The Supreme Court (SC) on February 2 dismissed a plea filed by Jalan Kalrock Consortium (JKC), the successful resolution applicant for the grounded airline Jet Airways. The plea sought the court's direction to instruct lenders to release the existing bank guarantee of Rs 150 crore, allowing JKC to replace it with a new one.
JKC had also sought a seven-day extension to deposit the Rs 150 crore. It proposed that the seven-day period should start from the day the lenders release the existing bank guarantee.
The consortium in its application had said that if the court permits the release of the existing bank guarantee, the amount will be infused to the designated share application account of the lenders. A performance bank guarantee is a compensation of money will be made by the bank when there is any delay in delivering the performance or operation.
JKC filed this application pursuant to an order of the Supreme Court from January 18, directing it to deposit Rs 150 crore by January 31. The amount is to be kept in an escrow account between State Bank of India (SBI) and JKC.
The apex court held that in case JKC does not furnish the bank guarantee, the consequences of law will follow. The NCLAT will now have to decide the appeal by SBI challenging the transfer of Jet Airways' ownership to JKC by end of March 2024.
JKC and the lenders of Jet Airways have been locked in a tussle over the last two years over the consortium's infusion of funds. According to the lenders, the consortium is not infusing funds into the airline in order to revive it.
In its January 18 order, the apex court set aside the order of National Company Law Appellate Tribunal (NCLAT) from August 2023, permitting JKC to adjust of Rs 150 crore from an existing performance bank guarantee for infusing Rs 350-crore payment.
The lenders of the airline had vehemently contested against the NCLAT permitting JKC to adjust the Rs 150 crore bank guarantee on the ground that was a back up and cannot be utilised at this stage.
On August 18, 2023, when the consortium presented the proposed payment schedule, the appellate tribunal directed them to file an application within 24 hours. In response, the lenders informed the appellate tribunal that they might opt not to pursue the appeal challenging the transfer of the airline's ownership to the JKC if the consortium fulfills condition precedents by making a payment of Rs 350 crore.
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