In a significant development on Thursday, the Supreme Court of India invoked its extraordinary powers under Article 142 to liquidate Jet Airways, setting aside the decision of the National Company Law Appellate Tribunal (NCLAT) that had upheld a resolution plan and allowed the Jalan-Kalrock Consortium (JKC) to take ownership of the airline without making full payments to creditors.
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Article 142 of the Constitution grants the court the authority to make orders for "complete justice" in any matter. The court found "peculiar and alarming" circumstances surrounding the case, especially concerning the improper execution of the resolution plan, which led to its decision to place Jet Airways into liquidation.
The Chief Justice DY Chandrachud, along with Justices JB Pardiwala and Manoj Misra, noted that liquidation must be considered as a last resort for lenders. They emphasized that the resolution plan was no longer feasible and that liquidation would better serve the interests of creditors, employees, and other stakeholders.
The court also criticized the NCLAT for allowing the transfer of ownership despite the consortium's failure to meet its financial obligations to creditors. The creditors, including major financial institutions such as the State Bank of India and Punjab National Bank, had filed the plea for liquidation.
Failure to Fulfill Financial Commitments
One of the key issues before the Supreme Court was the non-payment of an initial ₹350 crore by JKC, as stipulated by the resolution plan. The consortium was required to pay a total of ₹4,783 crore. However, it had only deposited ₹200 crore, which the court ordered to be forfeited. The NCLAT was directed to appoint a liquidator to oversee the liquidation process.
Background of Jet Airways' Crisis
Jet Airways, once one of India’s leading airlines, was grounded in April 2019 due to financial difficulties. In 2021, the Jalan-Kalrock Consortium, comprising Murari Jalan and Florian Fritsch, successfully acquired the airline's ownership through a resolution process. However, the implementation of the resolution plan has been marred by delays and legal challenges.
A monitoring committee was set up to supervise the plan’s implementation, but financial and legal setbacks have plagued the process. In May, Jet Airways announced a delay in declaring its financial results for the quarter and year ending in March, further highlighting the issues facing the airline.
With the Supreme Court’s ruling, Jet Airways is now set for liquidation, marking the end of a long-running legal and financial saga. The court’s decision underscores the importance of fulfilling financial commitments in resolution plans and the need to safeguard the interests of all stakeholders involved.
With inputs from agencies
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