1

1. WHETHER THE APPLICATION UNDER SECTION 7 OF THE INSOLVENCY

AND BAKRUPTCY CODE, 2016 FILED BY “RSS NBFC” TO INITIATE
CORPORATE INSOLVENCY RESOLUTION PROCESS IS MAINTAINABLE?

It is humbly submitted before the Ld. Tribunal that the application filed by the “RSS
NBFC” against “CAA Jets” under sec7 of the Insolvency and Bankruptcy Code is not
maintainable. The veracity of the claim can be substantiated by the following contentions.

[A] That Sec7 was suspended at the time of filing of CIRP by the Applicant.
It is submitted that the corporate insolvency resolution process initiated by the Applicant
is not valid and not maintainable. CAA Jets had taken a long term loan worth INR 2500
crores from “Rashtriya Samaj Seva NBFC (“RSS NBFC) in May 20191. The loan amount
was required to be repaid through monthly interest payment mode 2. CAA Jets for the past
one year had always done its monthly payments on time and paid for the interest out of
the business proceeds it generated3. The company had also paid the Applicant for the
month of February, March and April 2020 4. On April 29th, CAA Jets informed the
Applicants that they would not be able to fulfill their obligations from 1 st May as they are
not able to resume their business5. On 15th May CAA Jets defaulted in the payment of the
amount of interest and due to which RSS NBFC on 30th May brought an application
under sec 7 of IBC seeking to initiate CIRP against CAA Jets 6. Meanwhile the Central
Government issued the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2020
on 5th June, 2020. The Ordinance suspended sec 7,9,10 of IBC and stated that no
applications for initiation of CIPR for a corporate debtor shall be filed for any default
arising on or after 25th March, 2020, as a result of COVID-19 or any reason connected to
it, for a period of six months or a year from that date 7. It is humbly submitted that the
non-payment of interest amount of the loan by CAA Jets was solely because of the
complete nationwide lockdown to stop the spread of COVID-19. The inter-state and
1
Moot Proposition, pt.6
2
Ibid.
3
Ibid.
4
Moot Proposition, pt.7
5
Ibid.
6
Moot Proposition, pt.9
7
Moot Proposition, ANNEXURE A
2

international travelling was stopped and all Indian planes were notified to be grounded
until further notice8. This caused the company to earn zero income, hence became a
cause for the default in the interest payment to RSS NBFC. Therefore, the CIRP initiated
by RSS NBFC against CAA Jets is not maintainable according to the ordinance passed by
the President.

[B] That the CIRP will adversely affect the future of the growth-oriented Company.
It is pertinent to note that Respondent Company has the second highest market share in
aircrafts business, second only to government owned Boomer Junta Planes9. From its
incorporation it has consistently grown from strength to strength. The “sale and leaseback
model” that it adopted also proved to be very successful. 10 Thus, it is a growth oriented
company which would have many employees working for it. The interest of a large
number of employees could not be obliterated only to satisfy the unjustified claims of
certain creditor.11 The company also has extensive business commitments, which include
flawless customer service; the company should be afforded a reasonable opportunity to
resuscitate its resources12 and thus, CIRP should not be initiated.13
Reliance is placed on Kotak Mahendra Bank v. J.B. Diamonds 14, wherein the Court held
that winding up petition cannot be admitted without first giving the company an
opportunity of making payment in a phased manner, particularly when the company is
going through a temporary financial crisis and there is a possibility of overcoming it. The
application by the Applicant implies insolvency and if it is accepted, it is likely to
damage the company’s creditworthiness or its financial standing with its creditor or
customers and even among the public15. Thus, the decision should be modulated by
equitable considerations and reasonable opportunity should be afforded to the
Respondent Company to resuscitate its resources.16
8
Moot Proposition, pt.5
9
Moot Proposition, pt.2
10
Moot Proposition, pt.4
11
Ramdeo Ranglal v. Ghooronia Tea Co. P. Ltd., 2005 126 CompCas 193 (Gau).
12
Ema India Ltd. Track Parts of India Ltd., (1998) 106 CompCas 700 (All).
13
PEC Ltd. v. M/s. Sree Ramakrishna Alloys Ltd. with PEC Ltd. v. M/s. Sree Gangadhar Steels Ltd., Company
Appeal (AT) (ins.) No. 120 of 2107
14
Kotak Mahendra Bank Ltd. v. J.B. Diamonds Ltd., (2011) 163 CompCas 152 (Bom).
15
SUMANT BATRA, CORPORATE INSOLVENCY: LAW & PRACTICE 35 (1st ed. 2017).
16
Madhya Pradesh Iron & Steel Co. v. G.B. Springs Pvt. Ltd., (2003) 117 CompCas 327 (Del); Gujarat Industrial
Investment Corpn. Ltd. v. Sterling Holding Resorts (India) Ltd., (2008) 143 CompCas 39 (Mad).
3

