Jet Airways Insolvency: Supreme Court Orders Liquidation Of Grounded Carrier
Jalan Kalrock Consortium's resolution plan for Jet Airways is incapable of being implemented, therefore we must make sure that the avenue of liquidation must stay alive, Supreme Court said.
The Supreme Court on Thursday ordered the admission of Jet Airways Ltd. into liquidation.
The top court has ordered the Mumbai bench of the National Company Law Tribunal to appoint a liquidator for the process.
This litigation has been eye opener, the top court said while pronouncing its verdict.
The court said that the order of the National Company Law Appellate Tribunal which allowed the adjustment of the performance bank guarantee of Rs 150 crore towards the first tranche of payment was in flagrant violation of the top court's order.
Adjustment of the performance bank guarantee could not have been allowed as it was in violation of the resolution plan, the top court said, adding that the plan was clear in this aspect.
The court also pulled up Jalan-Kalrock Consortium for its failure to implement the resolution plan as per the terms mentioned in it. The winning bidder for the grounded airline contravened the terms of the plan, the court further said.
"The resolution plan is incapable of being implemented, therefore we must make sure that the avenue of liquidation must stay alive," said Supreme Court, while underlining the sanctity of timelines under the Insolvency and Bankruptcy Code of 2016.
With this, appeal by State Bank of India in the matter succeeded and the NCLAT order has been set aside. The amount of Rs 200 crore deposited by Jalan-Kalrock Consortium stands forfeited.
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.
In March this year, the NCLAT, too, gave a nod of approval for the transfer of Jet Airways' ownership to JKC.
On the one hand, lenders led by the SBI argued that JKC's resolution plan is a complete nightmare and refused to budge from their stand that the airline's liquidation is the only step forward.
On the other hand, JKC argued that it is the SBI who is the real thorn in the their way as as it wants to sell Jet’s assets as scrap.
The top court had reserved its verdict in the case last month after a detailed hearing.
