Bkp Enterprise Operational Creditor vs Air India Ltd

For Respondent: Mr. Azeem Khan and Ms. Ishani Mukherjee, Advocates

JUDGMENT

(Date: 21.10.2022)

[Per.: Dr. Alok Srivastava, Member (Technical)]

Company Appeal (AT) (Insolvency) No. 266 of 2022

Page 1 of 15 This appeal has been filed under section 61 of the Insolvency

and Bankruptcy Code, 2016 (in short 'IBC') by the Appellant, who

is aggrieved by the order dated 02.11.2021 passed by the

Adjudicating Authority (National Company Law Tribunal, New

Delhi) in Interlocutory Application No. IA-3425/2021 in CP No. IB

No.332/ND/2021 (hereinafter called 'Impugned Order').

2. The Appellant/Operational Creditor is aggrieved by the

finding in the Impugned Order that he has failed to demonstrate

"sufficient cause" for condoning the delay in filing the petition IB

No. 332/ND/2021 before the Adjudicating Authority.

3. In brief, the case of the Appellant is that he was authorized

by the principal Orbest Airlines through an authorization letter

dated 29.10.2012 to 'submit, represent and act on behalf of Orbest

Airlines in connection with charter agreement dated 3.11.2012'

entered into by Orbest Airlines with Air India for carrying pilgrims

between Jeddah and Medina to Gaya as per directions of Air India

and Air India promised to make payments in accordance with the

terms and conditions of the charter agreement to Orbest Airlines.

The appellant's contention is that he was dealing with Air India on

behalf of Orbest Airlines and an amount of US $ 275,000 was due

to Orbest Airlines from Air India and the Appellant was duly Company Appeal (AT) (Insolvency) No. 266 of 2022

Page 2 of 15 authorized by Orbest Airlines vide letter dated 11.3.2013 sent by

the Commercial Director to receive payment amounting to US $

275,000 from Air India on account of last payment in connection

with air transportation of Haj pilgrims in the year 2012.

4. The Appellant has stated that despite repeated requests

made by the Appellant to Air India, they did not receive the due

payment, while all along between the year 2013 to 2017, the

Appellant kept on pursuing the case for payment of overdue

amount. He has added that Air India raised the requirement of

bank guarantee and later letter of indemnity bond in order to make

the said payment to the appellant, but it could not be made as

formalities remained incomplete. The Appellant has further stated

that he filed a writ petition before the Hon'ble High Court of Delhi

in May, 2018, which was disposed of vide final order dated

28.11.2018 on the ground that the Hon'ble High Court of Delhi did

not feel inclined to examine the matter under writ jurisdiction of

Article 226 of the Constitution of India. He has stated that,

thereafter, a demand notice dated 28.4.2021 was issued by the

operational creditor BKP Enterprise to the corporate debtor Air

India and later a section 9 application dated 30.6.2021 was filed

by the Appellant, in which the Impugned Order came to be passed

Company Appeal (AT) (Insolvency) No. 266 of 2022

Page 3 of 15 dismissing the application filed under section 5 of the Limitation

Act for condoning delay in filing the section 9 application.

5. A perusal of the Impugned Order makes it clear that during

the hearing of section 9 application by the Adjudicating Authority,

it was noticed that the date of default mentioned in Part IV of

section 9 application was 11.3.2013, whereas section 9 application

was filed on 30.6.2021 after a delay of more than eight years.

Hence, the Appellant (applicant before the Adjudicating Authority)

was advised to first deal with the issue of limitation, whereupon

the Appellant/Applicant filed Interlocutory Application bearing IA

No. 3425/2021 on 6.8.2021 before the Adjudicating Authority.

The Adjudicating Authority thereafter went on to first hear IA

3425/20212 and the Impugned Order was passed on 2.11.2021

whereby IA No. 3425/2021 was dismissed as the operational

creditor had failed to demonstrate sufficient cause for condoning

the delay in filing the section 9 application bearing IB-

332/ND/2021.

6. We heard the arguments advanced by the Learned Counsels

of both the parties and perused the record.

