Yesterday, On 9th May, The lenders of Jet Airways expressed their dissatisfaction with the resolution plan, considering it to be a mockery of the situation. This information conveyed to the Supreme Court, highlighting concerns about the proposed plan’s efficacy or seriousness in resolving the airline’s financial woes. The lenders’ stance indicates a lack of confidence in the current proposal’s ability to address the challenges faced by Jet Airways comprehensively.
New Delhi: During an intense showdown at the Supreme Court on May 8, the lawyers representing the lenders of Jet Airways, the grounded airline, clashed with Jalan Kalrock Consortium (JKC), the successful resolution applicant.
Senior advocate Harish Salve, representing the lenders, began his arguments by stating,
“The resolution process should lead to dissolution. This situation has turned into a mockery.”
Salve argued that obtaining an international travel permit was a prerequisite in the resolution plan, and an airline must have a minimum of 20 aircraft to fulfil this requirement. However, JKC has only managed to acquire five aircraft so far.
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The lenders further asserted that they were incurring substantial expenses, including airport dues, at a rate of Rs 22 crore per month. They have already spent over Rs 350 crore on dues. However, despite these expenses, the National Company Law Appellate Tribunal (NCLAT) directed them to transfer the airline to JKC within 90 days, disregarding these concerns.
The senior counsel also stated,
“Operating an airline requires a substantial amount of money. JKC cannot obtain international permits, and they have not even arranged for Rs 150 crore. Instead of paying the money, they want a performance guarantee to be encashed.”
Senior advocate Mukul Rohatgi, representing JKC, strongly refuted the allegations, stating that JKC never accepted the lenders’ offer as they were already obligated to make a payment of Rs 350 crore. Rohatgi argued that despite facing objections from the lenders, JKC invested Rs 700 crore in the revival efforts of the airline.
On March 12, the NCLAT upheld the transfer of ownership of the grounded airline to JKC. This decision previously approved by the National Company Law Tribunal (NCLT) in January of the previous year.
The appellate tribunal instructed the lenders to complete the ownership transfer within 90 days, while also requiring JKC to obtain an air operator’s certificate within this timeframe. Additionally, the NCLAT allowed JKC to deduct Rs 150 crore from its bank guarantee for the initial payment of Rs 350 crore to the lenders. Over the course of a year, JKC and the lenders of Jet Airways have been engaged in a legal dispute regarding the transfer of ownership to the successful bidder. In January, the Supreme Court declined to intervene in other matters but overturned the NCLAT‘s decision to permit JKC to deduct Rs 150 crore from its bank guarantee.
Jet Airways ceased operations in 2019 due to escalating financial difficulties. The State Bank of India (SBI), the largest lender, initiated insolvency proceedings against the company, leading to its admission to the resolution process by the NCLT Mumbai. In 2021, JKC emerged as the successful resolution applicant to revive the airline’s operations.
While JKC claimed that the lenders had not commenced the ownership transfer process, the lenders contended that JKC had not infused any funds into Jet Airways. In February 2023, the lenders approached the NCLAT to challenge the NCLT’s order concerning the ownership transfer. However, the NCLAT declined to issue an injunction in favour of the lenders regarding this matter.