[Jet Airways] “Creditors Delayed Resolution Process By Raising Pleas At Every Stage”: Winning Bidder Tells SC

Jalan Kalrock Consortium (JKC), which was handed over the grounded air carrier Jet Airways, on Tuesday (Oct 15) informed the Supreme Court that the creditors had delayed the resolution process by raising pleas at every stage of compliance. The National Company Law Appellate Tribunal (NCLAT) on March 12 had upheld the resolution plan of the grounded air carrier and approved the transfer of its ownership to the consortium.

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NEW DELHI: The Jalan Kalrock Consortium (JKC), the new owners of the grounded airline Jet Airways, informed the Supreme Court on Tuesday that delays in the resolution process were due to the continuous legal challenges raised by creditors. These challenges have significantly slowed down efforts to revive the airline.

In a significant decision, the National Company Law Appellate Tribunal (NCLAT) on March 12 had upheld the resolution plan for Jet Airways and approved the transfer of its ownership to JKC. This decision marked a crucial step in reviving the once-grounded air carrier.

The case is being heard by a Supreme Court bench consisting of Chief Justice D Y Chandrachud, along with Justices JB Pardiwala and Manoj Misra. The appeal has been brought forward by creditors, including State Bank of India, Punjab National Bank, and JC Flowers Asset Reconstruction Private Limited, who are challenging the March 12 verdict of the NCLAT.

The NCLAT had earlier directed Jet Airways’ monitoring committee to ensure the transfer of ownership to the Jalan Kalrock Consortium within 90 days, a deadline that has been met with numerous legal and operational roadblocks.

JKC, having successfully bid to revive Jet Airways, now finds itself in the midst of a complex legal battle with its creditors. At the heart of the issue is the compliance with the resolution plan, which has been under intense scrutiny.

During the hearing, Additional Solicitor General N Venkatramani, representing the appellant banks, argued that the successful resolution applicant (SRA) had not adhered to the payment schedule outlined in the resolution plan.

“The successful resolution applicant has defaulted on payments prescribed under the resolution plan,”

-said Venkatramani.

He also highlighted-

“The consortium was four years behind on its payment schedule.”

On the other hand, senior advocate Mukul Rohatgi, representing JKC through the law firm Karanjawala and Company, countered that the delays were caused by the creditors themselves. He emphasized that creditors had consistently raised legal challenges, causing significant delays in the resolution process.

“The creditors had delayed the resolution process,”

-said Rohatgi, as he defended the consortium’s actions and its attempts to comply with the plan.

Rohatgi further argued that the revival of Jet Airways was a challenging commercial endeavor, influenced by a variety of external factors beyond the control of the consortium.

He stated that-

“the consortium cannot be held solely responsible for delays caused by security clearances and other procedural hurdles.”

Rohatgi also informed the bench that due to these delays, JKC had already incurred losses amounting to more than Rs 600 crore.

The Supreme Court bench raised questions regarding the consortium’s compliance with the resolution plan and sought clarifications on why previous court directives had not been followed, specifically concerning the infusion of funds and the execution of a Performance Bank Guarantee (PBG).

The court is particularly focused on understanding why the consortium has not met its obligations regarding the infusion of funds in cash and the timely execution of the PBG. The hearing on the matter is set to continue on October 16.

As the legal battle continues, JKC remains focused on taking control of Jet Airways. In its March 12 verdict, the NCLAT upheld a January 13, 2023, ruling by the NCLT Mumbai that approved the transfer of Jet Airways’ ownership to JKC. Furthermore, NCLAT had directed the lenders 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,”

-the NCLAT stated in its ruling.

Jet Airways, grounded since April 2019, has seen little movement towards resuming operations until recently. In September 2023, the Jalan Kalrock Consortium announced that it had made an additional infusion of Rs 100 crore into the airline, marking significant progress towards fulfilling its financial obligations.

With this recent infusion, JKC has now completed its total equity commitment of Rs 350 crore, as required by the court-approved resolution plan. In addition to the financial commitments, the consortium has stated that it has met all other requirements to assume full control of Jet Airways.

Jet Airways also revealed its plans to re-launch operations in 2024, a long-awaited move since the airline grounded operations in 2019 due to a severe liquidity crisis.

JKC emerged as the successful bidder for Jet Airways during the insolvency resolution process in 2021. Despite winning the bid, the consortium has faced an ongoing dispute with creditors, complicating the revival efforts for the once-thriving full-service airline.

As the case continues to unfold, the future of Jet Airways remains uncertain, though the Jalan Kalrock Consortium is moving forward with its plans to revive the airline.

With the legal proceedings still ongoing, all eyes will be on the Supreme Court’s decision in the coming weeks.

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