The Supreme Court on Thursday set aside the National Company Law Appellate Tribunal (NCLAT) order which has allowed cash-strapped Jet Airways ownership transfer to Jalan-Kalrock Consortium (JKC). The apex court order came after the resolution plan approved by the National Company Law Appellate Tribunal (NCLAT) was not implemented for over five years.
Since the successful bidder for the airline, the JKC, had failed to comply with the conditions of the resolution plan, the apex court ordered for the liquidation of the airline. Using its special powers under Article 142 of the Constitution, the Supreme Court decided to liquidate the airline after noting that the JKC had not fulfilled key obligations outlined in the resolution plan.
The apex court also set aside the March 2024 order of the NCLT, which had upheld the transfer of ownership to JKC. The court criticized NCLAT for disregarding its previous rulings and for allowing the order in favour of JKC without fully examining the facts.
The apex Court directed the NCLT Mumbai Bench to appoint a liquidator forthwith. It also ordered that the amount of INR 200 crores paid by the successful resolution applicant (SRA) stand forfeited.
The NCLAT order was challenged by SBI-led lenders of the cash-strapped Airlines at the Supreme Court. The lenders argued that JKC’s resolution plan was “unworkable” and urged the court to use its inherent powers under Article 142 to liquidate the airline.
The NCLAT has asked the Jalan Kalrock Consortium to file an application stating the conditions for seeking an extension to make payments to Committee of Creditors of bankrupt airline Jet Airways. The application filed by the State Bank of India, the primary lender, and others pertains to the transfer of ownership of the airline to JKC.
In its order, the apex court observed that since the resolution plan is not possible to be implemented, we have to ensure that liquidation remains an option for the corporate creditors. The court said the fundamental concern is not only to do substantial justice but also to bring speedy disposal of disputeThe main issue before the Court was the challenge to the decision of the NCLAT which allowed the completion of the transfer of ownership of the airlines to the SRA without paying the complete 350 crores as per the approved Resolution Plan. As per the resolution plan, the SRA was to pay a sum of INR 4783 crores and infuse 350 crores in the first tranche of the payment as agreed.
The SRA on the other hand objected to the lenders’ arguments for seeking to liquidate the Airlines. It also raised concern about the potential liquidation of Jet Airways. While JKC claimed ownership of the airline and stated it was doing everything possible to restart its operations, the lenders accused the consortium of intentionally stalling efforts and pushing the airline closer to liquidation.
Jet Airways, founded by Naresh Goyal, went bankrupt in April 2019 and suspended its flight operations due to financial troubles.
JKC’s resolution plan promised an infusion of funds, clearance of creditors’ dues, and the revival of flight operations. However, the execution of the plan encountered significant delays, leading to a prolonged legal battle with the lenders that spanned over five years.
