The Supreme Court continues its hearing Tuesday of a case that will decide the future of Jet Airways, the first airline in the country to face insolvency resolution.
The case is about Jet Airways’ lenders led by the State Bank of India opposing the Jalan-Kalrock Consortium (JKC), which submitted and received approval for a plan to revive the grounded airline.
The lenders contend that JKC has breached key conditions of the takeover, stalling the process of transferring ownership. Mint looks at the case and examines its importance.
What’s the case about?
At the centre of the dispute is the transfer of ownership of Jet Airways to JKC. The National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) approved JKC’s resolution plan in 2023.
However, the airline’s lenders claim JKC has not met critical conditions for the takeover.
Jet Airways, once one of India’s top airlines, has been grounded since 2019, with outstanding dues exceeding ₹7,500 crore. JKC’s ₹4,783 crore resolution plan was seen as a potential lifeline for the airline’s revival.
Why this case matters
The Supreme Court’s decision could determine whether Jet Airways gets revived or heads for liquidation.
If the court nullifies the plan and Jet Airways faces liquidation, it will raise concerns over India’s ability to handle airline insolvencies, particularly since Go First, another airline under insolvency, also failed to revive and filed for liquidation.
Will Jet Airways be the first airline to revive from insolvency?
When the NCLAT approved JKC’s resolution plan in March, tribunal chairperson Justice Ashok Bhushan said, “We hope and trust that all parties will take steps to implement the resolution plan to make the first Corporate Insolvency Resolution Process (CIRP) of the aviation company in the country successful.”
However, with the lenders now contesting the plan, Jet Airways’ chances of revival remain uncertain. If the airline does not emerge successfully from insolvency, it will fuel doubts about the efficacy of the insolvency regime in addressing airline bankruptcies.
Who is JKC?
JKC is a partnership between Murari Lal Jalan, a UAE-based businessman, and Florian Fritsch, an investor through Kalrock Capital Partners Ltd, based in the Cayman Islands. Their plan is aimed at reviving Jet Airways and its operations.
What is the stand of the lenders?
The lenders, led by SBI, argue that JKC has not:
1. Paid dues: JKC was supposed to deposit ₹350 crore as the first tranche but has deposited ₹200 crore so far. The consortium has not transferred the remaining ₹150 crore as mandated by the Supreme Court.
2. Provided security: JKC has not released three Dubai properties as security, as promised in the resolution plan.
3. Cleared worker obligations: JKC owes ₹272 crore towards provident fund and gratuity payments of Jet Airways’ employees.
4. Secured approvals: JKC has not obtained operational approvals, including an air operator’s certificate from the Directorate General of Civil Aviation.
The lenders claim that without fulfilling these conditions, the resolution plan should be set aside.
What is JKC’s position?
JKC asserts it has met its financial commitments and has infused the required funds into Jet Airways. The consortium accuses the lenders of intentionally delaying the ownership transfer and insists it is prepared to revive the airline.
JKC is willing to pay the remaining ₹150 crore to complete the first tranche of ₹350 crore, but the lenders demand this amount in cash, rejecting any performance bank guarantee based on the securities provided.
What to expect from the Supreme Court hearing
The Supreme Court, led by Chief Justice D.Y. Chandrachud, is hearing arguments from both sides. The hearing could result in a reserved judgment or continue with more dates to hear all sides.
