The Supreme Court of India has ruled that Jet Airways’ assets will be liquidated, invoking its extraordinary powers under Article 142. The court overturned a decision by the National Company Law Appellate Tribunal (NCLAT) that had upheld a resolution plan and approved the transfer of ownership to the Jalan-Kalrock Consortium (JKC), despite non-payment to creditors.
Article 142 Powers to Ensure Justice
Article 142 grants the Supreme Court the authority to issue orders for “complete justice” in any pending matter. In this case, the court noted “peculiar and alarming” circumstances surrounding the implementation of the resolution plan, which led to its decision to send Jet Airways into liquidation. The court emphasized that liquidation should be a last resort, but given the failure of the resolution plan, it was the most suitable option for creditors.
Court Criticizes NCLAT’s Decision
The Supreme Court also reprimanded the NCLAT for upholding the resolution plan, despite the fact that JKC had not made the full payment owed to creditors. The court supported the plea of creditors, including the State Bank of India (SBI) and Punjab National Bank (PNB), who had raised concerns over the non-payment.
Failure to Pay Dues
At the heart of the case was the failure of JKC to pay an initial ₹350 crore as required under the resolution plan. Overall, JKC was required to pay ₹4,783 crore, but the court ruled that only ₹200 crore had been infused into the company. As a result, the court directed the forfeiture of the ₹200 crore and ordered the appointment of a liquidator by the NCLAT’s Mumbai bench.
Background on Jet Airways’ Grounding and Ownership Shift
Jet Airways was grounded in April 2019, and two years later, the Jalan-Kalrock Consortium, consisting of Murari Jalan and Florian Fritsch, won the bid to take over the airline. Despite delays in financial reporting and the slow implementation of the resolution plan, a monitoring committee was set up to oversee the process. However, legal and financial challenges have continued to hinder progress.
Ongoing Delays and Future Actions
The delays in the implementation of the resolution plan have been accompanied by several legal challenges. In May, Jet Airways announced a delay in releasing its financial results for the quarter ending March, and a monitoring committee meeting was planned to address the issue. Despite these setbacks, the Supreme Court’s ruling will now initiate the liquidation process.
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