On March 7, the Supreme Court is expected to hear an appeal filed by the Jalan-Kalrock Consortium (JKC), the successful resolution applicant for grounded airline Jet Airways, against an order of National Company Law Appellate Tribunal (NCLAT) permitting the sale of aircraft belonging to the airline.
This is not the first case related to Jet Airways that has come up before the Supreme Court in 2024. Earlier this year, the apex court directed JKC to deposit Rs 150 crore in a designated bank account as a part of its fund infusion into the airline.
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. The National Company Law Tribunal (NCLT) permitted the transfer of ownership to JKC in January 2023.
In March 2023, the National Company Law Appellate Tribunal (NCLAT) refused to grant an interim stay on the implementation of JKC’s plan to revive Jet Airway. However, the issue did not end there.
While JKC has claimed that the lenders have not begun the process of transferring ownership of the airline, the lenders have argued that JKC has not infused any funds into Jet Airways.
Moneycontrol looks JKC’s role and what has transpired in the NCLAT and Supreme Court over the past year.
The Jalan-Kalrock Consortium
Jet Airways was grounded in 2019 amid mounting financial woes. State Bank of India, its largest lender, initiated insolvency proceedings against the company in the NCLT Mumbai and Jet Airways was admitted to the insolvency resolution process the same year.
In 2021, the consortium of UAE-based entrepreneur Murari Lal Jalan and UK-based Kalrock Capital emerged as the successful bidder to revive the airline.
The NCLT allowed ownership of Jet Airways to be transferred to JKC from the lenders, subject to the fulfilment of certain conditions, most notably, obtaining an air operator's certificate. JKC had to pay over Rs 8,000 crore to the lenders over a period of time from the revenue that would be generated by operating Jet Airways.
However, the lenders objected to the transfer of ownership, saying JKC had not fulfilled the stipulated conditions. In January 2023, the NCLT dismissed their objections and allowed the transfer of ownership. The lenders subsequently approached the appellate tribunal.
In October 2023, the NCLT, which is obligated to monitor the company till JKC takes over completely, allowed the sale of three Jet Airways aircraft to a Malta-based company called Ace Aviation. JKC challenged this order in the NCLAT.
NCLAT proceedings
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.
The appellate tribunal also granted more time to JKC to pay Rs 175 crore to SBI because 107 days had passed since the NCLT’s order allowing the transfer of ownership and the NCLAT’s order refusing an injunction.
While the lenders and JKC kept warring, in September 2023, the NCLAT permitted JKC to adjust its Rs 150 crore performance bank guarantee to infuse Rs 350 crore into Jet Airways.
The appellate tribunal, in December 2023, refused to interfere with the sale of Jet Airways aircraft as no rights of any party would be affected. According to the NCLAT, the sale proceeds of Rs 400 crore could subsequently be adjusted and apportioned as per the resolution plan.
While all these issues were appealed in the Supreme Court, the court refused to interfere in most of them, except for the order permitting JKC to adjust the Rs 150 crore from a bank guarantee.
The NCLAT has heard the case at length and reserved its orders.
Supreme Court
When the issue came up before the Supreme Court on the first occasion, the lenders contended that while they wanted to recover over Rs 8,000 crore from JKC, the consortium was struggling to infuse Rs 350 crore. The lenders also told the court that liquidating the company was the only solution.
In January 2024, the Supreme Court, while refusing to interfere in other issues, set aside the order of the NCLAT permitting JKC to adjust Rs 150 crore from its bank guarantee. The court ordered JKC to deposit Rs 150 crore in a designated account.
The SC also urged the NCLAT to decide the issue by March 31, 2024.
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