BEFORE NATIONAL COMPANY LAW TRIBUNAL

NEW DELHI
2019

Petition no. XX/2019

Trade Union of Weekend Airlines Pvt. Ltd. & Ors……………………….Petitoner

Vs.

The Weekend Airlines Pvt. Ltd. & Ors……………………………….Respondent

On Behalf of Petitioners

Memorial of Petitioner Page 1

 TABLE OF CONTENTS

1. List of Abbreviations

2. Index of Authorities

3. Statement of Jurisdiction

4. Statement of Facts

5. Issues Raised

6. Summary of Arguments

7. Arguments Advanced

8. Prayer

Memorial of Petitioner Page 2

 LIST OF ABBREVIATIONS

IBC Insolvency and Bankruptcy Code, 2016

Weekend The Weekend Airlines Pvt. Ltd.

AHSB Air Hotel SDN BHD

CIRP Corporate Insolvency Resolution Process

Weekend Productions Weekend United Productions Pvt. Ltd.

NCLT National Company Law Tribunal

IRP Interim Resolution Professional

RP Resolution Professional

CoC Committee of Creditors

STATUTES

Insolvency and Bankruptcy Code, 2016

Real Estate (Regulation and Development) Act, 2016

Companies Act, 2013

CASES

Pioneer Urban Land and Infrastructure Ltd. & Anr. Vs. Union of India, 2019 SCC OnLine SC 1005

Chitra Sharma v. Union of India, WRIT PETITION (CIVIL) NO 744 OF 2017

REPORTS

The Law Committee (Chair: Mr. Injeti Srinivas) Report

WEBSITES

1. www.manupatra.com
2. www.scconline.com

Memorial of Petitioner Page 3

 STATEMENT OF FACTS

1. ‘The Weeknd Airlines’ Pvt. Ltd. (Weeknd) is a reputed private airline in India. The
company was incorporated under Companies Act of 1956, having its registered office
situated in New Delhi, India. Mr. Hooda, who was born and brought up in India, founded
the company. He and his ancestors are known for living a lavish and luxurious life.
2. After three and a half decades of monopoly by Air India and Indian Airlines, the Indian
government opened the domestic aviation market to private carriers in April 2010. This
provided him with an opportunity to establish the company by 2011. The company at that
time turned out to be successful as it was the only privately owned airline earning profit
in India. The company took financial assistance of INR 309 Cr. from Manchester
Clothing Pvt. Ltd.
3. In the year 2014, after reviewing the market conditions and in order to expand its
business, the Weeknd Airlines Pvt. Ltd. established a wholly owned subsidiary i.e. Air
Hotels SDN BHD (AHSB).
4. AHSB had sought financial assistance from several banks located both in USA as well as
in India, for setting up and running its business. In the year 2015, the lenders under a
consortium of four US banks, led by Calfia Bank, granted AHSB term loan to the tune of
5 billion USD, in order to expand its business in USA. However, with the need to expand
its business in other jurisdictions also, it took a loan to the tune of INR 300 Cr. from
consortium of Indian Banks namely Bank of Maharaj, Lenden Bank and Chronicle Bank,
for which the Corporate Guarantee was provided by Weeknd Airlines Pvt. Ltd.
5. In the year 2017, Weeknd could not deliver any profit even though according to analysts,
the sector experienced its best returns in the quarter ending December 2017.
6. Mr. Hooda had long desire to take the company across the globe and for this; he wanted
to enter the markets of Europe and Russia. The company in 2018 flew for the first time to
Russia. Mr. Hooda gave an extravagant party at his house from the funds of the company.
However, to obtain international licence and to pay operating costs at the airport the
company had to take loan of INR 3200 Cr. from FIT Bank, wherein the majority shares
were held by the Government of India for. The company gradually started flying to other
parts of Russia and was planning to enter the European market as well.

