NCLT Mumbai approves Jalan-Kalrock Consortium to take over Jet Airways
NCLT Mumbai approves Jalan-Kalrock Consortium to take over Jet Airways
The Mumbai bench of National Company Law Tribunal (in short NCLT) permitted the consortium of Murari Lal Jalan and Florian Fritsch for the successful resolution plan applicant, of taking over the Jet Airways India.
The division bench of judicial member Justice P.N. Deshmukh and technical member Shyam Babu Gautam in the matter of State Bank of India vs. Jet Airways India Ltd. gave assent to the Jalan-Kalrock Consortium (in short JKC) for infusing funds into Jet Airways, by taking over its control and management, and execute all necessary documents to implement the approved resolution plan. In 2022, the consortium was declared the winning bidder but it did not have full control of the airline because according to the lenders of Jet Airways it had not satisfied three of five conditions precedent mentioned in the NCLT-approved resolution plan.
Afterward, the winning bidder appealed to the NCLT, following which the court ruled in its favor on January 13.
Jet Airways owed over ₹8,000 crore to lenders, which also included the consortium of banks. Additionally, the airline had a large debt by way of accumulated losses amounting to Rs. 13,000 crore, vendor dues of over Rs. 10,000 crore and salary dues exceeding Rs. 3,000 crore.
In 2019, the NCLT Mumbai initiated the Corporate Insolvency Resolution Process (in short CIRP) under the Insolvency and Bankruptcy Code, 2016. The application was moved by a consortium of lenders led by the State Bank of India.
The tribunal, while ruling in JKC's favour, stated that in another case filed by the Jet Airways Maintenance and Engine Workers Association, before the National Company Law Appellate Tribunal (in short NCLAT) had, on 21 October, 2022, stated that the winning bidder had fulfilled all the conditions precedent necessary for the transfer of Jet Airways.
The NCLT further into the details of the other conditions. A show-cause notice issued by the Directorate General of Civil Aviation (in short DGCA) to Jet, which said that an air operator certificate would be issued after Ministry of Civil Aviation (in short MoCA) approved the business plan was relied by the Tribunal. The order stated that, since the winning bidder had received the said certificate, it was implied that the business plan had been approved.
The Tribunal elucidated the condition for the allotment of slots and it was met because there was no challenge to the fact that old slots (which Jet had before it went bankrupt) could not be restored — this was made clear by a previous NCLT order. Moreover, the airport authorities concerned, including those in Delhi and Mumbai, had granted whatever slots the winning bidder had applied for.
Besides, the NCLT explained the condition regarding international traffic rights clearance could not be met upfront. The Jalan Kalrock Consortium would re-start operations with six aircraft, as created according to the resolution plan. However, according to applicable laws, international traffic rights clearance could only be granted only to those carriers who have 20 planes in operation. Therefore, the Tribunal ruled that this condition can be fulfilled only after JKC re-commences its business and not prior to starting.
Having ruled thus, the Tribunal granted an exclusion period of 180 days (from the date of its original order) to take control over Jet Airways. The bench opined that, "in the interests of justice and to achieve the primary objective of maximisation of assets and resolution of Corporate Debtor (Jet Airways)."
