NEW DELHI: In a big development in corporate world, the Supreme Court on Thursday ordered for the liquidation of grounded air carrier Jet Airways while setting aside the resolution plan approved by the NCLAT.
Supreme Court Overturns NCLAT’s Resolution Approval for Jet Airways Revival
A bench of Chief Justice of India and Justices J B Pardiwala and Manoj Misra passed the order, using its extraordinary power under Article 142 of the Constitution.
The court set aside the National Company Law Appellate Tribunal's decision, which upheld the resolution plan of Jet Airways and approved the transfer of its ownership to Jalan Kalrock Consortium (JKC).
The court said the NCLAT order was "perverse as it misled evidence on record since the performance bank guarantee of Rs 150 crore could not have been adjusted against the payment of Rs 350 crore".
Impact of Liquidation Order on Creditors and Future of Jet Airways Assets
Justice Pardiwala, who pronounced the judgment on behalf of the bench, allowed the plea of SBI and other creditors, who challenged the validity of the NCLAT's decision.
The bench said JKC contravened the terms of the resolution plan, which cannot be implemented.
It also said the fundamental concern was "not to do substantial justice but also bring speedy disposal of dispute".
The court found that the determination of resolution plan has been contravened in the matter.
“Since the resolution plan is not possible to be implemented, we have to ensure that liquidation remains an option for the corporate creditor," the bench said.
In its order, the bench said, "We direct corporate debtor is taken into liquidation. Lenders are permitted to encash the performance bank guarantee. NCLT Mumbai is to appoint liquidator forthwith."
The NCLAT had on March 12 upheld the resolution plan of the grounded air carrier and approved the transfer of its ownership to JKC. The SBI, Punjab National Bank (PNB) and JC Flowers Asset Reconstruction Private Limited have challenged the NCLAT verdict.
Jet Airways was grounded in 2019 as it was unable to cope with severe financial troubles. SBI, its largest lender, initiated insolvency proceedings against the company before the NCLT in Mumbai, leading to the Corporate Insolvency Resolution Process (CIRP).
In 2021, JKC emerged as the successful bidder for the airline's revival.
