Jet Airways case: NCLT asks monitoring committee to reinitiate sale of aircraft

Jet Airways

In a significant development, the Mumbai bench of the National Company Law Tribunal (NCLT) has directed the monitoring committee of grounded airline Jet Airways to reinitiate and conclude the sale of aircraft.

The sale process 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 (Jalan Kalrock Consortium) and the resolution professional.

The NCLT has directed the committee to "Reinitiate the process and
conclude the sale of the aircraft after taking into consideration
the applicant as one of the eligible bidders." In 2022, Malta-based Ace Aviation's letter of intent to buy four Boeing 777 aircraft has already been accepted by the monitoring committee.

Ace Aviation had earlier told Moneycontrol that the delays in the sale of the aircraft may force it to look at other options. Ace had already invested Rs. 50 crore towards buying the aircraft and was ready to invest another Rs. 350 crore.

Court litigation

Ace Aviation had approached the NCLT in late 2022 to enforce the sale. In July 2023, the NCLT in an order noted that an "order either allowing the sale of the aircraft or restraining the sale would lead to the reopening of the duly approved Resolution Plan. Since the sale process was kept in abeyance by the lenders and monitoring committee, it is their responsibility to clear the deadlock as it has arisen post-approval of the resolution plan."

It emerged that while the airline's lenders were aggregable for the sale of the aircraft, the consortium and the erstwhile workmen were opposed to it.

According to the consortium, the effective date of implementation of the resolution plan would start from August 2023 and they are ready to implement the plan, and as per the term of the plan, the sale proceeds should come to Jet and not the lenders.

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 approached the National Company Law Appellate Tribunal (NCLAT) against this observation by NCLT. The NCLAT, however, refused to pass any order stating that the case has not attained finality in NCLT. Subsequently, the NCLT has now passed a final order in the case.

However, the company eventually withdrew its plea.