India
SC quashes NCLAT decision and orders liquidation of Jet Airways assets – Times of India
SC ruled that the resolution plan was violated after the consortium failed to provide even the first tranche of funds within the stipulated timeline as prescribed by the plan. Moreover, the Rs 200 crore injected earlier by the Jalan-Fritsch consortium will be forfeited.
A bench headed by Chief Justice DY Chandrachud, along with Justices JB Pardiwala and Manoj Misra, quashed the decision of the National Company Law Appellate Tribunal (NCLAT) that had upheld the airline’s resolution plan, transferring ownership to the Jalan Kalrock Consortium (JKC).
Justice Pardiwala, who delivered the judgment on behalf of the court, allowed the appeal of SBI and other creditors, who had challenged the NCLAT’s approval of the scheme. The court ruled that the liquidation of Jet Airways was in the best interests of its creditors, employees and other stakeholders.
The bench strongly criticized the NCLAT for its decision and invoked its powers under Article 142 of the Constitution. This provision gives the apex court the power to issue orders and decrees to ensure complete justice in all pending cases.
SC said, “This trial is an eye-opener and has taught us many lessons about IBP and functioning of NCLAT and NCLT.”
The NCLAT had earlier, on March 12, ratified Jet Airways’ resolution plan and approved the transfer of ownership of the airline to the Jalan Kalrock Consortium. However, the ruling was challenged by several creditors, including SBI, Punjab National Bank (PNB) and JC Flowers Asset Reconstruction Private Limited, citing the inability of the resolution applicant to meet crucial financial obligations.
This follows an earlier hearing in which the SC had reserved its judgment on a plea by the SBI-led consortium, which sought to scrap the three-year-old Rs 4,783-crore resolution plan.
The consortium argued that the successful resolution applicant, led by Murari Jalan and Florian Fristch, had failed to deposit even the first tranche of Rs 350 crore, which was part of a larger payment under the scheme.
Representatives of the creditors, including Additional Solicitor General N Venkataraman and SBI counsel Sanjay Kapur, argued that the Jalan-Kalrock consortium had repeatedly failed to comply with key terms of the resolution plan, starting with the prepayment.
The delay had raised concerns about the consortium’s commitment to reviving the airline, which was originally grounded due to financial turmoil.
