SC to verdict on Nov 7 on plea against NCLAT

The Supreme Court is scheduled to pronounce its verdict on a plea of State Bank of India (SBI) and other creditors challenging the National Company Law Appellate Tribunal (NCLAT) decision that upheld the resolution plan of grounded air carrier Jet Airways and approved the transfer of its ownership to Jalan Kalrock Consortium (JKC). A bench of Chief Justice D Y Chandrachud and Justices J B Pardiwala and Manoj Misra will pronounce the verdict which was reserved on October 16. The NCLAT had on March 12 upheld the resolution plan of the grounded air carrier and approved the transfer of its ownership to the JKC. The appellate tribunal further directed the Jet Airways monitoring committee to complete the transfer of ownership within 90 days. Besides, the NCLAT had also directed the lenders of Jet Airways to adjust Rs 150 crore paid by the consortium as performance bank guarantee (PBG). The SBI, Punjab National Bank (PNB) and JC Flowers Asset Reconstruction Private Limited have challenged the March 12 verdict of the NCLAT. The consortium had contended that the creditors, including the SBI, were unjustifiably seeking to liquidate Jet Airways. The banks had referred to certain media reports and said the public lenders are unjustifiably being held responsible for the closure of private airlines and the companies are facing insolvency proceedings. The JKC argued that the obligations under the resolution plan were contingent upon the occurrence of the effective date, which marks the initiation of the consortium's obligation to make payments under the plan. It had opposed the plea of lenders that the consortium defaulted and made the resolution plan unworkable. The consortium has taken all necessary positive steps towards the implementation of the resolution plan and that it is now up to the lenders to fulfil their obligations, it had said. The banks said the JKC failed to meet its financial obligations, including the infusion of Rs 350 crore within the stipulated 180-day period from the effective date under the resolution plan. The lenders had further contended that the consortium failed to fulfil other key obligations, such as infusing Rs 150 crore in cash and mortgaging three Dubai properties as required under the resolution plan. On October 15, the consortium opposed the submissions of the law officer and said it was the creditors who had delayed the resolution process. It had said the revival of Jet Airways was a commercial endeavour, subject to various external factors and the consortium cannot be held solely liable for delays caused by security clearances and other procedural hurdles. The NCLAT, in its verdict, had approved the transfer of its ownership to the consortium by upholding the NCLT Mumbai's verdict of January 13, 2023. The NCLAT had also directed the lenders of Jet Airways to adjust the Rs 150 crore paid by the consortium as PBG. "The PBG of Rs 150 crore, which is lying with the monitoring committee/MC lenders, shall be adjusted towards the first tranche payment of Rs 350 crore as Rs 200 crore have already been paid by the SRA (JKC). By adjustment of PBG as per the resolution plan, the first tranche of payment of Rs 350 crore shall be completed," it had said. Jet Airways, which has remained grounded since April 2019, had in September, 2023 said the new proposed promoters -- the Jalan-Kalrock consortium -- had completed an additional infusion of Rs 100 crore into the carrier. With this infusion, it had said, JKC has fulfilled its total financial commitment of Rs 350 crore equity according to the court-approved resolution plan. The consortium has fulfilled all other commitments to take control of the airline, it had added. The airline had also said it was looking to re-launch operations from 2024.

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