In a seminal judgment on Thursday, the Supreme Court ordered the liquidation of Jet Airways’s assets, invoking its extraordinary powers under Article 142 to set aside an order of the tribunal that had approved a resolution plan. This would give ownership of the airline to the Jalan-Kalrock Consortium without ensuring full payment to creditors.
Article 142 of the Constitution empowers the court to pass orders to achieve “complete justice” in cases that are still pending. Drawing attention to the “peculiar and alarming” facts surrounding Jet Airways, the bench said improper implementation of the resolution plan prompted it to order liquidation of the airline.
A bench headed by Chief Justice DY Chandrachud and comprising Justices JB Pardiwala and Manoj Misra said liquidation should be the last thing on the lenders’ agenda, especially when the resolution plan itself is not practicable. The court was hearing a plea from creditors, including the largest lenders, such as State Bank of India and Punjab National Bank.
The court’s judgment in the matter has focused on protecting the interests of the creditors, employees, and other stakeholders. The apex court also reproached NCLAT for upholding the resolution when creditors did not receive the required money.
NCLAT approved the resolution plan and cleared the transfer of ownership on March 12, which was legally contested because the consortium had not paid. The central issue involves the NCLAT’s approval of the transfer of ownership despite the failure of the Jalan-Kalrock Consortium to pay the mandatory upfront amount of ₹350 crore out of ₹4,783 crore.
The court ordered that the ₹200 crore infused so far by the consortium shall stand forfeited and directed the NCLAT’s Mumbai bench to appoint a liquidator for the airline,” it said.
Earlier, the Jalan-Kalrock Consortium approached the NCLAT, seeking permission to move the ₹200 crore to an escrow account, but withdrew the plea in May after the tribunal dismissed the plea, citing the fact that the Supreme Court is seized of the matter.
Jet Airways has not flown since April 2019. In 2021, the Jalan-Kalrock Consortium emerged as a successful bidder for taking over Jet Airways: UAE-based non-resident Indian Murari Jalan and Florian Fritsch as shareholders through Kalrock Capital Partners Limited.
But ever since then, the implementation of the resolution plan has encountered innumerable legal and financial setbacks. In May, Jet announced the deferral of its financial results for the quarter and year ending March and said the monitoring committee would meet shortly to decide on the future course of action.
