The Supreme Court on Thursday ordered liquidation of grounded Indian airline Jet Airways, after finding National Company Law Appellate Tribunal (NCLAT) judgment was in flagrant disregard of the the top court’s January 2023 judgment.
The top court stated that the NCLAT disregarded the Court’s January 2023 order by allowing the adjustment of a INR 150 crore performance bank guarantee (PBG) against an infusion requirement of INR 350 crore from the Jalan-Kalrock Consortium (JKC), Jet Airways’ resolution applicant.
The Naresh Goyal-led airline, which was once India’s premiere airline, has been grounded since 2019. Later, NCLAT had approved the transfer of Jet’s ownership rights to a consortium of UK’s Kalrock Capital and United Arab Emirates-based entrepreneur Murari Lal Jalan .
The apex court today noted that liquidation will be in the best interest of its lenders and employees as Jalan-Kalrock Consortium failed to implement the resolution plan, five years since its approval.
Further, the bench of Chief Justice D Y Chandrachud, Justices J B Pardiwala and Manoj Misra directed the National Company Law Tribunal (NCLT), Mumbai to take steps for appointment of liquidator.
The Supreme Court pronounced its judgment on a batch of appeals including one by lenders against the National Company Law Appellate Tribunal’s order approving the takeover of Jet Airways (India) Ltd. by the JKC.
The lenders, led by State Bank of India, have argued that the consortium has failed to meet the conditions for the takeover of the airline and is no longer in a position to revive the airline.
Jet Airways Liquidation: What SC said
Justice Pardiwala said that the litigation surrounding the airline was “an eye-opener” with numerous lessons for India’s Insolvency and Bankruptcy Code (IBC).
The Supreme Court today found the NCLAT’s judgment perverse, noting that it misread material evidence and disregarded legal principles. It said that the bank guarantee was meant to stay active until the conclusion of the insolvency process.
Consequently, the Supreme Court noted JKC’s failure to infuse the promised funds of INR 350 crore, which makes enough grounds for Jet Airways’ fate towards liquidation.
The court also permitted lenders to encash PBG of INR 150 crore.
The top court was to decide whether to uphold the takeover of Jet Airways, making it the first-ever successful completion of a bankruptcy resolution of an airline in India, or liquidate the airline, a prayer made by the lenders.
(With inputs from Indu Bhan, ET Bureau)
