The Supreme Court of India has ordered the liquidation of the defunct Jet Airways, invoking its extraordinary powers under Article 142 of the Constitution. The ruling came after the airline’s resolution plan failed to be implemented, despite five years of attempts to revive the once-prominent carrier.
In a landmark judgment, the Court overturned an earlier order by the National Company Law Appellate Tribunal (NCLAT), which had permitted the ownership transfer of Jet Airways to the Successful Resolution Applicant (SRA) without full payment as per the resolution plan. The Supreme Court directed the National Company Law Tribunal (NCLT) in Mumbai to appoint a liquidator immediately, effectively concluding the long and contentious resolution process for the cash-strapped airline.
The bench, comprising Chief Justice DY Chandrachud and Justices JB Pardiwala and Manoj Misra, reserved its verdict on October 16. The SBI-led consortium of lenders challenged the NCLAT’s decision, which had allowed the adjustment of a first tranche of Rs 350 crore against the Performance Bank Guarantee (PBG). The Supreme Court deemed this allowance a “flagrant disregard” of its previous order from January 18, 2024, calling it “perverse.”
Justice Pardiwala voiced concern over the handling of the case, stating, “This litigation is an eye-opener and has taught us many lessons about the Insolvency and Bankruptcy Code (IBC) and the functioning of NCLAT.” The Court emphasized that the PBG must remain intact until the full implementation of the resolution plan, only forfeitable in the event of a breach.
The Court’s judgment marks a pivotal moment in Jet Airways’ prolonged financial turmoil. The airline, grounded since 2019, had sought revival under the resolution plan, which promised a fresh start. However, the SRA, the Jalan KalRock Consortium, failed to meet the payment obligations specified in the plan. This non-compliance ultimately led to the Court’s decision to proceed with liquidation, highlighting the judiciary’s commitment to upholding the integrity of the IBC process.
In the corporate restructuring community, the decision has reverberated, underscoring the importance of strict adherence to IBC regulations for resolving distressed assets. Senior Advocate Mukul Rohatgi and Advocate Gopal Sankaranarayanan, representing the Jalan KalRock Consortium, argued for the approval of the ownership transfer, but the Court ruled against their plea, citing insufficient compliance.
This judgment reaffirms the Court’s stance on ensuring fairness and rigor in the IBC process, marking an end to Jet Airways’ hopes for revival through restructuring.
