'Jet Airways' revival plan is discriminatory'

In its appeal before the NCLAT, PNB - the largest shareholder in Jet Airways - argued that NCLT should have heard its application on the issue of reduction of its claim by Rs 202 crore before passing an order on the revival plan.

Challenging the “illegal” reduction in its claim by the erstwhile resolution professional (RP) in the Jet Airways revival plan, the Punjab National Bank (PNB) has moved the National Company Law Appellate Tribunal (NCLAT) citing discrimination.

The NCLAT on Thursday issued notices to RP Ashish Chhawchharia and the committee of creditors on PNB’s plea to set aside the insolvency court’s approval of the airline’s revival plan.

It has posted the matter for further hearing on September 21.

In its appeal before the NCLAT, PNB argued that NCLT should have heard its application on the issue of reduction of its claim by Rs 202 crore before passing an order on the revival plan.

The Committee of Creditors gave its nod to the Jet Airways resolution plan last October while the NCLT approved it in June.

According to the plan, the Kalrock-Jalan consortium will pay Rs 380 crore to financial creditors, as against the admitted claims of about Rs 7,800 crore.

Last September, PNB had submitted a revised claim of Rs 994 crore.

Its claim amount was reduced to the extent of the fair value of shares it held in Jet Airways.

PNB, however, questioned the move and said the RP’s decision to reduce the claim amount was arbitrary and beyond his jurisdiction.

The bank said its claim can be set off only upon sale of pledged shares and cannot be reduced merely upon invocation.

PNB is the largest shareholder in Jet Airways with 26 per cent stake which it secured after invocation of a pledge in 2019.

“The consent by the appellant (PNB to the revival plan) amounts to forced consent as in case of dissenting financial creditors the resolution plan entails only minimum payment of liquidation value.

"This differential treatment of assenting and dissenting financial creditors is discriminatory,” it said.

Further, PNB argued that the resolution plan was discriminatory as it treated it on a par with its promoter Naresh Goyal and Etihad Airways and proposes a payment of a fixed sum of Rs 10,000.

All other public shareholders will get one share for every 100 shares held by them in the airline upon restructuring of capital structure.

“The approval of the resolution plan by the adjudicating authority (NCLT) is infirm both due to contravention of law and material irregularity by the resolution professional,” said senior advocate and additional solicitor general Aman Lekhi, who appeared for PNB.

While Chhawchharia denied comment, an airline source said PNB’s plea should not impact the airline’s revival as it was an inter-bank dispute on the amount that should be paid to each creditor under the plan.

Photograph: Danish Siddiqui/Reuters