2. WHETHER THE APPLICATION OF YAMIA MILITIA TO BECOME A PARTY

TO THE CORPORATE INSOLVENCY RESOULTION PROCESS IS
ADMISSIBLE?

It is humbly submitted before the Ld. Tribunal that the application of Yamia Militia to
become a party to the CIRP is not admissible. This can be substantiated as follows.

[A] That the default in lease payment was the result of “Force Majeure”.

It is humbly submitted that there is no unjustifiable default in the payment of interest in

the instant case. It is to be noted that the default in lease payment made by CAA Jets
would be covered under the “Force Majeure” clause present in the lease agreement. CAA
Jets had already paid the lease amount for the month of February, March and April 2020 17
but due to COVID-19 outbreak in the whole word, it had the cease its business. This
unforeseen market situation has resulted in a temporary financial crunch for the
Respondent Company which otherwise had earned huge exponential growth 18. The
“Force Majeure” clause present in the agreement says “if the performance by either
party, of any of its obligation under the lease agreement is prevented, restricted or
interfered with by reason of circumstances as floods, fire, earthquake, natural calamity
and other acts of God: war, military operation, blockade, acts or actions of central or
state authorities or any other circumstances beyond the parties reasonable control, shall
be exempted from such performance to the extent of such prevention, restriction, or
interference.” 19 Therefore, in the present case scenario the default of the interest payment
occurred due to the order by central government to stop all business activities and hence
would come under the “Force Majeure” clause. In Seavalley Resorts Case20, the court
said that there was no unjustifiable delay in the payment involved 21. Thus, the delay in
payment by the Respondent Company is due to the unforeseen circumstances which have
occurred and not due to commercial insolvency of the company itself.

17
Moot proposition, pt.7
18
Moot Proposition, pt.4
19
Moot Proposition, ANNEXURE B
20
Bikkina Gopalkrishna Rao v. Seavalley Resorts Pvt. Ltd., (2001) 104 CompCas 267 (AP); Daulat Mokanlal
Luthria v. Solitaire Hotels Pvt. Ltd., (1993) 76 CompCas 215 (Bom).
21
Ibid.
4

[B] That Yamia Militia does not fulfill the criteria of becoming an “Operational
Creditor”

The counsel for the Respondent submitted that in the instant petition u/s. 9 of the Code
per se is not maintainable because the Respondent does not owe any 'Operational Debt' to
the applicant. The applicant is not an 'operational creditor 22'. Operational debt is clearly
defined in section 5(21)23 of the Code. Ipso-facto an Operational Debt arises only in
respect of the claim of 'goods' and 'services'24. The expression goods and service include
'employment'25. The counsel also maintains that it is clear from the bare reading of the
statute, the applicant ipso-facto and ipso-jure does not and cannot qualify to be by any
stretch of imagination of an Operational creditor as there is no operational Debt26.
Learned counsel has maintained that the 'debt' is not arising under any law for the time
being in force, as is the mandate of sub-section 21 section 5 of the Code and it would be
attracted only when the said debt is payable to (i) Central Government; (ii) State
Government; and (iii) Local Authority. According to the learned counsel sections 8, 9,
5(2), 5(21) must be construe in accordance to the object of the Code as outlined in the
long title. The Code as it stands must be construed strictly. The learned counsel invites
your attention to para 9 & 10 of the judgment rendered in the case of Workmen of
Dimakuchi Tea Estate v. Management of Dimakuchi Tea Estate 27. The counsel has placed
reliance on the judgment delivered by the court in Sajive Kunwar v. AMR infrastructure 28
where it has been held that a person who claims to be 'Operational Creditor' must show
that he is covered by section 5(20) of the Code which defines the expression 'Operational
Creditor'. Such person is also required to satisfy the requirement of section 5(21) by
showing that his claim is in respect of provision of goods or services including

