The Supreme Court on Thursday ordered the liquidation of defunct Jet Airways according to the Insolvency and Bankruptcy Code (IBC), setting aside the order of the National Company Law Appellate Tribunal (NCLAT).
NCLAT had earlier, upheld the transfer of ownership of the airline to the Jalan Kalrock Consortium (JKC) as part of the Corporate Insolvency Resolution Process (CIRP). The Supreme Court, while issuing an order observed that JKC failed to comply with the resolution as it failed to infuse Rs 150 crore, the first trench of Rs 350 crore to clear the workers' dues and airport dues among other essential costs. The latest judgement marks the end of the airline's struggle to revive itself.
The court also reprimanded the NCLAT for issuing a judgment in favour of JKC without fully examining the facts.
What is the case?
It all started in 2019 when Jet Airways suspended its operation after getting cash-starved. Following this, the State Bank of India (SBI), the largest lender, initiated insolvency proceedings before the National Company Law Tribunal in Mumbai (NCLT).
After months of proceedings, in March 2020, the NCLT allowed more time for the resolution process, as requested by the airline. Months later in October 2020, JKC, a consortium led by UAE-based entrepreneur Murari Lal Jalan and UK-based Kalrock Capital, was approved by the Committee of Creditors (CoC). It emerged as the successful bidder for the airline revival in 2021.
The NCLT approved its resolution plan and approved the ownership of the airline on certain conditions including, the acquisition of an air operator's certificate. JKC was also required to pay the dues of lenders which were to the tune of Rs 8,000 crore.
Lenders reach NCLT: The fulfilment of the conditions became the reason for the dispute between the lenders and the consortium. The lenders again reached out to NCLT, which dismissed the objections and allowed the takeover of the airline by JKC in January 2023.
Lenders reach NCLAT: With the issue of non-fulfilment of conditions and demand to stop the takeover, the lenders, headed by SBI, reached out to NCLAT, however in March 2023, the appellate tribunal also confirmed the transfer of ownership of Jet Airways to JKC. Moreover, the NCLAT directed the lenders to complete the transfer within 90 days.
The appellate tribunal, while giving the order, instructed JKC to secure an air operator certificate within 90 days while permitting it to use Rs 150 crore from its bank guarantee to make part of initial payments of Rs 350 crore to the lenders.
Lenders reach SC: Unsatisfied with the order, the lenders approached the Supreme Court. While hearing in the apex court, JKC emphasised the detailed judgement of the NCLAT, however, the lenders, represented by the Additional Solicitor General Venkatraman asserted that JKC does not have an intention to implement the resolution. He emphasised that going by their contention, the CoC, which has 30 banks, will have to bear the airport dues of Rs 1,100 crore.
The apex court reserved the judgement on October 16. The Supreme Court has used its inherent power under Article 142 to liquidate the company, marking the end of the long struggle for the revival of the airline.
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