Supreme Court orders liquidation of ailing Jet Airways as bidder fails to implement resolution plan

The Supreme Court on Thursday ordered the liquidation of grounded Indian carrier Jet Airways in view of the non-implementation of the resolution plan by successful bidder Jalan-Kalrock Consortium (JKC) for the last 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 as the resolution plan was not working out and it had to ensure that liquidation remained an option.

• Editorial: All over for Jet Airways

“In the peculiar and alarming circumstances…and also keeping in mind the fact that almost five years have elapsed since the resolution plan was duly approved by the NCLAT and there being no progress worth the name, we are left with no other option but to invoke our jurisdiction under Article 142 of the Constitution and direct that the corporate debtor be taken in liquidation,” it said.

The Bench directed the NCLAT to take appropriate steps for the appointment of liquidator and the commencement of all necessary formalities for the liquidation.

“We have reached the conclusion that the impugned order passed by the NCLAT is perverse and unsustainable in law. It has led to further complications,” the top court said, setting aside the National Company Law Appellate Tribunal (NCLAT) order that upheld the transfer of Jet Airways ownership to JKC under an approved resolution plan. Allowing an appeal filed by State Bank of India 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, Justice Pardiwala said, “This litigation is an eyeopener... It has taught us many lessons about the IBC (Insolvency and Bankruptcy Code) and the functioning of the NCLAT (National Company Law Appellate Tribunal).”

It said liquidation was the best route as the 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. The NCLAT had told the JKC to obtain an air operator’s certificate within 90 days. It had also given it more time to pay the dues to the SBI as 107 days had passed since the NCLAT 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.

Jet Airways has been grounded since 2019 owing to financial problems and its largest lender SBI had initiated insolvency proceedings against it before the NCLAT in Mumbai.

Fate of 1.48 lakh retail shareholders in limbo

• The fate of nearly 1.48 lakh retail shareholders who hold around 20 per cent stake in the Jet Airways remains uncertain after the SC ordered the liquidation of the Naresh Goyal-led grounded airline
• At the current market capitalisation of Jet Airways at Rs 386.69 crore, retail shareholding in the airline is around Rs 74.6 crore

Rs 200 cr of bidder forfeited

The SC ordered forfeiture of Rs 200 crore infused by the successful bidder of the airline, Jalan Kalrock Consortium, and permitted the lenders led by the SBI to encash Rs 150 crore performance bank guarantee

NCLAT verdict ‘unsustainable’

The SC termed the verdict of the National Company Law Appellate Tribunal (NCLAT) “perverse and unsustainable in law” and invoked its extraordinary powers under Article 142 to set it aside