Jet Airways‘ assets will be liquidated, the Supreme Court said Thursday afternoon, invoking ‘extraordinary’ powers under Article 142 to set aside a tribunal’s decision to uphold a resolution plan and transfer ownership – to the Jalan-Kalrock Consortium – without full payment to creditors.
Article 142 allows the court to make orders for ‘complete justice’ in any pending matter.
In this instance, the Supreme Court noted “peculiar and alarming” circumstances of the case – referring to improper implementation of a resolution plan approved five years ago – and said it was, therefore, left with “no choice but to send Jet Airways into liquidation”.
“Liquidation must be available to lenders as a last resort… since resolution plan is no longer capable of implementation,” Chief Justice DY Chandrachud and Justices JB Pardiwala and Manoj Misra said, allowing a plea by creditors, including the State Bank of India and the Punjab National Bank.
The court said liquidation would best serve the interests of creditors, workers and other stakeholders, and also rapped the National Company Law Appellate Tribunal for its decision.
The tribunal, on March 12, had upheld the resolution plan and cleared transfer of ownership, but that was challenged by the raft of creditors after the consortium’s alleged failure to pay dues.
One of the primary issues before the Supreme Court in this hearing was that the NCLAT had allowed transfer of ownership despite JKC failing to pay the Rs 350 crore as required by the resolution plan.
According to that plan, JKC was required to pay a total of Rs 4,783 crore overall.
In this context the court ruled that the Rs 200 crore already infused by JKC is to be forfeited.
Also, the NCLAT’s Mumbai bench has been directed to appoint a liquidator.
JKC earlier asked the NCLAT for permission to move the Rs 200 crore to an escrow account, but withdrew that plea in May after the tribunal denied relief, noting the top court is hearing the matter.
Jet Airways was grounded in April 2019 and, two years later, JKC – a consortium of Murari Jalan, a United Arab Emirates-based non-resident Indian, and Florian Fritsch, a Jet shareholder via an offshore holding company called Kalrock Capital Partners Limited – successfully bid for ownership.
Since then, however, there have been legal and financial delays.
