The Supreme Court on Thursday set aside the National Company Law Appellate Tribunal (NCLAT) ruling that upheld the transfer of Jet Airways ownership to the Jalan-Kalrock Consortium (JKC) under an approved resolution plan.
The top court today allowed the appeal by State Bank of India (SBI) and other creditors who had objected to the NCLAT order tranfering Jet Airways to JKC.
Using its extraordinary powers under Article 142, the top court ordered Jet Airways liquidation citing "peculiar and alarming" circumstances that the resolution plan has not been implemented for five years.
A bench headed by CJI Chandrachud and comprising Justices JB Pardiwala and Manoj Misra termed the NCLAT order as "perverse" for allowing the cash-strapped Jet Airways' ownership transfer to the Successful Resolution Applicant (SRA) without complete payment in accordance with the resolution plan.
The apex court directed the NCLT Mumbai Bench to appoint a liquidator forthwith and said that the amount of Rs 200 crores paid by the SRA stands forfeited.
"This litigation is an eyeopener, has taught us many lessons about the IBC and the functioning of NCLAT," Justice Pardiwala orally remarked before the pronouncing the verdict.
The bench held that the NCLAT order allowing the adjustment of the first tranche of payment of Rs 350 crores against the Performance Bank Guarantee (PBG) was in "flagrant disregard" of the order of the Supreme Court passed on January 18.
The Supreme Court on October 16 reserved its verdict on a petition filed by the State Bank of India (SBI) and other creditors challenging the NCLAT order that upheld the resolution plan of grounded air carrier Jet Airways and approved the transfer of its ownership to Jalan-Kalrock Consortium (JKC).
On March 12, an NCLAT order had upheld the resolution plan of the Jet Airways and approved the transfer of its ownership to the JKC. The order had further directed the monitoring committee to complete the transfer of ownership of Jet Airways to JKC within 90 days. It was further directed that the lenders of Jet Airways should the Rs 150 crore paid by the consortium as performance bank guarantee (PBG).
Lender banks to the grounded airlines including SBI, Punjab National Bank and JC Flowers Asset Reconstruction Private Limited challenged this NCLAT order in the top court.
The Banks contended that the the consortium defaulted on payments prescribed under the resolution plan and was four years behind on its payment schedule at the moment. The consortium however blamed the creditors for the delayed resolution process.
The counsel appearing for the consortium told the court that the Jet Airways was grounded in April 2019, and JKC completed an additional infusion of Rs 100 crore into the carrier in September, 2023. Thus, JKC has fulfilled its total financial commitment of Rs 350 crore equity in line with the resolution plan.
In 2019, Jet Aiways was grounded due to a severe liquidity crisis and subsequently faced an insolvency resolution process. In 2021, JKC emerged as the successful bidder of Jet Airways.