Jet Airways Case: JKC’s Resolution Plan Has Become A Nightmare, SBI Tells Supreme Court

The lenders led by the State Bank of India told the Supreme Court on Wednesday that the Jalan-Kalrock Consortium's resolution plan for Jet Airways Ltd.'s revival has become a nightmare and isn't sustainable anymore.

Appearing for SBI, Additional Solicitor General N Venkatraman said that it's a case where the resolution plan has completely failed. He stated that JKC has not adhered to numerous conditions precedent that the resolution plan mandates.

The court was informed that JKC has not paid airport dues to the tune of Rs 1,000 crore, which it was obligated to pay as per the resolution plan, and now it has rewritten the resolution plan, saying that it isn't its responsibility to pay the dues.

In addition, Venkatraman said the National Company Law Appellate Tribunal, in an earlier order, had very clearly said that workmen’s compensation of provident funds is a sine qua non, or indispensable, to save JKC’s resolution plan.

However, in its March verdict that upheld that transfer of ownership, the NCLAT completely lets them off of Rs 220 crore worth of provident fund dues, Venkatraman said.

Senior Advocate Harish Salve, who also appeared for SBI, said that this entire episode has become a joke. 

“Running an airline requires a lot of money. It isn't a neighbourhood grocery store," Salve said. "To get an international travel permit, an airline must have at least 20 aircraft; however, JKC has only managed to get five as of now."

Salve also said JKC is in violation of a Supreme Court directive, whereby the court said that JKC cannot complete its first tranche of payment through a performance bank guarantee.

He said that JKC did not deposit Rs 150 crore in an escrow account, as per the court’s order. “It is a breach of a judicial order."

In January this year, the top court directed JKC to deposit Rs 150 crore in an SBI escrow account by Jan. 31, failing which the consortium will be treated as being non-compliant with its resolution plan. 

However, the NCLAT allowed JKC to adjust its first tranche payment from the performance bank guarantee, which is in contradiction with the top court’s orders.

Due to paucity of time, the top court has adjourned the case for a week and it will come up for a hearing on May 17.

Jet Airways went into insolvency after facing a severe funding crunch in 2019.

The resolution plan submitted by the consortium of Murari Lal Jalan—a non-resident Indian—and Florian Fritsch of Kalrock Capital Partners Ltd. was approved two years later, in June 2021.

After multiple litigations that continued for nearly two years, the NCLT in 2023 ordered the transfer of ownership of the airline to JKC in compliance with the resolution plan the tribunal previously approved.

Last month, the NCLAT, too, gave a nod of approval for the transfer of Jet Airways' ownership to JKC.