Memorial of Petitioner Page 4

 7. Weeknd was not incurring sufficient profits from its ventures in Russia; but the company
still started its venture of flying to Europe. Thus, the company took another loan of INR
100 Cr. from the Bank of Dehradun. As per the terms and conditions of sanction of loan,
an additional condition was imposed on Weeknd, requiring a person other than a
promoter of the company to furnish a Personal Guarantee, which is co-extensive with of
the amount of loan, i.e. 100 Cr. On the request of the company, Mr. Vikas Sharma, a
person of fine repute and a friend of Mr. Hooda’s father gave a personal guarantee to
secure the loan amount.
8. In order to maintain quality of the customer services the company had to manage
expensive and lucrative inventory base, that compelled the company to take an additional
loan of INR189 Cr. from Kailash Bank, by furnishing the registered office in New Delhi
and the corporate office in Mumbai as security.
9. Later in 2017, Mr. Hooda was all over the news, as he purchased a hockey team, in his
personal capacity, in the hockey premier league happening in India then and was seen
hanging out with many Bollywood stars. The auditing company which was handled by
his father, time and again repeatedly requested him to cut down his expenses as the
company was not earning profits. Later, it was in public that Mr. Hooda had defaulted on
his loans and the banks had taken over all his assets. Despite that, the loan of INR 240 Cr.
was outstanding (Kailash Bank INR 100 Cr. and Bank of Dehradun INR140Cr.).
10. In June 2018, another wholly owned subsidiary of Weeknd- Weeknd United Productions
Pvt. Ltd. (Weeknd Productions) was incorporated with its registered office at Lucknow.
The composition of board of directors of both the companies was same. The company
was incorporated with the objective of aircraft manufacture majorly as per the needs and
demands of Weeknd. Soon after the incorporation, the production commenced and the
products were available for the whole aviation industry. The company yielded high
profits initially. However, after 3 profitable months, the company had to deal with severe
losses due to shortage in supply of raw materials. Banks were not in favour of providing
another loan of INR 150 Cr. to Weeknd Production. However, after a personal request of
Mr. Hooda and furnishing of Weeknd’s current assets as security, RSJ Bank agreed to
provide financial assistance of INR 150 Cr. to Weeknd Productions.

Memorial of Petitioner Page 5

 11. Surprisingly, two senior pilots of Weeknd were terminated amidst these developments.
The e- mail for termination was a mere single statement, citing no reasons. Every top
level employee got worried apprehending lack of job security. However, the pilots
formed a union and registered it as per the provisions of the law to protect themselves
from whims of the management.
12. Meanwhile, Weeknd was not able to pay its dues to Bank of Dehradun with regard to its
100 Crore loan. The Bank invoked Personal Guarantee against Mr. Vikas. He paid the
entire amount accordingly to Bank of Dehradun, looking forward to be indemnified by
Weeknd.
13. On 17th September, 2018, on Mr. Hooda’s birthday, he announced that all the pilots will
be given 2 BHK flats by the company at 50% of the market price. Around 175 pilots
accepted the deal. The company promised possession by 15th March, 2019. However,
even after paying the amount i.e., 50% of the market price as asked by Mr. Hooda and
several reminders in writing, there was no communication from the company about the
promised flats. On the request of the pilots, the trade union instituted an application under
Insolvency and Bankruptcy Code, 2016 (Code) in the NCLT on 1st July, 2019 for
initiating Corporate Insolvency Resolution Process.
14. The Tribunal initiated the Corporate Insolvency Resolution Process (CIRP) and
appointed Mr. Suresh Nath as Interim Resolution Professional (IRP). The IRP took
charge of Weeknd’s assets to discharge his duties as per the provisions of the Insolvency
and Bankruptcy Code (Code). The IRP invited the claims of the creditors, thereafter. He
was eventually appointed as the Resolution Professional (RP) in pursuance of the meeting
of the Committee of Creditors (CoC).

Memorial of Petitioner Page 6

 STATEMENT OF JURISDICTION

THE HONB’LE NATIONAL COMPANY LAW TRIBUNAL HAS THE JURISDICTION TO

HEAR THE INSTANT MATTER UNDER SECTION 60 OF INSOLVENCY AND
BANKRUPTCY CODE, 2016.

Section 60 of Insolvency and Bankruptcy Code, 2016 read as:

60. Adjudicating authority for corporate persons

(1) The Adjudicating Authority, in relation to insolvency resolution and
liquidation for corporate persons including corporate debtors and personal
guarantors thereof shall be the National Company Law Tribunal having territorial
jurisdiction over the place where the registered office of the corporate person is
located.

