The Supreme Court on May 8 witnessed an intense showdown between the lawyers for the lenders of grounded airline Jet Airways and its successful resolution applicant Jalan Kalrock Consortium (JKC).
Senior advocate Harish Salve, who appeared for the lenders, commenced his arguments saying “From resolution this has to go to dissolution. This thing has become a joke.”
Salve further contended that obtaining an international travel permit was a condition precedent in the resolution plan and to get the same an airline requires minimum of 20 aircraft. However, JKC has managed to get just five so far.
Lenders further contended that they are continuously spending for airport dues and other expenses at the rate of Rs 22 crore a month. They have thus far spent over Rs 350 crore on dues, however NCLAT asked them to transfer the airline to JKC in 90 days ignoring all this.
The senior counsel further said: "Running an airline requires a lot of money - He (JKC) cannot get international permits. He has not even been able arrange for Rs 150 crore. He wants a performance guarantee encashed instead of paying the money."
In January, the Supreme Court, had set aside the order of the NCLAT permitting JKC to adjust Rs 150 crore from its bank guarantee. SC had directed the consortium to deposit Rs 150 crore in a designated account. The issue arose in August 2023 out of an offer made by the lenders to withdraw the appeal if JKC deposited Rs. 350 crore in a specific period of time. While JKC offered to deposit Rs 200 crore in cash, it asked the lenders to adjust Rs. 150 crore from an existing bank guarantee.
Salve, argued that JKC had not deposited this Rs 150 crore despite SC's express directions. At this point in time, Chief Justice of India (CJI) DY Chandrachud expressed his desire to stay the order as the NCLAT order ran contrary to SC's explicit directions.
However, senior advocate Mukul Rohatgi, who appeared for JKC, vehemently denied these allegations. According to Rohatgi, JKC never availed the offer made by the lenders since they were anyway supposed to make a payment of Rs 350 crore. Rohatgi also argued that JKC has spent Rs 700 crore so far in trying to revive the airline despite the lenders objecting to every move they make.
On March 12, the NCLAT upheld the transfer of ownership of the grounded airline to JKC. The National Company Law Tribunal (NCLT) had already permitted the transfer of ownership to JKC back in January last year.
The appellate tribunal further directed the lenders to effect the transfer in 90 days, while asking JKC to obtain an air operator's certificate with in this window.
The NCLAT further permitted JKC to adjust the Rs 150 crore from its bank guarantee towards the first tranche of payment of Rs 350 crore to the lenders.
JKC and the lenders of Jet Airways have been engaged in a legal tussle over the transfer of ownership of the airline to the successful bidder for over a year. In January, the Supreme Court, while refusing to interfere in other issues, had set aside the order of the NCLAT permitting JKC to adjust Rs 150 crore from its bank guarantee.
Jet Airways was grounded in 2019 amid mounting financial vows. State Bank of India (SBI), its largest lender, initiated insolvency proceedings against the company before NCLT Mumbai, and the company was subsequently admitted to the resolution process. In 2021, JKC emerged as the successful resolution applicant to re-commence the operations of the airline.
While JKC had claimed that the lenders have not begun the process of transferring ownership of the airline, the lenders argued that JKC had not infused any funds into Jet Airways. In February 2023, the lenders approached the NCLAT against the NCLT’s order on the transfer of ownership. The NCLAT, however, refused to issue any injunction in favour of the lenders on the issue.
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