New Delhi: The Supreme Court on Wednesday reserved its judgement on a plea of State Bank of India (SBI) and other creditors challenging the National Company Law Appellate Tribunal (NCLAT) decision that upheld the resolution plan of grounded air carrier Jet Airways and approved the transfer of its ownership to Jalan Kalrock Consortium (JKC).
A bench comprising Chief Justice of India D Y Chandrachud and Justices JB Pardiwala and Manoj Misra heard submissions of Additional Solicitor General (ASG) N Venkatraman, appearing for the appellant banks and others, and senior advocate Mukul Rohatgi, representing the consortium, before reserving the judgement.
The NCLAT had on March 12 upheld the resolution plan of the grounded air carrier and approved the transfer of its ownership to the JKC. The appellate tribunal further directed the Jet Airways monitoring committee to complete the transfer of ownership within 90 days. Besides, the NCLAT had also directed the lenders of Jet Airways to adjust the Rs 150 crore paid by the consortium as performance bank guarantee (PBG).
The top court was hearing an appeal of the SBI, Punjab National Bank (PNB) and JC Flowers Asset Reconstruction Private Limited challenging the March 12 verdict of the NCLAT. Senior advocate Gopal Sankaranarayanan, also appearing for the consortium represented by law firm Karanjawala and Company, submitted that the creditors, including the SBI, were unjustifiably seeking to liquidate Jet Airways.
On the other hand, the ASG referred to certain media reports and said that the public lenders are unjustifiably being held responsible for the closure of private airlines and the companies are facing insolvency proceedings. The JKC argued that the obligations under the resolution plan were contingent upon the occurrence of the effective date, which marks the initiation of the consortium's obligation to make payments under the plan.
The senior lawyer opposed the plea of lenders that the consortium defaulted and made the resolution plan unworkable. The consortium has taken all necessary positive steps towards the implementation of the resolution plan and that it is now up to the lenders to fulfil their obligations, he said.
The ASG said that the JKC failed to meet its financial obligations, including the infusion of Rs 350 crores within the stipulated 180-day period from the effective date under the resolution plan. The law officer said the consortium failed to fulfil other key obligations, such as infusing Rs 150 crores in cash and mortgaging three Dubai properties as required under the resolution plan.
On October 15, Rohatgi, representing the consortium, opposed the submissions of the law officer and said it were the creditors who had delayed the resolution process. Rohatgi said the revival of Jet Airways was a commercial endeavour, subject to various external factors and the consortium cannot be held solely liable for delays caused by security clearances and other procedural hurdles.
He said the creditors had obstructed the resolution process at every stage, causing the consortium to incur more than Rs 600 crore in losses. The NCLAT, in its verdict, had approved the transfer of its ownership to the consortium by upholding the NCLT Mumbai's verdict of January 13, 2023. The NCLAT had also directed the lenders of Jet Airways to adjust the Rs 150 crore paid by the consortium as PBG.
"The PBG of Rs 150 crore, which is lying with the monitoring committee/MC lenders, shall be adjusted towards the first tranche payment of Rs 350 crore as Rs 200 crore have already been paid by the SRA (JKC). By adjustment of PBG as per the resolution plan, the first tranche of payment of Rs 350 crore shall be completed," it had said.
Jet Airways, which has remained grounded since April 2019, had in September, 2023, said the new proposed promoters -- the Jalan-Kalrock consortium -- had completed an additional infusion of Rs 100 crore into the carrier. With this infusion, it had said, JKC has fulfilled its total financial commitment of Rs 350 crore equity as per the court-approved resolution plan.
The consortium has fulfilled all other commitments to take control of the airline, it had added. The airline had also said it was looking to re-launch operations from 2024. After grounding in 2019 owing to a severe liquidity crisis at that time, the full-service carrier underwent an insolvency resolution process. However, it was having a dispute with the lender. In 2021, JKC emerged as the successful bidder of Jet Airways.
