Supreme Court orders liquidation of grounded air carrier Jet Airways' assets
The Supreme Court on Thursday ordered the liquidation of grounded Indian carrier Jet Airways in view of the “peculiar and alarming” circumstance that the resolution plan had not been implemented for five years.
A Bench of CJI DY Chandrachud, Justice JB Pardiwala and Justice Manoj Misra said it had no choice but to order liquidation of Jet Airways.
The top court set aside the National Company Law Appellate Tribunal (NCLAT) order that upheld the transfer of Jet Airways ownership to the Jalan-Kalrock Consortium (JKC) under an approved resolution plan.
Allowing an appeal filed by State Bank of India (SBI) and other creditors against the NCLAT order, it said, “We have no doubt that the NCLAT acted contrary to settled legal principles and incorrectly interpreted our order.”
Pronouncing the verdict, Pardiwala said, “This litigation is an eyeopener... It has taught us many lessons about the IBC (Insolvency and Bankruptcy Code) and the functioning of NCLAT (National Company Law Appellate Tribunal).”
The top court invoked its extraordinary powers under Article 142 of the Constitution to set aside a NCLAT decision to uphold a resolution plan and transfer ownership - to the JKC - without full payment to creditors.
It said liquidation was the best route as Jalan-Kalrock Consortium (JKC) -- the successful bidder for the airline -- failed to implement the resolution plan, five years after its approval.
The NCLAT had on March 12 upheld the resolution plan of the grounded airline and approved the transfer of its ownership to the JKC. NCLAT had told JKC to obtain an air operator’s certificate within 90 days. It had also given it more time to pay Rs 175 crore to SBI as 107 days had passed since NCLAT’s order allowing the transfer of ownership.
The lenders -- State Bank of India, Punjab National Bank and JC Flowers Asset Reconstruction Private Limited had challenged the NCLAT verdict.
JKC had alleged that SBI has given loans to previous companies without security and that is why they are floundering now while SBI had said the Performance Bank Guarantee (PBG) of Rs 150 crore should not be used even if expressly mentioned in the resolution plan.
NCLAT had also directed the lenders of Jet Airways to adjust the Rs 150 crore paid by JKC as PBG.
The creditors said out of the Rs 350 crore payment, which is the first tranche, only Rs 200 crore has been paid. They said their Air Operator Certificate (AOC) expired in September 2023 and was never extended. SBI had asked the court for the liquidation of the airline, saying they don’t know what to do when the resolution plan was not working.