Company Appeal (AT) (Insolvency) No. 266 of 2022

Page 4 of 15

7. The Learned Counsel for the Appellant has argued that since

the Appellant had an unpaid operational debt which was to be paid

by the Respondent, he filed a writ petition before the Hon'ble High

Court of Delhi and pursued it sincerely and with due diligence and

this writ petition was finally disposed of vide order dated

28.11.2018, whereby it was dismissed. The Learned Counsel for

Appellant has claimed that the operational creditor was sincerely

pursuing legal remedy for recovery of the overdue amount and

after the writ petition was dismissed by the Hon'ble High Court of

Delhi that the Appellant issued a demand notice dated 29.4.2021

to the corporate debtor for payment of overdue amount under

section 8 of the IBC. He has also claimed that the Respondent

never disputed payment of the requisite amount in multiple

communications which are on record, but the payment was kept

pending by the Respondent as it kept on raising various

requirements, including furnishing a bank guarantee and later an

indemnity bond. He has claimed that the operational creditor

sent a duly executed indemnity bond to Air India, whereafter Air

India put forward a new requirement of authentication of a letter

dated 11.3.2013 issued by the Commercial Director of Orbest

Airlines.

Company Appeal (AT) (Insolvency) No. 266 of 2022

Page 5 of 15

8. The Learned Counsel for appellant has thus vehemently

argued that the debt was at various occasions acknowledged by

the corporate debtor through e-mail communication which is, inter

alia, acknowledgement of the corporate debtor's liability to pay, but

it was only due to the procedural formalities of submission of bank

guarantee or indemnity bond and authentication of Commercial

Director's letter dated 11.3.2013 that the final payment did not

take place, but the fact is that the operational debt is in default

and payable to the Appellant. He has further argued that the time

spent in pursuing his writ petition before the Hon'ble Delhi High

Court was done with full sincerity and therefore, the time spent in

prosecuting the writ petition should be considered for exclusion

out of time period when counted for the purpose of limitation.

9. The Learned Counsel for Respondent has argued that the

appellant is not an operational creditor, since he was only

authorized by its principal Orbest Airlines to 'submit, represent

and act on behalf of Orbest Airlines for the ensuing Haj operations

for Air India' and neither was he authorized to receive payment nor

was the Charter Agreement novated to authorize him to receive

payments on behalf of Orbest airlines and further he received the

earnest money deposit made by him on behalf of Orbest Airlines,

as per one-time authority dated 10.1.2013 given by Orbust Company Appeal (AT) (Insolvency) No. 266 of 2022

Page 6 of 15 Airlines. Furter, the Commercial Director of the principal, Orbest

Airlines requested Air India vide letter dated 11.3.2013 to remit

the remaining amount of US $ 275,000 in the account of BKP

Enterprise is doubtful for which Air India has sought proper

authentication by the Appellant, which has not been done. He

has claimed that the Appellant has been dealing with Air India

regarding Haj 2012 operations on behalf of Orbest Airlines but not

authorized to receive any payment qua the Charter Agreement.

10. The Learned Counsel for Respondent further argued that the

debt which was due for payment in 2013 has become time barred

as the section 9 application was filed on 30.6.2021, and in any

case the onus for delay in making the payment is on the Appellant

since it did not provide requisite documents or complete necessary

formalities for payment. He has contended that Orbest Airlines

went into bankruptcy on 4.4.2013 and this fact was not brought to

the knowledge of the Respondent by the Appellant. He has added

that in view of the bankruptcy proceedings against Orbest Airlines,

the Appellant was asked to submit authentication of the letter of

Commercial Director of Orbest Airlines dated 11.3.2013 which was

sent before Orbest airlines went into liquidation, as per advice of

its legal counsel, but the same was not submitted and hence the

delay of non-submission of requisite documentations has kept the Company Appeal (AT) (Insolvency) No. 266 of 2022

Page 7 of 15 payment pending. Finally, he has argued that since sufficient

cause was not shown for condonation of delay that was requested

in IA. No. 3425/2021, it was correctly dismissed by the

Adjudicating Authority.

11. The issue that falls for consideration in the present appeal is

whether the section 9 petition was filed within limitation and

therefore it concerns IA No. 3425/2021, which is an application for

condonation of delay under section 5 of the Limitation Act.

12. A perusal of pleadings made in section 5 application under

Limitation Act shows that the operational creditor has admitted

that the last acknowledgment by the corporate debtor was on

21.11.2017 through an e-mail from corporate debtor to Mr. Bruno

Claeys, former Commercial Director of the ex Orbest Airlines which

was actually to check the authenticity of letter dated 11.3.2013

and also enquiring whether the said letter was signed by him in

his capacity as Commercial Director of Orbit Airlines. Clearly this

e-mail is checking on the authenticity of his signature in letter

dated 11.3.2013 and cannot be considered as acknowledgment of

the operational debt by the corporate debtor. We note that an

earlier e-mail dated 7.11.2017 sent by Director (Finance) of the

corporate debtor requesting that an Indemnity Bond may be Company Appeal (AT) (Insolvency) No. 266 of 2022

