Ex-employees' Appeals Dismissed; Sale Deemed Compliant with Insolvency and Bankruptcy Code
In a significant ruling, the National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, upheld the sale of Jet Airways' aircraft assets during the liquidation process, dismissing objections raised by former employees of the airline. The ex-employees challenged the sale, claiming undervaluation and procedural irregularities. However, the tribunal found the sale to be conducted in accordance with the Insolvency and Bankruptcy Code, 2016 (IBC), and approved by the Adjudicating Authority, NCLAT, and the Supreme Court.
The appeal, filed by Aman Monga and others, contended that the aircraft assets were sold at a lower value than the market price and without a fresh valuation. The appellants argued that this undervaluation prejudiced the liquidation estate and impacted stakeholders, including former employees awaiting dues. They also raised concerns about the legality of involving third-party entities in the sale process and executing agreements outside India.
The tribunal, after reviewing the facts, noted that the sale process had been judicially supervised and approved at every stage. It emphasized that the liquidator, under Section 35 of the IBC, possesses unfettered power to sell assets, and the sale was part of a competitive process approved by the Adjudicating Authority and affirmed by the Supreme Court.
Moreover, the tribunal clarified that employees' dues are protected under the waterfall mechanism in Section 53 of the IBC, ensuring their claims are settled in priority. It also highlighted that the employees' association had previously approached the tribunal and the Supreme Court, which had affirmed the legitimacy of the sale process and the protection of employees' interests.
The NCLAT found no merit in the appellants' claims, asserting that their objections were speculative and lacked a substantial basis. It reaffirmed that the liquidator had acted within the legal framework, and any apprehensions regarding undervaluation or procedural violations were unfounded.
This ruling marks a crucial step in the liquidation proceedings of Jet Airways, ensuring the resolution process adheres to statutory provisions while safeguarding the rights of all stakeholders involved.
Bottom Line :
Insolvency and Bankruptcy Code, 2016 - Sale of assets during liquidation upheld - Ex-employees' objections regarding undervaluation and procedural irregularities dismissed - Employees entitled to dues under Section 53 of the Code.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016, Section 35, Section 53
