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Airport Authority of India Not ‘Corporate Person’ under IBC: NCLT

In a recent order, the National Company Law Tribunal (NCLT), Hyderabad, held that respondent no.2, the Airport Authority of India was not a “corporate person” as defined under Section 3(7) of the Insolvency and Bankruptcy Code, 2016, and hence, no proceedings could be initiated against the said Authority under the Code.[1]

In 2019, the services of the petitioner, M/s. Akash Electrotek Engineers Pvt. Ltd. were availed of in respect of conducting certain electrical works at Lucknow Airport and a tripartite agreement was executed with the respondents. Subsequently, the process of privatisation of Lucknow Airport was initiated and the Airport was handed over to the successful bidder, M/s. Adani Group for future management, construction, and development.  

The petitioner filed the present petition alleging that even after having completed 95% of the work allotted, the payment for the same was not received despite multiple requests. On the other hand, the respondent denied the allegations citing delays and issues with the quality of the work and services provided. It was asserted that the petitioner failed to submit the GST invoice or extend the mobilisation Bank Guarantee, and also in paying wages to its workers and employees which ultimately led to a claim being filed before the Labour Court. Reference was then made to a suit instituted by the respondent regarding the amount payable by the petitioner.

Accepting the respondent’s submissions, the Tribunal observed that respondent no.2 was a statutory body created under the Airport Authority of India Act, 1944, and was not a “corporate person” as defined under Section 3(7) of IBC. It followed that proceedings under IBC could not have been initiated against said Authority. Additionally, the Tribunal noted that the single application filed against two corporate debtors was ambiguous and the demand notice for the alleged operational debt was not accompanied by GST invoices and resulted in uncertainty since the parties presented conflicting printouts of Excel sheets.

Remarking that the petitioner ought to have approached the appropriate Civil Court for recovering outstanding dues, the Tribunal held that the “principal objective of the Insolvency and Bankruptcy Code (IBC) is not intended to be a tool for recovering disputed debts. Instead, its primary purpose is to facilitate the resolution of insolvency for corporate entities. Issues pertaining to non-payment for services rendered cannot be addressed through the initiation of insolvency proceedings under the IBC”.

[1] M/s. Akash Electrotek Engineers Pvt. Ltd. vs. M/s. NCC Limited & Anr. [CP(IB) No.66/09/HDB/2022]