NCLT’s Decision on Aviator ML’s Insolvency Petition Withdrawal
The National Company Law Tribunal (NCLT) has ruled on an insolvency dispute involving aircraft lessor Aviator ML 29641 Limited and airline SpiceJet, imposing a ₹15 lakh penalty as costs for a last-minute settlement. The tribunal, composed of Judicial Member Mahendra Khandelwal and Technical Member Anu Jagmohan Singh, granted Aviator ML permission to withdraw the insolvency petition against SpiceJet. However, this permission comes with the stipulation that both parties must pay ₹7.5 lakh each to the Prime Minister’s National Relief Fund within seven days.
Conditions for Withdrawal
The NCLT has made it clear that the withdrawal will only be effective upon the submission of proof of payment to the NCLT Registry. Should either party fail to comply, the Registry is instructed to bring the matter back to the tribunal for further orders. Furthermore, the tribunal has de-reserved its orders in seven additional insolvency petitions against SpiceJet, directing these cases to be reviewed by the regular bench for further consideration.
Background of the Petition
Aviator ML filed the petition under Section 9 of the Insolvency and Bankruptcy Code (IBC) in 2024, citing an alleged default by SpiceJet amounting to ₹58.64 crore. The case had been extensively argued and was slated for pronouncement on August 17, alongside seven other petitions against SpiceJet. However, just before the pronouncement, it was disclosed that SpiceJet and Aviator ML had reached a settlement, with SpiceJet agreeing to the debt and making an initial payment of $500,000.
NCLT’s Stand on Settlements
During the hearing, Aviator ML and SpiceJet sought to have the settlement officially recorded, with the option to revive the petition if the settlement’s terms were breached. The tribunal, however, declined to acknowledge the settlement, emphasizing its role in insolvency and resolution rather than settlements. It insisted on an unconditional withdrawal of the petition without recording the settlement terms or granting any revocation rights.
Legal Representation and Tribunal’s Response
Senior Advocates Ramji Srinivasan and Krishnendu Datta represented Aviator ML and SpiceJet, respectively, urging the tribunal to at least note the settlement’s execution. Despite these appeals, the tribunal remained firm, pointing out that the petition had not been admitted and thus the proceedings were personal rather than public. The tribunal expressed dissatisfaction with the conduct of the parties, especially given the prolonged nature of the proceedings.
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Implications for Future Proceedings
The NCLT criticized the selective settlement with one creditor when multiple petitions were pending. It noted that the outcome of the other seven cases was interconnected with the decision in Aviator ML’s petition. As Aviator ML’s petition was withdrawn without a merit-based ruling, the tribunal found it impractical to issue detailed orders on the remaining cases. It also highlighted the procedural impact of one tribunal member’s imminent retirement, leading to the de-reservation of the seven petitions for reassignment to the appropriate bench.
