New Delhi:

Jet Airways’ assets will be liquidated, the Supreme Court said Thursday afternoon, invoking ‘extraordinary’ powers under Article 142 to set aside a tribunal’s decision to uphold a resolution plan and transfer ownership – to the Jalan-Kalrock Consortium – without full payment to creditors.

Article 142 allows the court to make orders for ‘complete justice’ in any pending matter. In this instance, it noted “peculiar and alarming” circumstances of the case – referring to improper implementation of the resolution plan – and said it had, therefore, “no choice but to send Jet Airways into liquidation”.

“Liquidation must be available to lenders as a last resort… since resolution plan is no longer capable of implementation,” Chief Justice DY Chandrachud and Justices JB Pardiwala and Manoj Misra said, allowing a plea by creditors, including the State Bank of India and the Punjab National Bank.

The court said liquidation would best serve the interests of creditors, workers and other stakeholders, and also rapped the National Company Law Appellate Tribunal for its decision to uphold resolution despite non-payment to creditors.

The tribunal, on March 12, had upheld the resolution plan and cleared transfer of ownership, but that was challenged by the raft of creditors after the consortium’s alleged failure to pay dues.

One of the primary issues before the Supreme Court in this hearing was that the NCLAT had allowed transfer of ownership despite JKC failing to pay an initial Rs 350 crore as required by the resolution plan. Overall JKC was required to pay Rs 4,783 crore.

In this context the court ruled the Rs 200 crore already infused is to be forfeited and directed the NCLAT’s Mumbai bench to appoint a liquidator.

JKC earlier asked the NCLAT for permission to move the Rs 200 crore to an escrow account, but withdrew that plea in May after the tribunal denied relief, noting the top court is hearing the matter.

READ | Jet Winning Bidder Withdraws Plea To Put Rs 200 Crore In Escrow

Jet Airways was grounded in April 2019 and, two years later, JKC – a consortium of Murari Jalan, a United Arab Emirates-based non-resident Indian, and Florian Fritsch, a Jet shareholder via an offshore holding company called Kalrock Capital Partners Limited – successfully bid for ownership.

READ | Jet Says Resolution Plan Being Implemented, Q4 Result Delayed

Subsequently, a monitoring committee was set up to oversee plan implementation, but there have been legal and financial delays. In May Jet announced a delay in declaring financial results for the quarter and year ending March, and that the monitoring committee would meet soon to clear the data.

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File picture of a Jet Airways aircraft standing on tarmac at the domestic airport terminal in Mumbai.
| Photo Credit: Reuters

The Supreme Court on Wednesday (October 16, 2024) reserved its judgment on a plea of State Bank of India (SBI) and other creditors challenging the National Company Law Appellate Tribunal (NCLAT) decision that upheld the resolution plan of grounded air carrier Jet Airways and approved the transfer of its ownership to Jalan Kalrock Consortium (JKC).

A Bench comprising Chief Justice of India D.Y. Chandrachud and Justices JB Pardiwala and Manoj Misra heard submissions of Additional Solicitor General (ASG) N Venkatraman, appearing for the appellant banks and others, and senior advocate Mukul Rohatgi, representing the consortium, before reserving the judgement.

The NCLAT on March 12 upheld the resolution plan of the grounded air carrier and approved the transfer of its ownership to the JKC. The appellate tribunal further directed the Jet Airways monitoring committee to complete the transfer of ownership within 90 days.

Besides, the insolvency the NCLAT had also directed the lenders of Jet Airways to adjust the ₹150 crore paid by the consortium as performance bank guarantee (PBG).

The Supreme Court was hearing an appeal of State Bank of India, Punjab National Bank and JC Flowers Asset Reconstruction Private Limited challenging the March 12 verdict of the NCLAT.

The ASG submitted that the consortium, the successful resolution applicant (SRA), had defaulted on payments prescribed under the resolution plan.

The law officer said that the consortium was four years behind on its payment schedule at the moment.

MR. Rohatgi, appearing for the consortium, represented by law firm Karanjawala and Company, opposed the submissions of the law officer and it was the creditors who delayed the resolution process.

Jet Airways, which has remained grounded since April 2019, had in September, 2023, had said the new proposed promoters — the Jalan-Kalrock consortium — had completed an additional infusion of ₹100 crore into the carrier.

With this infusion, it had said, JKC has fulfilled its total financial commitment of ₹350 crore equity as per the court-approved resolution plan.

The consortium has fulfilled all other commitments to take control of the airline, it had added.

The airline had also said it was looking to re-launch operations from 2024.

After grounding in 2019 owing to a severe liquidity crisis at that time, the full-service carrier underwent an insolvency resolution process. However, it was having a dispute with the lender.

In 2021, JKC emerged as the successful bidder of Jet Airways.

Pristine Delhi:

The Nationwide Corporate Legislation Appellate Tribunal (NCLAT) on Monday prolonged the month until September 30 for the Jalan-Kalrock Consortium to pay Rs 350 crore to the lenders of the now-bankrupt Jet Airlines.

A 3-member NCLAT bench authorised the consortium’s request to increase the timeline and an adjustment of Rs 150 crore from the efficiency cupboard commitment (PBG) in opposition to the fee of Rs 350 crore.

The consortium submitted an enterprise sooner than the appellate tribunal, moving to pay Rs 100 crore via August 31, 2023, and any other Rs 100 crore via September 30, 2023.

For the difference Rs 150 crore, the consortium asked the appellate tribunal to encash the PBG submitted for that function.

The Jalan-Kalrock Consortium emerged because the successful bidder for the airline, which banned flight in April 2019 and then underwent an insolvency solution procedure.

Previous, the consortium was once to pay Rs 350 crore to the lenders via August 31 however sought an extension for the fee.

Hour the consortium emerged because the successful bidder beneath the insolvency solution procedure, the possession switch has been striking hearth amid proceeding variations between lenders and consortiums.

The NCLAT layout is but to be uploaded on its website online. Endmost Monday, the tribunal had reserved its layout.

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