BEFORE THE NATIONAL COMPANY LAW TRIBUNAL

THE PETITIONERS HUMBLY AND RESPECTFULLY

Memorial of Petitioner Page 7

 STATEMENT OF ISSUES

Issue 1: Whether the application filed under Insolvency and Bankruptcy Code, 2016 is
admissible?

Memorial of Petitioner Page 8

 SUMMARY OF ARGUMENTS

Issue 1: Whether the application filed under Insolvency and Bankruptcy Code, 2016 is
admissible?

The Counsel would like to submit that the application filed by the Trade Union which represents
the interest of Home buyers is admissible under section 7 of The Insolvency and Bankruptcy
Code, 2016 before this Honb’le National Company Law Tribunal.

Memorial of Petitioner Page 9

 ARGUMENTS ADVANCED

Issue 1: Whether the application filed under Insolvency and Bankruptcy Code, 2016 is
admissible?

Yes, the application filed by the Trade Union representing the interest of home buyers before the
Honb’le National Company Law Tribunal for initiating CIRP is admissible.

1. The Counsel would like to initiate by quoting Section 5(7), which defines the Financial
Creditor, “as any person to whom a financial debt is owed and includes a person to
whom such debt has been legally assigned or transferred to”1
Financial debt is further defined “as a debt alongwith interest, if any, which is disbursed
against the consideration for the time value of money and includes any amount raised
under any other transaction, including any forward sale or purchase agreement, having
the commercial effect of a borrowing”2
2. The mere glimpse of the abovementioned sections clarifies the amount paid by the pilots
for the flats is under the transaction to enter into the purchase agreement with Mr. Hooda
and hence it will be incorporated as ‘Financial debt’ and the Trade Union as ‘Financial
Creditor’.
3. In Pioneer Urban Land and Infrastructure Ltd. Vs. Union of India, it was held that, “It
can be seen that the Insolvency Law Committee found, as a matter of fact, that delay in
completion of flats/apartments has become a common phenomenon, and that amounts
raised from home buyers contributes significantly to the financing of the construction of
such flats/apartments. This being the case, it was important, therefore, to clarify that
home buyers are treated as financial creditors so that they can trigger the Code under
Section 7 and have their rightful place on the Committee of Creditors.”3
Similarly, the Counsel wants to emphasize that the home buyers are in disadvantageous
position and hence their rights should be safeguarded.

1
Section 5(7), Insolvency and Bankruptcy Code, 2016
2
Section 5(8)(f), Insolvency and Bankruptcy Code, 2016
3
2019 SCC OnLine SC 1005

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 4. It was also held by the Supreme Court that, “Section 5(8)(f) as it originally appeared in
the Code being a residuary provision, always subsumed within it allottees of
flats/apartments. The explanation together with the deeming fiction added by the
Amendment Act is only clarificatory of this position in law. 4
5. Therefore, in the instant case, the Home buyers represented by Trade Union, couldn’t get
the promised possession of the 2 BHK flats on the due date even after paying the full
amount asked will be treated at par with financial creditor according to the above quoted
judgement given by Justice R.F. Nariman.
6. Under section 7, “A financial creditor either by itself or jointly with other financial
creditors may file an application for initiating corporate insolvency resolution process
against a corporate debtor before the Adjudicating Authority when a default has
occurred.”
Therefore, all home buyers, jointly represented as Trade Union, has right under section 7
to file the application for initiating Corporate Insolvency Resolution Process against the
Corporate Debtor and hence the present application is admissible before the Honb’le
National Company Law Appellate Tribunal under Insolvency and Bankruptcy Code,
2016.

4
Supra

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 PRAYER

Wherefore, in the light of the issues raised, arguments advanced, reasons given and authorities
cited, it is humbly prayed that this Hon’ble Court may be pleased to adjudge:

1. That the application filed by Trade Union is admissible under IBC.

And/or pass any other order that this Hon’ble Court may deem fit in the interests of justice,
equity and good conscience.

All of which is humbly prayed

Counsel for the Petitioner

Memorial of Petitioner Page 12