SC orders liquidation of grounded Jet Airways' assets

The Supreme Court on Thursday ordered the liquidation of grounded Indian carrier Jet Airways in view of the “peculiar and alarming” circumstance that the resolution plan had not been implemented for five years.

A Bench of CJI DY Chandrachud, Justice JB Pardiwala and Justice Manoj Misra said it had no choice but to order liquidation of Jet Airways as the resolution plan was not possible to be implemented and it had to ensure that liquidation remained an option for the corporate creditor.

“In the peculiar and alarming circumstances…and also keeping in mind the fact that almost five years have elapsed since the Resolution Plan was duly approved by the NCLAT and there being no progress worth the name, we are left with no other option but to invoke our jurisdiction under Article 142 of the Constitution and direct that the corporate debtor be taken in liquidation,” it said.

The Bench directed NCLT, Mumbai, to take appropriate steps for appointment of liquidator and all other necessary formalities for commencement of liquidation of the corporate debtor.

“We have reached the conclusion that the impugned order passed by the NCLAT is perverse and unsustainable in law. It has led to further complications,” the top court said, setting aside the National Company Law Appellate Tribunal (NCLAT) order that upheld the transfer of Jet Airways ownership to the Jalan-Kalrock Consortium (JKC) under an approved resolution plan.

Allowing an appeal filed by State Bank of India (SBI) and other creditors against the NCLAT order, it said, “We have no doubt that the NCLAT acted contrary to settled legal principles and incorrectly interpreted our order.”

Pronouncing the verdict, Pardiwala said, “This litigation is an eye-opener...It has taught us many lessons about the IBC (Insolvency and Bankruptcy Code) and the functioning of NCLAT (National Company Law Appellate Tribunal).”

It said liquidation was the best route as Jalan-Kalrock Consortium (JKC) -- the successful bidder for the airline -- failed to implement the resolution plan, five years after its approval.

“The Registry shall forward one copy each of this judgment to the Principal Secretary, Ministry of Finance, Government of India, and the Chairperson, Insolvency Bankruptcy Board of India, with a request to look into this judgment, more particularly the suggestions made by this court,” it said.

Ordering that the amount of Rs 200 crore already infused by the SRA (Successful Resolution Applicant) stood forfeited, the top court permitted the Lenders/Creditors to encash the performance bank guarantee of Rs 150 crore furnished by the SRA.

The NCLAT had on March 12 upheld the resolution plan of the grounded airline and approved the transfer of its ownership to the JKC. NCLAT had told JKC to obtain an air operator’s certificate within 90 days. It had also given it more time to pay Rs 175 crore to SBI as 107 days had passed since NCLAT’s order allowing the transfer of ownership.

The lenders -- State Bank of India, Punjab National Bank and JC Flowers Asset Reconstruction Private Limited -- had challenged the NCLAT verdict.

Jet Airways has been grounded since 2019 owing to financial problems and its largest lender SBI had initiated insolvency proceedings against it before the NCLAT in Mumbai.