SC orders liquidation of Jet Airways assets, forfeiture of winning bidder's money

PTI New Delhi: In a major development in the Jet Airways insolvency saga, the Supreme Court on Thursday ordered the grounded airline's liquidation, forfeiture of Rs 200 crore infused by successful bidder Jalan Kalrock Consortium and permitted the lenders led by SBI to encash Rs 150 crore performance bank guarantee. Invoking its extraordinary powers under Article 142 of the Constitution, a bench comprising Chief Justice D Y Chandrachud and Justices J B Pardiwala and Manoj Misra put the curtains down on the insolvency proceedings of the airlines by setting aside the order of the National Company Law Appellate Tribunal (NCLAT).

The bench termed the case as an “eye opener” and rapped NCLAT for allowing adjustment of performance bank guarantee (PBG) in view of payment of the first tranche by Jalan Kalrock Consortium (JKC). Insolvency appellate tribunal NCLAT had allowed JKC to take over Jet Airways without fully complying with its payment obligations, it observed. “The impugned order of the NCLAT directing the SRA (successful resolution applicant) to adjust PBG of Rs 150 crore against the first tranche of payment of Rs 350 crore was in flagrant disregard of the order of this court…,” it said. Pronouncing judgement for the bench, Justice Pardiwala allowed the plea of SBI and other creditors against the NCLAT decision that upheld the resolution plan of Jet Airways in favour of JKC. The apex court, as a result, allowed the appeals of the lenders and set aside the NCLAT order.

"In the peculiar and alarming circumstances as discussed in this judgement, and also keeping in mind the fact that almost five years have elapsed since the resolution plan was duly approved by the NCLT (National Company Law Tribunal) and there being no progress worth the name, we are left with no other option but to invoke our jurisdiction under Article 142 of the Constitution and direct to the corporate debtor be taken in liquidation,” held the bench. The bench ordered that requisite steps be taken for the commencement of the liquidation process of the grounded airline and “the amount of Rs 200 crore already infused by the SRA stands forfeited".