Supreme Court Refuses To Interfere With NCLAT Order Upholding CIRP Against Air Travel Enterprises
The Supreme Court on Tuesday dismissed an appeal filed by E.M. Najeeb Ellias Mohammed, promoter of Kerala-based travel agency Air Travel Enterprises India Ltd., declining to interfere with an NCLT order admitting insolvency proceedings against the company as a corporate guarantor
A bench of Justices Pamidighantam Sri Narasimha and Vijay Bishnoi held that no error of law or fact was committed by the National Company Law Tribunal.
“Having heard learned senior counsel appearing for the appellant and the respondents, we are of the opinion that the National Company Law Tribunal has not committed any error in law or fact,” the court observed.
The dispute relates to credit facilities extended by Union Bank of India to Green Gateway Leisure Ltd., a company promoted by Air Travel Enterprises, for the development of a five-star resort project at Bekal in Kerala. A term loan of about Rs 25 crore was sanctioned in 2010. The facility was renewed and restructured on several occasions.
To secure the loan, Air Travel Enterprises executed corporate guarantees in favour of the bank. The promoter, E.M. Najeeb, also stood as a personal guarantor.
The project failed to progress as planned. Delays and cost overruns followed, and loan repayments fell behind. The account was classified as a non-performing asset in September 2015. Demand notices were issued in December 2017, and the guarantees were invoked.
Settlement talks did not result in repayment. In 2020, Union Bank initiated insolvency proceedings against Green Gateway Leisure. The appellate tribunal granted time for settlement, but the account was not regularized.The process ultimately resulted in an order of liquidation in November 2023.
At the same time, the bank proceeded against Air Travel Enterprises in its capacity as corporate guarantor. the promoter opposed the move on the ground of limitation. He argued that the claim was time-barred from the NPA date. He also said that acknowledgements by the borrower could not bind the guarantor.
The NCLT, however, rejected the objection in its order dated December 22, 2023. It held that the guarantees were continuing and that repeated acknowledgements and settlement proposals extended limitation. The insolvency application was admitted. The NCLAT upheld the order on February 26, 2024.
It held that acknowledgments made by the principal borrower were binding on the corporate guarantor as well.
In appeal, the Supreme Court declined to re-examine these findings.
For Appellants: Senior Advocates S. Niranjan Reddy Nikhil Goel, with Advocates Haris Beeran, Azhar Assees, Anand B. Menon, Rizwana R. Raj, Shaswat Jena, Radha Shyam Jena, AOR
For Respondents: Senior Advocates P.h. Arvindh Pandian, with Advocates Varun Srinivasan, Vinithra Srinivasan, Dilraj Singh Bhinder, Anna Oommen, P. S. Sudheer, Rishi Maheshwari, Anne Mathew, Bharat Sood, Jai Govind M J, J. Karan Malhotra, Jashan Vir Singh, Rupam Sharma, Sujoy Chatterjee, AOR, P.S. Sudheer, AOR