22
“operational creditor” means a person to whom an operational debt is owed and includes any person to whom
such debt has been legally assigned or transferred;
23
 “operational debt” means a claim in respect of the provision of goods or services including employment or a
debt in respect of the 6[payment] of dues arising under any law for the time being in force and payable to the Central
Government, any State Government or any local authority;
24
Ibid.
25
Ibid.
26
Section 5(21) of IBC
27
AIR 1958 SC 353
28
IB-06(PB) 2017 decided on 16.2.2017
5

employment or debt in respect of repayment of dues arising under any law payable to the
Centre/State Government to acquire locus standi and to file a petition u/s. 9 of the Code29.

[C] That the contract is frustrated and also Section 7 of IBC is suspended

It is submitted by the counsel that the courts declare frustration of a contract on the
ground of subsequent impossibility when it finds that the whole purpose or basis of a
contract was frustrated by the intrusion or occurrence of an unexpected event or change
of circumstances which was beyond what was contemplated by the parties at the time
when they entered into the agreement30. The changed circumstances make the
performance of the contract impossible and the parties are absolved from the further
performance of it as they did not promise to perform impossibility 31. In Sushila Devi vs.
Hari Singh32 the Court stated that if the performance of a contract becomes impracticable
or useless having regard to the object and purpose of the parties, then it must be held that
the performance of the contract became impossible. But the supervening events should
take away the very basis of the contract and it should be of such a character that it strikes
at the root of the contract 33. In the present case also the impossibility to perform and
fulfill the contract arose when the government shut all the aviation companies for an
indefinite period of time34, which made “CAA Jets” to stop functioning and also they
stopped earning income. Due to this there arose an impossibility to fulfill the basic terms
of the agreement i.e. monthly lease payment and hence the contract stood frustrated. Also
the section 7 of IBC was suspended 35 at the time when CIRP was initiated and hence the
plea of the Yamia Militia to become a party to it is not admissible.

29
Ibid.
30
Krell v. Henry [1903] 2 KB 740
31
Satyabrata Ghose versus Mugneeram Bangur& Co & Anr (AIR 1954 SC 44)
32
AIR 1971 SC 1756: (1971) 2 SCC 288
33
Ibid.
34
Moot Proposition, pt 5
35
Moot Proposition, pt.9
6

3. IN VIEW OF THE SUIT PENDING IN THE CIVIL COURT, WHETHER THE

NATIONAL COMPANY LAW TRIBUNAL CAN ADJUDICATE UPON THE
SUBJECT MATTER OF THE DEMAND NOTICE?

It is humbly submitted before the National Company Law Tribunal that the present case
cannot be adjudicated before NCLT but is to be adjudicated in the Civil Court. This can
be substantiated by the following points.

[A] That the present case deals with Matters related to Civil Law
In the instant case the matter adjudicated upon is the matter related to the civil dispute as
the terms of contracts were violated by one party for the two other parties. “CAA Jets”
was in a lease agreement with various third parties for the lease of various types of
aircrafts36. “CAA Jets” also took a loan from RSS NBFC which required monthly interest
payments37. “CAA Jets” failed in making payments to both the agreements and therefore
defaulted38. The Yamia Militia with brought together other lessors and sought to bring a
legal action against CAA Jets for defaulting on their contractual obligations. 39 Yamia
Militia on the behalf of other lessors had initiated an action in the civil court of New
Delhi against Shaan Bhag on 24th May seeking special performance for the monthly lease
payments and damages for breach of the contractual obligations by Shaan Bhag. 40 Also
RSS NBFC brought an application under Section 7 of IBC seeking to initiate CIRP 41 but
section 7 was suspended by the central government. Also it is not mentioned anywhere
that the default caused by CAA Jets was due to the insolvency and bankruptcy of the
company. It is mentioned that the company’s cash reserves were fast dwindling 42 but it
does not mean that the cash reserves of the company were exhausted. Also section 7 of
the IBC was suspended in the mean time, which cancels the probability of NCLT
adjudicating upon the present case as the default occurred due to Covid-19 and reasons