Page 8 of 15 submitted by the operational creditor. A perusal and reading of

this e-mail shows that the corporate debtor was not certain that

the amount of US $ 275,000 as claimed by the Appellant is even

due to the corporate debtor, which was taken under liquidation on

4.4.2013 and whose liquidation was finalized on 21.1.2014. Again

since the matter as to whether payment of the operational dues to

the Appellant would be proper and in order, and not be

appropriate as Orbest Airlines had been liquidated, the corporate

debtor took the views of ASG, a senior law officer, which opinion

was communicated to the operational creditor/Appellant vide e-

mail dated 7.6.2017 (attached at pg. 184 of the appeal paperbook,

Vol. II). In this e-mail, the issue of authenticity of the letter issued

by the ex-Commercial Director of ex-Orbest Airlines was raised by

the corporate debtor. This view is extracted in the said e-mail,

which is as follows:-

"Air India would have to undertake the exercise of verifying the authenticity of the said letter in the light of the certificate issued by the Spanish Lawyers. It would be unwise on the part of the organization such as Air India to straight away proceed to make payment without first establishing the authenticity and veracity of the said letter. More so, the amounts involved are huge sums and therefore, due caution and care in such matters is essential......"

13. As a follow up, to checking on the authenticity of letter dated

11.3.2012, subsequently an e-mail was sent to Mr. Bruno Claeys,

Company Appeal (AT) (Insolvency) No. 266 of 2022

Page 9 of 15 ex-Commercial Director of former Orbest Airlines, who replied vide

e-mail dated 28.11.2017 (attached at pg. 206 of appeal paperbook,

Vol.II) that the signature on the letter dated 11.3.2013 was not his

i.e. of Mr. Bruno Claeys. Therefore, the letter dated 11.3.2013

(attached at pg. 165 of the appeal paperbook, Vol.II) by which Mr.

Bruno Claeys has purportedly asked Air India Ltd. to make

payment of US $ 275,000 to BKP Enterprise is doubtful regarding

its authenticity. Significantly the clarification sent by Mr. Bruno

Claeys through e-mail dated 28.11.2017 (attached at pg. 206 of

appeal paperbook, Vol.II) has been sent at a time when Mr. Bruno

Claeys was no longer working with the successor body of Orbest

Airlines which had been liquidated.

14. Thus we find that in the light of ASG's opinion seeking to

establish authenticity of the letter issued by the ex-Commercial

Director Mr. Bruno Claeys' letter dated 11.3.2013, there is a clear

doubt about the authenticity of the letter, which the Appellant has

not clarified though he was asked to do so. We also note that after

liquidation of Orbest Airlines, a certification issued on 11.11.2016

(attached at pg.178, Appeal Paperbook, Vol.II) by Mr. Macros

Andreu Bleckmann, a Spanish Lawyer registered in the Bar

Association of Madrid to say that the company Iverworld Airlines

Company Appeal (AT) (Insolvency) No. 266 of 2022

Page 10 of 15 SA (DBA Orbest Airlines)/official liquidator has no claim against

the company Air India Ltd.

15. Thus it is clear that Orbest Airlines went into liquidation on

21.1.2014, and that in the event of Mr. Bruno Claeys refusing to

accept that the signature on the letter dated 11.3.2013 was not in

his hand-writing, it is not established that so-called operational

debt is due and payable to the Appellant. We have also looked at

the Charter Agreement between Air India and Orbest Airlines

(attached at pp.148-159 of the appeal paperbook, Vol.II) wherein

there is no mention of BKP Enterprise to act and collect payment

on behalf of the original operational creditor Orbest Airlines.

Significantly, vide a letter dated 28.11.2012, Mr. Sohil B. Zaveri

and Mr. Bharat N. Zaveri of BKP Enterprise were authorized to

reconcile the Orbest accounts with Air India in respect of the Haj

operation undertaken in the year 2012.

16. We also note that the Hon'ble High Court of Delhi in WP (C-

5823/2018 and CM No. 4698/2018 qua which BKP Enterprise

had prayed for issuing a writ of mandamus against Air India for

outstanding payment of US$ 22,537 together with interest accrued

thereon @ 18% p.a. from 11.3.2013, the Hon'ble High Court of

Delhi while dismissing the writ petition noted as follows:-

Company Appeal (AT) (Insolvency) No. 266 of 2022

Page 11 of 15 "4. This court is of the view that controversy involved in the present case raises a disputed question of fact and it would not be apposite to examine the same in these proceedings. In view of the above , the present petition is disposed of, leaving it open for the petitioner to institute proper action for recovery, if so advised, in accordance with law."

