Sections 234 and 235 deal with
agreements with foreign countries and letters of requests to a foreign country during the
insolvency proceedings, where the assets of the debtor exist outside India, these statutory
provisions have not been notified and hence, they are not enforceable and as such it could not
recognize the Dutch Order initiating insolvency proceedings against the debtor.

Even if section 234 were enforceable, it is applicable only when the assets of a debtor are
situated in a foreign country with which reciprocal arrangements exist. The Indian Government
has no such reciprocal arrangement with the Dutch Government. Therefore, section 234 would
have been inapplicable regardless of its enforceability.
NCLAT ORDER
An appeal was filed by the Dutch Court to the NCLT order. In the appeal before the NCLAT,
the issue to be determined was,
“Whether separate proceeding(s) in ‘Corporate Insolvency Resolution Process’ against
common ‘Corporate Debtor’ can proceed in two different countries, one having no territorial
jurisdiction over the other”
The NCLAT stayed the order for further hearing till 21 August, 2019. Noting the fact that
separate CIRP proceedings have been initiated against Jet Airways (one in India and one in
Netherlands), the point that was determined was.
“Whether by a Joint Agreement between the ‘Resolution Professional’ of ‘Corporate Debtor’
in India and Administrator in Netherland, as may be approved by Appellate Tribunal, one
proceeding in India can proceed for maximization of the asset of ‘Corporate Debtor’ and
balancing all stakeholders, including Indian/Offshore/Creditors/Lenders”
The NCLAT directed SBI that it may file a reply suggesting a procedure that may be followed
in the facts and circumstances of the case, without any conflicting interest of stakeholders of
both the countries. It also stated that, during the pendency of the appeal, appellant administrator
and Respondent 2 – ‘Interim Resolution Professional’ will cooperate with each other. It will be
open to the appellant administrator to collate the claims of offshore creditors including
‘Financial Creditors’, ‘Operational Creditors’ and other stakeholders and forward their details
to Respondent 2-‘Resolution Professional’ for purpose of preparing the Information
memorandum with approval of ‘Committee of Creditors’.