Supreme Court Verdict On Jet Airways Awaited After Plea By SBI, PNB
Supreme Court Verdict On Jet Airways Awaited After Plea By SBI, PNB
The banks had opposed the appellate tribunal’s order of transferring the carrier to winning bidder Jalan Kalrock Consortium
The Supreme Court is set to pronounce its verdict on the fate of Jet Airways after a plea was filed by the State Bank of India (SBI) and other creditors challenging the decision of the National Company Law Appellate Tribunal (NCLAT).
A bench of Chief Justice DY Chandrachud, Justice J B Pardiwala and Justice Manoj Misra will pronounce the verdict which was reserved on October 16.
The tribunal had upheld the resolution plan of the grounded air carrier and approved the transfer of its ownership to Jalan Kalrock Consortium (JKC). It had directed the airline’s monitoring committee to complete the transfer of ownership within 90 days.
The NCLAT also directed Jet Airways’ lenders to adjust Rs.150 crore paid by the consortium as a performance bank guarantee (PBG).
However, the March verdict was challenged by the SBI, Punjab National Bank and JC Flowers Asset Reconstruction.
On the other hand, JKC contended that the creditors, including the SBI, were unjustifiably seeking to liquidate Jet Airways.
On the other hand, the banks said that the public lenders were unjustifiably being held responsible for the closure of the private airline and the companies were facing insolvency proceedings.
The JKC argued that the obligations under the resolution plan were contingent on the effective date, marking the consortium's obligation to make payments.
It had opposed the lenders’ plea that the consortium defaulted and made the resolution plan ineffectual. It stated taking positive steps to implement the resolution plan and it was up to the lenders to fulfil their obligations.
The banks submitted that JKC failed to meet its financial obligations, including infusing Rs.350 crore within the stipulated 180 days.
They added that the consortium failed to fulfil other key obligations of the resolution plan, including paying Rs.150 crore in cash and mortgaging three Dubai properties.
Recently, JKC opposed the submissions of the law officer and blamed the creditors for the delay in progression. It stated that Jet Airways’ revival was a commercial endeavor, subject to various external factors. Therefore, the consortium was not solely liable for delays caused by security clearances and other procedural hurdles.
In its verdict, the NCLAT had approved the transfer of the airline’s ownership to JKC by upholding the January 2023 order of the Mumbai bench of the National Company Law Tribunal (NCLT). It also directed the lenders to adjust Rs.150 crore paid by the consortium as PBG.
Meanwhile, the PBG of Rs.150 crore, lying with the monitoring committee, would be adjusted towards the first tranche payment of Rs.350 crore as Rs.200 crore have already been paid by JKC.
Jet Airways was grounded in April 2019, and in September 2023, the new proposed promoters infused Rs.100 crore in the carrier. With this, it fulfilled the total financial commitment of Rs.350 crore equity.
The JKC has fulfilled all other commitments to take control of the airline. It expected to re-launch operations this year.
Owing to a severe liquidity crisis, the full-service carrier underwent a Corporate Insolvency Resolution Process (CIRP). However, there was a dispute with the lender.
In 2021, JKC emerged as the airline’s successful bidder.
