The Supreme Court of India issued a ruling on Thursday, ordering the liquidation of Jet Airways, overturning the National Company Law Appellate Tribunal (NCLAT) decision that had supported the transfer of the airline’s ownership to the Jalan-Kalrock Consortium (JKC) under an approved resolution plan.
Court’s Decision to Liquidate Jet Airways
A bench consisting of Chief Justice of India Dhananjaya Y. Chandrachud and Justices JB Pardiwala and Manoj Misra backed the appeal by the State Bank of India (SBI) and other creditors, who challenged the NCLAT’s ruling. The bench stated that the court had to exercise its powers under Article 142 to order liquidation due to the five-year delay in finalizing the resolution process.
This judgment ends the long-running legal struggle concerning Jet Airways, which was grounded in April 2019 due to severe financial troubles. The case focused on whether the Jalan-Kalrock Consortium (JKC), the successful bidder for the airline, had fulfilled its responsibilities, and whether the creditors acted within their rights by pushing for liquidation.
NCLAT’s March Ruling
In March, the NCLAT had upheld the resolution plan for Jet Airways, allowing JKC to take over and setting a 90-day deadline for completing the transfer of ownership. The NCLAT also authorized the adjustment of a ₹150 crore performance bank guarantee by JKC.
However, the Supreme Court found this adjustment “perverse” and in violation of earlier orders from January and the terms of the resolution plan. The court also noted that this went against established legal principles.
Creditors’ Argument Against JKC
The creditors, led by SBI, Punjab National Bank, and JC Flowers Asset Reconstruction, challenged the NCLAT’s decision in the Supreme Court. They argued that JKC had failed to meet critical obligations, such as infusing ₹350 crore within the prescribed timeline and meeting other financial commitments, including mortgaging properties in Dubai.
The Supreme Court agreed with the creditors, stating that JKC had not fulfilled its financial obligations under the resolution plan. It highlighted that JKC’s failure to meet commitments led to the eventual liquidation of the airline.
JKC’s Defense of Procedural Delays
In defense, JKC argued that delays in the resolution process, including the need for security clearances, hindered their efforts. The consortium stated that these delays led to significant financial losses, exceeding ₹600 crore. Despite this, JKC claimed to have honored its financial commitments, including an additional ₹100 crore infusion in September 2023.
Background on JKC’s Bid and Jet Airways’ Future
In 2021, JKC won the bid to revive Jet Airways, and the airline had aimed for a possible relaunch in 2024. However, due to the ongoing legal and financial issues, the court’s ruling now brings a definitive end to the revival plans under the current resolution framework.