NCLAT Delhi Rules RP Not Personally Liable For Lump Sum Payments To Jet Airways Asset Preservation Team

NCLAT Delhi Rules RP Not Personally Liable For Lump Sum Payments To Jet Airways Asset Preservation Team

The National Company Law Appellate Tribunal (Appellate Tribunal) Delhi, comprising Mr. Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), has ruled that the Resolution Professional (RP) is not personally liable for the lump sum payments made to 103 employees of Jet Airways who were part of the Asset Preservation Team (APT). This decision comes after dismissing an appeal filed by the Jet Aircraft Maintenance Engineers Welfare Association.

The Association had challenged the payment arrangement for these 103 employees, who were involved in preserving and managing Jet Airways' operations amid the Corporate Insolvency Resolution Process (CIRP). The appeal sought payments for all workmen and employees of Jet Airways, arguing that the lump sum payments to these 103 individuals were unfair and unreasonable.

On June 20, 2019, CIRP proceedings were initiated against Jet Airways (India) Ltd. The Interim Resolution Professional (IRP) formed an Asset Preservation Team comprising 103 employees, who were granted lump sum payments due to uncertainties surrounding their employment. The Committee of Creditors (CoC) approved these payments, but the employees later departed from the team.

The Resolution Professional later included the claims of these 103 employees as NIL in the third list of creditors, despite their previous inclusion in the second list. This led the appellant to file MA No. 3387 of 2019, demanding that the RP clarify the settlements, justify the payments, and be held personally liable for any alleged illegal payments. The appellant contended that the lump sum payments were arbitrary and that all employees and workers should be compensated similarly.

The NCLT Mumbai, on September 26, 2023, rejected the appellant's appeal, deeming it meritless. The appellant subsequently appealed to the NCLAT.

The NCLAT reviewed the respondent's affidavit, noting that the 103 employees were paid lump sums because they were deemed essential for preserving Jet Airways' assets and operations during CIRP. This decision was approved by the CoC on July 19, 2019, as part of the operational budget.

The Appellate Tribunal concluded that the RP's actions were properly explained in the respondent's affidavit and previous adjudication. Therefore, there was no ground for holding the RP personally liable for the payments. As a result, the NCLAT upheld the NCLT Mumbai's decision and dismissed the appeal.