The Supreme Court recently heard a challenge to the decision of the National Company Law Appellate Tribunal (NCLAT) to approve a resolution plan proposed by the Jalan-Kalrock consortium (JKC) for Jet Airways. The challenge was brought by a State Bank of India-led consortium of lenders. The lenders described the NCLAT verdict as “shocking” and a deviation from the Supreme Court’s direction to encash a ₹150 crore bank guarantee towards the initial tranche payment of ₹350 crore to the banks.
Arguments Presented by the Parties
During the hearing, senior advocate Harish Salve, representing the SBI consortium, expressed concern over the situation, stating that it has become a “nightmare” for the lenders. He emphasized that airlines require significant amounts of money and cannot be treated like a regular business. Salve argued that financial institutions would be left in a difficult position if resolution plans do not adequately address the lenders’ concerns.
On the other hand, senior advocate Mukul Rohatgi, appearing for the JKC, denied the allegations made by the lenders. He stated that the JKC had already spent ₹700 crore to revive the airline and that the lenders had objected to their efforts.
Next Steps
The Supreme Court has deferred the hearing to May 17, 2024, at 2 p.m. The court had directed the NCLAT to decide on the appeal by the SBI consortium challenging the transfer of Jet Airways’ ownership to JKC by March 31, 2024.
Background Information
Jet Airways, a grounded airline, has been undergoing a legal battle over the transfer of ownership to the JKC for over a year. In January 2023, the Supreme Court set aside the NCLAT’s order permitting JKC to adjust ₹150 crore from its bank guarantee. The JKC emerged as the successful resolution applicant in 2021 to restart the airline’s operations.