36
Moot Proposition, pt.4
37
Moot Proposition, pt.6
38
Moot Proposition, pt.7
39
Moot Proposition, pt.7
40
Moot Proposition, pt.8
41
Moot Proposition, pt.9
42
Moot Proposition, pt.6
7

related to it. Therefore the matter in the present case is civil in nature and hence must be
adjudicated in the Civil Court.

[B] Jurisdiction of Civil Court in Company Law Matters

The issue at hand can be best understood with the help of the decided cases wherein the
courts have minutely analyzed and read Section 9 of CPC, 1908, in relation to the
intention and powers conferred to company law board under the Companies Act, 1956. In
Dwarka Prasad Agarwal v. Ramesh Chandra Agarwal43  it was held that:
“the ouster of jurisdiction shall not be readily inferred. If the matter is of civil nature and
if ouster of the jurisdiction is not implied or expressed then the jurisdiction of civil court
cannot be questioned.”
Section 9 of the Code of Civil Procedure, 1908 has the jurisdiction to try all suits of a
civil nature excepting suits of which cognizance is either expressly or impliedly barred.
Accordingly, though, the proper forum to adjudicate on an issue is the Civil Court,
section 9 of the CPC44 excludes suits of civil nature which is being empowered by the
Special Act on the Tribunal. It is pertinent to draw the reference of the wordings of Lord
Thankerton in the case The Secretary of State v Mask And Co45 where he explained the
scope of the exclusion clause in the following words:
"It is settled law that the exclusion of the jurisdiction of the Civil Courts is not to be
readily inferred, but that such exclusion must either be explicitly expressed or clearly
implied. It is also well settled that even if jurisdiction is so excluded, the Civil Courts
have jurisdiction to examine into cases where the provisions of the Act have not been
complied with, or the statutory tribunal has not acted in conformity with the fundamental
principles of judicial procedure".
The Supreme Court in the case of Dhulabhai v. State of Madhya Pradesh and
others46 (Constitutional Bench) laid down seven principles to be applied for deciding
whether a suit is barred under Section 9 CPC 47. The summary of the principles of the

43
(2003) 117 Com cases 206 (Sc): (2003) 4 Comp LJ 385
44
The Courts shall (subject to the provisions herein contained) have jurisdiction to try all suits of a civil nature
excepting suits of which their cognizance is either expressly or impliedly barred.
45
AIR 1940 PC 105, 110
46
A.I.R. 1969 S.C. 78
47
Ibid.
8

primary indicia, which would govern determination of the question whether the
jurisdiction of Civil Courts is, in any particular case, ousted, or not, would appear to be
(i) whether the decision of the tribunal, on which jurisdiction is conferred, is also
attributed finality by the statute, and (ii) whether such tribunal can do what the Civil court
would be able to do and is, therefore, an efficacious alternative to the Civil Court48.
In the case of Abdul Gafur v. State of Uttarakhand49 , the Supreme Court, while taking
recourse to the jurisdiction of Civil Court, has observed the right to bring a suit of civil
nature of one's choice, at one's peril, howsoever frivolous the claim may be, unless it is
barred by a statute50.
Therefore the counsel contends that the National Company Law Tribunal cannot
adjudicate upon the present case matter.

4. WHETHER “CAA JETS” VIOLATED THE PROVISION OF SECTION 3(3)

READ WITH SECTION 3(1) OF THE COMPETITION ACT, 2020?

