The Supreme Court on 2 May allowed Ezeego One Travel and Tours to withdraw its insolvency dispute against Yatra Online following a settlement where Yatra would pay Ezeego INR16 million (USD194,000).
Earlier in March 2023, JSA helped Yatra Online to secure the dismissal of insolvency resolution proceedings filed by creditor Ezeego One Tours and Travel in the National Company Law Appellate Tribunal (NCLAT).
The JSA team was led by partner Dheeraj Nair, who was assisted by principal associate Anjali Anchayil, senior associate Vishrutyi Sahni and junior associate Ridhima Sharma.
The NCLAT dismissal revises an earlier judgment also in March 2023 at the National Company Law Tribunal (NCLT) in Mumbai.
In Yatra Online Ltd v Ezeego One Travel and Tours Ltd, Yatra had filed an application before the NCLT, which was dismissed by the tribunal after conducting a fact-finding exercise on whether the date of default was beyond the section 10A suspension period under the Insolvency and Bankruptcy Code, 2016 (IBC).
Section 10A was introduced to the IBC to bar the filing of corporate insolvency resolution applications from 25 March 2020 for a period not exceeding one year due to the pandemic.
The NCLT found that Yatra had begun accruing defaults from 1 April 2019 – a period prior to the institution of section 10A.
However, Ezeego had already specified a date of default, which was 30 October 2020, in a demand notice and company petition, which fell squarely within the section 10A suspension period.
A demand notice is a sine qua non (an indispensable condition) before the filing of an application by an operational creditor for initiation of corporate insolvency under section 9 of the IBC.
The demand notice is an important document that the operational creditor sends to the corporate debtor, stating facts of the debt and default.
Yatra appealed the NCLT decision before the NCLAT, which on further investigation set aside the NCLT’s order.
The NCLAT held that the date of default, 30 October 2020, as set out in the demand notice and the section 9 application were the same. It further said Ezeego could not now change the date to an earlier one, even if it had the opportunity to amend its section 9 application.
Any attempt to set back the date of default is contrary to the disclosure made in the demand notice under section 8(1) and section 9, as established in a Supreme Court judgment in Ramesh Kymal v Siemens Gamesa (2021), the NCLAT added.
The NCLAT also clarified that the judgments permitting applicants to amend their application to change the date of default in the context of section 7 does not apply in the case of applications under section 9.
The NCLAT dismissed the section 9 application on the grounds that it is not maintainable, and therefore set aside the NCLT order.