NCLT agrees to hear Air India case; seeks response from carrier by December 9

A two-member Bench of Justice Ina Malhotra and Justice LN Gupta, while agreeing to hear the case, sought AI’s response by December 9, when it will next hear the case.

The apex court had asked NCLT to re-consider the pilot’s plea for initiation of insolvency against AI.

A New Delhi Bench of National Company Law Tribunal (NCLT) Wednesday agreed to hear a case of insolvency against Air India (AI), moved by a pilot of the airline. A two-member Bench of Justice Ina Malhotra and Justice LN Gupta, while agreeing to hear the case, sought AI’s response by December 9, when it will next hear the case.

The NCLT agreed to hear the case, following an October order by a two-judge Supreme Court Bench of Justice Rohinton Nariman and Justice V Ramasubramanian, which set aside the tribunal’s decision to adjourn the case sine die. The apex court had asked NCLT to re-consider the pilot’s plea for initiation of insolvency against AI. The two-judge SC Bench had then said though it was aware of case pending with it, the same could not come in the way of the NCLT hearing the insolvency petition filed by the pilot under The Insolvency and Bankruptcy Code (IBC). Under Section 9 of IBC, salaried staff can, acting as operational creditors, initiate insolvency proceedings against a corporate debtor.

In February, the case moved by a serving pilot of the airline was adjourned sine die by the NCLT following submissions made by AI that a similar case was begin heard by the apex court as well. The pending case referred to by AI concerns a challenge to a judgment of the Bombay High Court, which had ruled that the airline could not have altered the terms of service of employees who had joined when the erstwhile domestic carrier Indian Airlines was merged with it in 2007.

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The pilot had approached the NCLT towards the end of last year. After the tribunal’s order, he approached the top court in August this year.

A separate but similar plea by another pilot who is now retired, also seeking the initiation of insolvency proceedings against AI for failing to pay his dues, has been pending before the NCLT since the beginning of 2018.

It will be next heard by NCLT on December 3. The dues claimed by the serving and former pilots amount to nearly Rs 1 crore and Rs 70 lakh respectively, a person aware of the developments said. These dues are for the period between July 2012 and January 2016.

Cases such as these could create problems for the central government’s plan to float an Expression of Interest (EoI) for divestment of its stake in the debt-laden national carrier. The government had planned to float the EoI in November, but it could be delayed — it has been reported that a new proposal could come only by January 2020.

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The Centre had floated an EoI last year to sell 76 per cent stake in AI, which has a debt of around Rs 57,000 crore. The attempt had failed. In June, the Indian Commercial Pilots Association wrote to AI Chairman and Managing Director Ashwani Lohani, asking him to clear dues worth nearly Rs 1,200 crore, failing which they would take the company to NCLT.

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