SC reserves verdict on plea against NCLAT order transferring Jet Airways to winning bidder

In 2021, JKC emerged as the successful bidder of Jet Airways.

The Supreme Court on Wednesday reserved its judgement on a plea by the State Bank of India (SBI) and other creditors challenging the National Company Law Appellate Tribunal (NCLAT) decision that upheld the resolution plan of grounded air carrier Jet Airways and approved the transfer of its ownership to the Jalan Kalrock Consortium (JKC).

A bench comprising Chief Justice of India D Y Chandrachud and Justices J B Pardiwala and Manoj Misra heard submissions from Additional Solicitor General (ASG) N Venkatraman, representing the appellant banks and others, and senior advocate Mukul Rohatgi, representing the consortium, before reserving the judgement.

The NCLAT had on March 12 upheld the resolution plan of the grounded air carrier and approved the transfer of its ownership to the JKC. The appellate tribunal further directed the Jet Airways monitoring committee to complete the transfer of ownership within 90 days. Additionally, the NCLAT directed the lenders of Jet Airways to adjust the Rs 150 crore paid by the consortium as a performance bank guarantee (PBG).

The top court was hearing an appeal by SBI, Punjab National Bank (PNB), and JC Flowers Asset Reconstruction Private Limited challenging the March 12 NCLAT verdict.

Senior advocate Gopal Sankaranarayanan, also representing the consortium, argued that the creditors, including SBI, were unjustifiably seeking to liquidate Jet Airways. On the other hand, the ASG referred to certain media reports and argued that public lenders are unfairly being held responsible for the closure of private airlines undergoing insolvency proceedings.

The JKC argued that the obligations under the resolution plan were contingent upon the effective date, which marks the initiation of the consortium’s obligation to make payments. The senior lawyer opposed the plea from lenders claiming that the consortium had defaulted and rendered the resolution plan unworkable.

The ASG countered that JKC failed to meet its financial obligations, including the infusion of Rs 350 crores within the stipulated 180-day period from the effective date. Additionally, the consortium had not fulfilled other obligations, such as infusing Rs 150 crores in cash and mortgaging three Dubai properties as required by the resolution plan.

Rohatgi, representing JKC, opposed these claims and argued that it was the creditors who delayed the resolution process. He asserted that Jet Airways' revival was a commercial endeavour, subject to various external factors, and the consortium could not be solely held liable for delays caused by security clearances and other procedural hurdles.

Jet Airways, which has remained grounded since April 2019, announced in September 2023 that the new promoters—Jalan Kalrock Consortium—had completed an additional infusion of Rs 100 crore into the carrier. With this, JKC fulfilled its total financial commitment of Rs 350 crore equity as per the court-approved resolution plan. The airline aims to relaunch operations in 2024.