It is humbly submitted before the Ld. Tribunal that CAA Jets did not violate the
provisions of section 3(3) read with Section 3(1) of the Competition Act, 2002. The
veracity of the claim can be substantiated by the following contentions.

[A] That CAA Jets and KingShark airlines did not enter in an anti-competitive
agreement
48
Dhulabhai v. State of Madhya Pradesh and others, A.I.R. 1969 S.C. 78
49
2008 (10) SCC 97.
50
Ibid.
9

It is submitted that there is no alliance agreement at all in place between the opposite
parties save, and accept the interline agreements which enables the passengers to
seamlessly use different service providers. It is further submitted by the party that CAA
Jets and KingShark Airlines are in fierce competition and offering full service flights to
the consumers51. And each of them is promoting in competition to the other the level and
quality of the services to increase its own respective market share and this is done by
making more, and more facilities available to its customers both at ground level and in
flight52. At the time of downturn in the market and considering severe constraint on
financial as well as on physical resources the two airlines had discussions so as to avoid
or mitigate the wastage of resources. It is submitted that the discussions between the two
had up to an extent been fruitful. It is submitted that as it is inevitable airlines strain to
stagger flights in a manner as would give them higher and higher capacity. This is not an
anti-competitive practice but simply a matter of a sensible and prudent management of
resources53. There is no any covert or overt agreement between the competitor airlines.
This arrangement is more in the nature of passenger-facility and it is completely at the
option and will of the passenger to avail of the facility, if so desired 54. The said interline
agreements between the Respondent airlines, does not in any manner adversely affect the
competition with each other in the industry. The consumers availing of the services of the
Respondent N0. 1 or the Respondent No. 2 are not in any way precluded from/ availing
of the services of similarly situated service providers. None of the Respondents control
the price of the air tickets or any part of the market 55. Respondent has not sought to
impose any unfair or discriminatory conditions on the passengers as alleged or otherwise,
while availing of the services of the Respondent. In absence of any concluded
agreement/contract and or any conclusive decision to implement any alliance 56, it is not
just, proper or appropriate to even suggest that CAA Jets and KingShark Airlines are
acting in concern and thereby affecting competition adversely. Only certain arrangements
51
On various different routes as only a small number of flights were available and they must not overlap and cover
all routes, Moot Proposition, pt.12 and 13.
52
They also introduced private jets for the migrant laborers who need to their homes, Moot Proposition, pt.12
53
The two companies were rivals of each other as they were involved in the same business and also KingShark
airlines are 3rd in the business, Moot Proposition, pt.12
54
They changed their booking policies also to provide comfortable booking procedure to the customers, Moot
Proposition, pt.12
55
Ticket Pricing was not discussed in the meeting between the two companies, Moot Proposition, pt.12
56
It is not mentioned anywhere in the problem that both the airlines entered into an agreement or alliance
10

or agreements common in the Airlines industry have been entered into which have
nothing to do with the announcement. Thus alliance per say cannot be termed violating of
provisions of section 3 (3) of the Act. It is further submitted that assumptions that such
interline agreements are voilative of the provisions of the Act is also erroneous for the
following reasons:

i.) Multilateral interline traffic agreement (MITA); say this agreement is a voluntary
commercial agreement between individual airlines to handle passengers travelling on
itineraries that require multiple airlines and is made between two carriers operating
schedule air transportation services, who desire to enter into arrangements under which
each party may sell transportation over the rules of the other Carrier.57

ii) Special Re-protection agreement: This is a bilateral agreement between the carriers
who operate similar routes to protect their passengers in case of any disruption in
operating carrier schedules due to flight cancellation, delay or re-timing of the flights.

