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Jet Airways Case: NCLAT gives Jalan Kalrock Consortium more time to pay dues to SBI

On May 22, the tribunal had reserved its order on a plea by Jalan Kalrock Consortium, seeking directions to stop the State Bank of India from invoking its performance bank guarantee of Rs 150 crore

May 26, 2023 / 05:08 PM IST
Jet Airways

Jet Airways

The National Company Law Appellate Tribunal (NCLAT) on May 26 granted Jalan Kalrock Consortium, which emerged as a successful bidder to take over Jet Airways, more time to make payments to the State Bank of India (SBI).

The appellate tribunal has noted that despite National Company Law Tribunal (NCLT) having approved the resolution plan in January, the case came to be heard by the NCLAT in March and an order of refusal of stay was passed on March 3, hence the tribunal held that Jalan Kalrock is entitled to an exclusion from November 16 2022 to March 3, 2023 from complying with payment obligation towards SBI.

Pulling up SBI for threatening to invoke bank guarantees as opposed to co-operating with Jalan Kalrock in implementing the resolution plan, NCLAT noted "Monitoring Committee (of which SBI is a part of) has to act as a facilitator for implementation of the Resolution Plan instead of finding fault and taking steps, which does not facilitate the implementation, rather delay the implementation."

The tribunal's order further notes that time is yet to come for lenders to take coercive measures as Jalan Kalrock is still trying to implement the resolution plan. According to the order "There is no doubt that Performance Bank Guarantee can be invoked by the Lenders, but the said invocation can only take place when SRA has failed to implement the Plan. Present is a case where directions have been issued to both lenders and SRA (Jalan Kalrock) to implement the Plan and the event of failure of the Plan has not yet arrived"

The tribunal's order thus directs SBI not to invoke the performance bank guarantee. By virtue of this order, Jalan Kalrock Consortium will now get an additional time to pay its dues to SBI.

On May 22, the tribunal reserved its decision on a plea by the consortium, which emerged as a successful bidder in the Jet Airways insolvency resolution process, seeking directions to stop SBI to invoke its performance bank guarantee of Rs 150 crore.

Even though the NCLAT's daily order sheet indicated that the order would be passed on May 30, the appellate tribunal chose to pronounce the order five days in advance.

On January 13, the National Company Law Tribunal (NCLT) allowed the transfer of the beleaguered airline to the consortium led by London-based Kalrock Capital and UAE-based entrepreneur Murari Lal Jalan.

It also asked the consortium to make payments by May 15, 150 days from the initiation of the ownership proceedings, but the NCLAT exemption gives it more time.

The consortium was to make the first tranche of the payment to Jet's lenders before May 15 but it didn't and feared that the SBI would invoke the performance bank guarantee of Rs 150 crore in lieu of Rs 175 crore worth of dues.

The airline's ownership can't be transferred to the consortium if the payment is not made. The air operator's certificate of Jet Airways expired on May 19.

Lenders of the airline had approached the NCLAT as they opposed the ownership transfer to the consortium. They alleged that the consortium had not fulfilled its obligations.

Jet Airways was grounded in April 2019 over growing losses and a debt of about Rs 8,000 crore. In October 2020, the airline's Committee of Creditors (CoC) approved the revival plan submitted by the Jalan-Kalrock consortium.