The Supreme Court has ruled to liquidate Jet Airways, scrapping the revival plan proposed by the Jalan-Fritsch consortium after it failed to fulfill financial commitments. This decision, reversing a prior NCLAT approval, upholds creditors’ appeals and orders the forfeiture of Rs 200 crore from the consortium. The court’s decision brings a definitive close to Jet Airways’ prolonged revival efforts.
BY PC Bureau
NEW DELHI
The Supreme Court has ordered the liquidation of Jet Airways, nullifying the Jalan-Fritsch consortium’s resolution plan to revive the bankrupt airline. The court ruled that the consortium breached its obligations by failing to infuse the initial tranche of funds on time, a key requirement of the revival plan. Consequently, the Rs 200 crore already invested by the consortium will be forfeited.
A bench led by Chief Justice DY Chandrachud, along with Justices JB Pardiwala and Manoj Misra, overturned a National Company Law Appellate Tribunal (NCLAT) decision that had upheld the airline’s resolution plan and transferred ownership to the Jalan Kalrock Consortium (JKC). Justice Pardiwala, delivering the judgment, supported an appeal from SBI and other creditors, who argued that the liquidation would better serve the interests of Jet Airways’ creditors, employees, and other stakeholders.
The bench criticized the NCLAT’s decision, invoking Article 142 of the Constitution to ensure “complete justice” in the case. “This litigation is an eye-opener and has taught us valuable lessons about the IBC framework and the functioning of NCLAT and NCLT,” the Supreme Court noted.
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The NCLAT had previously approved the Jalan Kalrock Consortium’s resolution plan in March, transferring ownership of Jet Airways. However, several creditors, including SBI, Punjab National Bank (PNB), and JC Flowers Asset Reconstruction Private Limited, contested the plan, citing the consortium’s repeated failure to fulfill financial commitments. The SBI-led consortium had also petitioned to scrap the three-year-old Rs 4,783 crore resolution plan due to unmet financial obligations.
The court’s decision follows arguments from representatives of the creditors, including Additional Solicitor General N Venkataraman and SBI counsel Sanjay Kapur, who pointed out that the consortium had failed to deposit the first Rs 350 crore tranche, casting doubt on their commitment to reviving the grounded airline, which has been mired in financial difficulties for years.
Here’s a bullet-point summary of the Supreme Court’s order regarding Jet Airways:
- Order for Liquidation: The Supreme Court directed the liquidation of Jet Airways, annulling the revival plan proposed by the Jalan-Fritsch consortium.
- Resolution Plan Breach: The court determined that the consortium breached the resolution plan by failing to deposit the first tranche of funds within the specified timeline.
- Forfeiture of Investment: The Rs 200 crore previously infused by the consortium will be forfeited as a result of the breach.
- Overturning NCLAT Approval: The Supreme Court reversed the National Company Law Appellate Tribunal’s (NCLAT) decision, which had transferred Jet Airways’ ownership to the Jalan Kalrock Consortium.
- Appeal by Creditors Upheld: The court supported an appeal from creditors, including SBI and other financial institutions, who argued that liquidation would better serve the interests of creditors, employees, and stakeholders.
- Criticism of NCLAT: The bench criticized the NCLAT’s decision-making process and invoked Article 142 of the Constitution to ensure complete justice.
- Legal Observations: The court remarked on the case as a learning opportunity for the Insolvency and Bankruptcy Code (IBC) framework, and for the functioning of the NCLAT and NCLT.
- Background on Financial Obligations: Creditors challenged the consortium’s adherence to the resolution plan due to its failure to deposit an initial Rs 350 crore, raising concerns about the consortium’s commitment to the airline’s revival.
