'Shocking order': SBI on NCLAT upholding transfer of Jet Airways' ownership to Jalan Kalrock Consortium

'Shocking order' SBI on Jet Airways transfer of ownership to JKC

The State Bank of India (SBI) on April 22 told the Supreme Court that the order of National Company Law Appellate Tribunal (NCLAT) upholding the transfer of grounded airline Jet Airways' ownership to Jalan Kalrock Consortium (JKC) was 'shocking'.

"It is a shocking order and is completely unacceptable. It reverses a Supreme Court ruling on the Rs 150 crore bank guarantee. We are supposed to collect Rs 4,400 crore, they are struggling to repay Rs 300 crore now, " Additional Solicitor General (ASG) Venkatraman, who appeared for SBI, told the apex court.

Senior advocate Mukul Rohatgi, who appeared for JKC, objected to the ASG using the word 'shocking' for an order by a judicial body. He said "The order cannot be called shocking. Such words cannot be used for a court order."

Though the court was inclined to issue notice in the case, the ASG urged the court to finish hearing the case and pass an order rather then issuing notice now and keeping it pending. The SC, accordingly, has kept the case for hearing on Friday (April 26).

On March 12, the NCLAT upheld the upheld the transfer of ownership of the grounded airline to JKC. The National Company Law Tribunal (NCLT) had already permitted the transfer of ownership to JKC back in January last year.

The appellate tribunal further directed the lenders to effect the transfer in 90 days, while asking JKC to obtain an air operator's certificate with in this window.

The NCLAT has further permitted JKC to adjust the Rs 150 crore from its bank guarantee towards the first tranche of payment of Rs 350 crore to the lenders.

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. In January, the Supreme Court, while refusing to interfere in other issues, had set aside the order of the NCLAT permitting JKC to adjust Rs 150 crore from its bank guarantee.

A Brief Timeline

Jet Airways was grounded in 2019 amid mounting financial vows. State Bank of India (SBI), its largest lender, initiated insolvency proceedings against the company before NCLT Mumbai, and the company was subsequently admitted to the resolution process. In 2021, JKC emerged as the successful resolution applicant to re-commence the operations of the airline.

While JKC had claimed that the lenders have not begun the process of transferring ownership of the airline, the lenders argued that JKC had not infused any funds into Jet Airways. 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.