On Wednesday, the Supreme Court reserved its judgment regarding a plea filed by the State Bank of India and other creditors against the National Company Law Appellate Tribunal’s (NCLAT) decision.
This decision upheld the resolution plan for the insolvent airline Jet Airways and sanctioned the transfer of its ownership to the Jalan Kalrock Consortium (JKC). The Case highlights the ongoing complexities in the insolvency resolution process and the challenges faced by creditors in ensuring compliance with approved plans.
The bench was led by Chief Justice D.Y. Chandrachud, along with Justice J.B. Pardiwala and Justice Manoj Misra. The Court listened to arguments from Additional Solicitor General (ASG) N Venkatraman, representing the appellant banks, including the State Bank of India and Punjab National Bank, as well as JC Flowers Asset Reconstruction Private Limited. The ASG contended that the JKC had failed to meet its payment obligations outlined in the resolution plan, stating that the consortium was currently four years behind schedule. In contrast, senior advocate Mukul Rohatgi, representing JKC, argued that delays were primarily attributable to the creditors, not the consortium.
The NCLAT had previously ruled on March 12 in favour of the resolution plan, directing the Jet Airways monitoring committee to complete the ownership transfer within 90 days. It also mandated that Jet Airways’ lenders adjust a performance bank guarantee (PBG) of Rs. 150 crore provided by the consortium. The airline, which has been grounded since April 2019 due to a liquidity crisis, announced in September 2023 that the new promoters had made an additional investment of Rs. 100 crore, fulfilling their financial commitment of Rs. 350 crore as per the court-approved resolution plan. Jet Airways indicated its intent to resume operations in 2024.
During the proceedings, the court reviewed the submissions from both sides regarding the implications of the consortium’s financial commitments and the timeline of the insolvency process. The ASG’s argument centred on the JKC’s alleged defaults, suggesting that their non-compliance could hinder the effective resolution of Jet Airways’ financial distress. Conversely, Rohtagi emphasised that the consortium had met its obligations and criticised the creditors for delaying the resolution process. The Court’s deliberations reflect the tension between ensuring creditors’ rights and facilitating a viable resolution plan that can breathe new life into a struggling airline. The reserved judgement indicates the Court’s intention to carefully weigh the arguments presented and clarify the responsibilities of all parties involved in the insolvency resolution process, particularly concerning the adherence to approved financial commitments.
In conclusion, this case illustrates the complexities involved in corporate insolvency proceedings, particularly in balancing the rights and interests of creditors to ensure successful business rehabilitation. The final decision is anticipated to set a significant precedent for the interpretation and enforcement of resolution plans under insolvency law in India.