Jet Airways: NCLAT Gives More Time To Jalan Kalrock Consortium To Clear SBI Dues

The NCLAT has extended the deadline for the Jalan Kalrock Consortium (JKC), the winning bidder for the acquisition of Jet Airways, to fulfill its payment obligations to the State Bank of India.

The appellate tribunal also directed the lenders not to encash the performance bank guarantee of Rs 175 crore furnished by the consortium.

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The National Company Law Appellate Tribunal (NCLAT) on Friday granted additional time to the Jalan Kalrock Consortium (JKC), the successful bidder for the acquisition of Jet Airways, to fulfill its payment obligations to the State Bank of India, reported PTI. This decision brings relief to the JKC as it navigates the process of taking over Jet Airways. The appellate tribunal also directed the lenders not to encash the performance bank guarantee of Rs 175 crore furnished by the consortium.

According to the report, the NCLAT extended the timeline for payment obligation by excluding the time period between November 16, 2022, and March 3, 2023, the period when it was hearing the petition filed by lenders. The resolution plan proposed by the Jalan Kalrock Consortium (JKC) was approved by the National Company Law Tribunal (NCLT) in January. The NCLAT noted that the matter was brought before the appellate tribunal in March for a stay on the decision. 

The NCLAT emphasised the importance of coordination between the monitoring committee of lenders and the Jalan Kalrock Consortium (JKC) in their efforts to revive Jet Airways.

The tribunal stressed the need for swift action "so as to start its operations at an early date, which is in the interest of all stakeholders", the report added. It has also allowed the lenders' plea for appointment to the Board of Directors of Jet Airways. It has directed the listing of the matter on July 12 for a hearing. 

The NCLAT also pulled up the State Bank of India (SBI) for its approach of 'threatening to invoke bank guarantees' instead of collaborating with the Jalan Kalrock Consortium (JKC) in the implementation of the resolution plan, the report noted. The tribunal emphasized that performance bank guarantees can be invoked by lenders, but only in cases where the successful resolution applicant has failed to execute the plan.

Jet Airways ceased its operations in April 2019 and subsequently, the Jalan Kalrock consortium emerged as the successful bidder through the insolvency resolution process. However, the transfer of ownership has been delayed due to ongoing disagreements between the lenders and the consortium. Presently, the grounded airline is being overseen by the Monitoring Committee (MC) consisting of lenders.

The consortium was to infuse Rs 175 crore, the first tranche of money within 180 days by May 15, 2023. The consortium approached NCLAT fearing encashment of its bank guarantee and said as no corresponding steps are taken by lenders, the first tranche of money could not be infused, the report noted. 

In its 16-page order, the National Company Law Appellate Tribunal (NCLAT) said that the parties should work on the early revival of the carrier. A two-member NCLAT bench said that the Monitoring Committee (MC) has to act as a facilitator for the implementation of the resolution plan. Instead of that, MC is finding fault and taking steps "which does not facilitate the implementation, rather delay the implementation", the report said. 

"MC lenders instead of threatening to invoke performance bank guarantee, should take steps, which may help implementation of the plan and to achieve the objective of the resolution plan," the NCLAT order said.

"When the NCLT has directed on January 13, 2023, to take steps towards the implementation of the plan and which order was not been stayed by this tribunal on March 3, 2023, the steps ought to have been taken by the MC lenders in furtherance of the implementation," it said.

Further, it said there is no doubt that the performance bank guarantee can be invoked by the MC lenders but the said invocation can only take place when the consortium has failed to implement the plan.

"We direct that MC lenders shall not invoke the performance bank guarantee in the facts of the present case as on date, and for invocation, if any, MC Lenders may take leave of the adjudicating authority," NCLAT bench, comprising Chairman Justice Ashok Bhushan and Member (Technical) Barun Mitra, said.

Further, it said the resolution plan has been approved with the intent and purpose to revive Jet Airways.