In a landmark decision, the Supreme Court of India on Thursday ordered the liquidation of Jet Airways, invoking its extraordinary powers under Article 142 of the Constitution, following the failure of the airline's resolution plan to be implemented over a span of five years.
The court's decision comes after the NCLAT (National Company Law Appellate Tribunal) allowed the transfer of ownership of the cash-strapped airline to the Successful Resolution Applicant (SRA), the Jalan KalRock Consortium (JKC), without the full payment stipulated in the resolution plan.
The bench, comprising Chief Justice DY Chandrachud, Justice JB Pardiwala, and Justice Manoj Misra, set aside the NCLAT’s order, citing the non-fulfillment of the payment terms as a violation of the resolution plan. The NCLAT had allowed the adjustment of the first tranche of Rs 350 crore against the Performance Bank Guarantee (PBG), but the Supreme Court found this decision to be in "flagrant disregard" of its earlier order passed on January 18, 2024, and termed it "perverse."
Justice Pardiwala expressed disappointment with the handling of the case, stating, "This litigation is an eye-opener and has taught us many lessons about the IBC and the functioning of NCLAT." The court emphasized that the PBG must remain intact until the resolution plan was fully implemented, and could only be forfeited in case of a breach.
The Court’s judgment marks a critical moment in the saga of Jet Airways' financial troubles, with the airline having been grounded since 2019. The airline's lenders, led by the State Bank of India (SBI), have long expressed concerns over the non-implementation of the resolution plan, which was supposed to bring the airline back into operation.
The court further observed that since the resolution plan was no longer viable due to the SRA’s failure to make the necessary payments, the option of liquidation was now the only course of action.
The ruling underscores the serious consequences of non-compliance with the terms of the resolution process under the Insolvency and Bankruptcy Code (IBC).
