Ace aviation moves NCLT over difficulties in purchasing Jet Airways aircraft despite SC order

Jet Airways aircraft not sold despite SC order

The National Company Law Tribunal (NCLT) in Mumbai, on May 2, took action in response to a complaint filed by Malta-based Ace Aviation against the monitoring committee of Jet Airways, which is currently grounded. Ace Aviation expressed difficulties in purchasing three aircraft from Jet Airways, despite a Supreme Court ruling in its favor.

The NCLT directed the monitoring committee, consisting of representatives from financial creditors (such as banks and lenders), the successful bidder (JKC), and the former resolution professional of Jet Airways, to file a response to the plea. The case has been scheduled for a hearing on May 17.

According to the plea, accessed by Moneycontrol, Ace is compelled to file the plea owing to the monitoring committee's delayed and non-co-operative actions regarding the sale of certain aircraft of Jet Airways.

The process of sale of three aircraft for Rs 400 crore was put on hold in November 2022 owing to a deadlock in the monitoring committee comprising representatives of the financial creditors, the successful resolution applicant (JKC) and the resolution professional. It emerged that while the airline's lenders were agreeable to the sale of the aircraft, the consortium and the erstwhile workmen were opposed to it.

According to the workmen, the aircraft could not be sold as they have a lien over the aircraft towards non-payment of their gratuity and provident fund dues. Ace Aviation approached NCLT against this deadlock. In October 2023,  NCLT told the committee: "Reinitiate the process and conclude the sale of the aircraft after taking into consideration the applicant as one of the eligible bidders."

JKC appealed against this order in the National Company Law Appellate Tribunal (NCLAT), however in December 2023, the appellate tribunal junked the plea, noting that the sale of aircraft does not affect the rights of any of the stakeholders in the airline as the sale proceeds will be deposited in an escrow account. The proceeds will subsequently be distributed by the resolution plan.

JCK approached the Supreme Court against this order, however, the Apex Court also junked its plea. A bench led by Justice Abhay Sriniwas Oka noted that they did not find anything wrong with the NCLAT order. The court noted that it would benefit JKC as the sale would infuse more funds.

During the arguments, JKC urged the court to keep the case pending till the NCLAT decides on the issue of ownership of Jet Airways as the NCLAT has reserved the case for judgment. However, the court expressed its disinclination to entertain the plea

According to the plea, despite orders from three courts, the monitoring committee “have failed to consider the requests and have so far not made any progress towards completing the sale process of the Aircraft favour of the Applicants (Ace aviation) and are continuing to stall the process.” Ace Aviation has also contended that the monitoring committee is delaying the entire process to the extent of it potentially becoming unviable.

The NCLAT in March upheld the transfer of Jet Airways ownership to JKC, an appeal against this judgment is presently pending the apex court and is likely to be heard on May 6.