New Delhi: The Supreme Court on Thursday quashed the resolution plan to revive bankrupt Jet Airways Jalan Fritsch Consortium and ordered the liquidation of the assets of grounded Jet Airways.
The SC ruled that the resolution plan was breached as the consortium failed to infuse the first tranche of funds within the stipulated time as stipulated in the plan. In addition, the Rs 2 billion previously injected by the Jalan-Fritsch consortium will also be forfeited.
A bench headed by Chief Justice DY Chandrachud along with Justices JB Pardiwala and Manoj Misra overturned the National Company Law Appellate Tribunal’s (NCLAT) verdict upholding the airline’s resolution plan to transfer ownership to Jalan Kalrock Consortium (JKC).
Justice Padivala delivered the judgment on behalf of the bench, allowing appeals by SBI and other creditors who had challenged NCLAT’s approval of the scheme. The court held that the liquidation of Jet Airways was in the best interests of its creditors, employees and other stakeholders.
The bench strongly criticized the NCLAT’s decision and invoked its powers under Article 142 of the Constitution. This provision empowers the Supreme Court to pass orders and decrees to ensure complete justice in any pending matter.
“This litigation is an eye-opener and has taught us a lot of lessons on the functioning of IBP and NCLAT and NCLT,” the SC said.
NCLAT had earlier upheld Jet Airways’ resolution plan on March 12 and approved the transfer of ownership of the airline to Jalan Kalrock Consortium. However, the award was challenged by several creditors, including SBI, Punjab National Bank (PNB) and JC Flowers Asset Reconstruction Private Limited, on the grounds that the resolution applicant failed to meet key financial obligations.
Earlier in the hearing, the SC reserved its ruling on the plea of the SBI-led consortium seeking to scrap the three-year Rs 4,783-crore resolution plan.
The consortium argued that the successful resolution applicants, led by Murari Jalan and Florian Fristch, failed to even deposit the first tranche of Rs 350 crore, which is part of the next larger tranche of the scheme.
Creditors’ representatives, including Solicitor General N Venkataraman and SBI lawyer Sanjay Kapur, argued that the Jalan-Kalrock consortium, starting with the advance deposit, had repeatedly failed to meet basic terms of the resolution plan.
The delay raised concerns about the consortium’s commitment to reviving the airline, which was initially grounded due to financial turmoil.