[B] That the government has allowed coordination of certain activities

It is humbly submitted that as the COVID-19 pandemic has affected the entire business
world and many companies are suffering from huge loses the CCI released an advisory
that said “To cope with significant changes in supply and demand patterns arising out of
this extraordinary situation, businesses may need to coordinate certain activities, by way
of sharing data on stock levels, timings of operation, sharing of distribution network and
infrastructure, transport logistics,R & D, production etc. to ensure continued supply and
fair distribution of products (e.g. medical and healthcare products such as ventilators,
face masks, gloves, vaccines etc. and essential commodities) &services (e.g. logistics,
testing etc.)……………. However, only such conduct of businesses which are necessary
and proportionate to address concerns arising from COVID-19 will be considered. 58”
This notification by CCI allows the providers of essential goods and services to
coordinate with each other for the continued supply of services and goods. But this

57
Multilateral Interline Traffic Agreement Manual
58
Advisory during the times of COVID-19 by CCI
11

should not hamper the basic crux of the Competition Act. It is submitted that in the tough
times of the pandemic when many people who worked in different states, or who were
stuck away from their homes and also the migrant laborers, who wanted to go to their
homes and families, are to be helped by the respondent company who operated their
flights and is helping people reach their families 59. The airlines are also a fast option for
the supply of necessary goods that need to be transported urgently in these testing times.
Therefore the respondent companies had a meeting to decide upon various factors which
would help them to operate to their fullest and save their resources 60 and hence were
exempted from stringent laws governing the competition in India in the times of COVID.

[C] That there was no Cartel for Bid rigging

Firstly, it is contended that for section 3(3) of the Competition Act, 2002 ("Act") which
prohibits anti-competitive agreement between direct competitors, there has to be a
competition in the market in the first place. In the present case scenario the whole market
was on a standstill due to a national lockdown 61. Many companies were facing the same
problems as the Respondent Company62 and there existed no competition. It is further
averred that in a market, where the price is set by the buyers, demand is predictable and
there is a repeated bidding process, the products are homogeneous and specialized, price
parallelism is inevitable, which as per the decision of the Supreme Court in the well-
known case of Union of India Vs. Hindustan Development Corporation 63, alone cannot
lead to conclusion of cartelization. Accordingly, CCI or COMPAT could not have used
these unique market factors itself to presume collusion since most of these factors are
inherent in the nature of industry as described by CCI itself.

Secondly, contention is raised that there was no collusive agreement or bid rigging in this
case and the CCI decision was based solely on the factum of meetings of the trade

59
The company introduced charted flights to assist distressed migrant labors, Moot Proposition, pt.12
60
Both the airlines were struggling with limited personnel and unprecedented drop in passenger traffic. Also the
majorities of their aircrafts was grounded due to long pending maintenance and were also under repossession on
account of failure to make lease payments. All due to COVID. Moot Proposition, pt.13
61
Moot Proposition, pt.5
62
Moot Proposition, pt.13
63
(1993) 1 SCC 467
12

association held, attended by KingShark Arilines 64 and that the same cannot lead to a
conclusion of collusion. Such approach also attacks the fundamental right to from an
association under Article 19(1) (c)65 and (g)66 of the Constitution of India. Similarly,
inference of collusion cannot be drawn on the basis of two business associates meeting.

Thirdly, the Ld. Counsel relying on the Supreme Court's decisions in Punjab Land
Development & Reclamation Corporation Ltd. Vs. Presiding Officer, Labour
Court67 and S. Sundram Pillai Vs. V.R. Pattabiraman68 and CCI Vs. Coordination
Committee of Artists & Technicians of West Bengal Film & Television 69 raises another
legal argument that as per the Explanation to section 3(3) of the Act , which defines the
term "bid rigging" , since the word "means" is used , the "effects" on competition , as
mentioned in the said Explanation ( i.e. elimination or reducing of competition for bids,
or, adversely affecting the process of bidding ,or, manipulation the process of bidding)
have to be specifically proved with the help of evidence and cannot be inferred.

64
Moot Proposition, pt.12
65
(1) All citizens shall have the right (c) to form associations or unions
66
(1) All citizens shall have the right (g) to practise any profession, or to carry on any occupation, trade or business
67
 (1990) 3 SCC 682
68
(1985) 1 SCC 591
69
CIVIL APPEAL NO. 6691 OF 2014 Judgment dated 07 March 2017
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