17. Thus, it is clear from the above noted order of Hon'ble High

Court of Delhi that there was a dispute about payment of the

claimed amount of operational debt. Further the issue whether

the said pending amount of alleged operational debt is due and

payable to the operational debtor is also a doubtful matter in view

of the e-mail dated 28.11.2017 of Mr. Bruno Claeys, ex-

Commercial Director of Orbest Airlines, wherein he has not

accepted that the letter has his signature. It is also quite clear

from the Charter Agreement entered into between Air India and

Orbest airlines regarding Haj Operation 2012 that BKP Enterprise

was given the authority to collect payment from the corporate

debtor a fact that Air India has also raised in its arguments.

18. We thus find that the e-mails that have been cited by the

Appellant in his application IA No. 3425/2021 for condonation of

delay do not provide clear and unequivocal acknowledgment of

debt that is due to be paid to the Appellant. These e-mails only

allude to the fact that there was no clarity between whether

Company Appeal (AT) (Insolvency) No. 266 of 2022

Page 12 of 15 payment should be made to BKP Enterprise and moreover, Orbest

airlines after liquidation certified that no payment was due to be

received from Air India.

19. We peruse the judgment of the Hon'ble Supreme Court in

the matter of Assets Reconstruction Company (India) Limited

vs. Bishal Jaiswal ( 2021 SCC OnLine SC 321) wherein Hon'ble

Supreme Court has observed as follows:-

"........ The statement on which a plea of acknowledgement is based must relate to a present subsisting liability though the exact nature or the specific character of the said liability may not be indicated in words. Words used in the acknowledgement must, however, indicate the existence of jural relationship between the parties such as that of debtor and creditor, and it must appear that the statement is made with the intention to admit such jural relationship. Such intention can be inferred by implication from the nature of the admission, and need not be expressed in words. If the statement is fairly clear then the intention to admit jural relationship may be implied from it. The admission in question need not be expressed but must be made in circumstances and in words from which the court can reasonably infer that the person making the admission intended to refer to a subsisting liability as at the date of the statement........."

20. From the above stated observations of Hon'ble Supreme

Court in the matter of Assets Reconstruction Company (India)

Limited vs. Bishal Jaiswal (supra), it is quite clear that a jural

relationship should be established between the parties, which

Company Appeal (AT) (Insolvency) No. 266 of 2022

Page 13 of 15 should be in existence and thereafter the said liability can be

acknowledged. In the e-mails that the Appellant has mentioned in

his section 5 application under Limitation Act, no jural

relationship as operational creditor and corporate debtor has been

established between the Appellant and Respondent, and therefore

the e-mail communications of Air India do not constitute

acknowledgment of the debt.

21. We have noted in previous paragraph that the status of BKP

Enterprise as operational creditor is not established and hence the

debt is not due and payable to the appellant. The application IA

3425/2021 lists e-mail communication starting from 7/3/2013 to

21/11/2017 as acknowledging the operational debt. The period

between 23.3.2018 to 28.11.2018, which is the time when the

Appellant pursued writ petition before the Hon'ble Delhi High

Court, is stated by Appellant as spent in bonafide pursuit of legal

remedy. This pursuit of legal remedy before Hon'ble Delhi High

Court to obtain writ of mandamus against Air India was dismissed

as the matter involved disputes and was not found appropriate for

consideration in writ proceedings. IBC came into force in

December, 2016 and the Appellant has chosen to file section 9

application on 30.6.2021. Pursuing a legal remedy before Hon'ble Company Appeal (AT) (Insolvency) No. 266 of 2022

Page 14 of 15 High Court of Delhi and failing to get a favourable order on merits

cannot be taken as sufficient cause for condonation of delay.

Further the order of Hon'ble High Court of Delhi was passed on

28.11.2018 and Section 9 Application has been filed on 30.1.2021,

no sufficient cause has been shown for such long delay.

22. Thus, it is quite clear that the application for condonation of

delay does not contain sufficient cause and has, therefore, been

correctly dismissed by the Adjudicating Authority. We do not find

any error in the order of Adjudicating Authority and consequently

dismiss the appeal.

23. There is no order as to costs.

(Justice Ashok Bhushan) Chairperson

(Dr. Alok Srivastava) Member (Technical)

(Mr. Barun Mitra) Member (Technical)

New Delhi 21st October, 2022

/aks/ Company Appeal (AT) (Insolvency) No. 266 of 2022

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