The Supreme Court delivered a decisive ruling on November 7, ordering the liquidation of Jet Airways, effectively ending attempts to resurrect the once-leading Indian carrier. The verdict came after the Jalan Kalrock Consortium (JKC), the airline’s successful bidder, failed to fulfil critical conditions outlined in the 2021 resolution plan.
Here’s what Supreme Court said on Jet Airways row:
The airline, which has remained grounded since 2019 due to financial difficulties, faced a final setback when JKC failed to meet key financial obligations. These included a required injection of Rs 350 crore into the airline and the payment of Rs 226 crore in pending employee salaries.
In a significant observation, Justice Pardiwala emphasized the case’s broader implications, stating, “This litigation is an eye-opener and has taught us many lessons about the IBC and the functioning of NCLAT.” The court overturned the National Company Law Appellate Tribunal (NCLAT) order that had permitted Jet Airways’ ownership transfer to JKC without complete payment compliance.
The Supreme Court particularly criticized NCLAT’s decision to allow JKC to adjust a Performance Bank Guarantee (PBG) of Rs 150 crore against its payment obligations, ruling it contradictory to Insolvency and Bankruptcy Code (IBC) principles.
NCLT to appoint a liquidator
Under the court’s directive, the National Company Law Tribunal (NCLT) in Mumbai will appoint a liquidator to oversee the process. The ruling stipulates that JKC’s initial investment of Rs 200 crore will be forfeited, while lenders led by the State Bank of India (SBI) are authorized to invoke the Rs 150 crore PBG to partially recover their dues.
The consortium’s defence, which cited lender delays and regulatory hurdles, failed to convince the court. The lenders had approached the Supreme Court arguing that JKC had not fulfilled crucial aspects of the resolution plan, including securing necessary regulatory approvals and an air operator certificate.
What does Jet Airways case underscore?
This development represents a significant moment in India’s aviation sector, as Jet Airways becomes the second major airline, following GoFirst, to face liquidation under the IBC. The case underscores the complex challenges facing the industry and sets a precedent for strict adherence to resolution plans in insolvency proceedings.
The decision marks the end of a prolonged attempt to revive Jet Airways, which once stood as a symbol of India’s aviation success. It also reinforces the judiciary’s commitment to maintaining stringent standards in corporate insolvency resolutions, particularly in cases involving major public interest.
For the aviation sector, this ruling serves as a reminder of the regulatory and financial challenges that airlines face in maintaining sustainable operations within the Indian market.
