November 7, 2024, the Supreme Court of India delivered a landmark ruling ordering the liquidation of Jet Airways, marking a significant moment in the airline’s tumultuous journey since its grounding in April 2019. This decision comes after years of legal battles and failed attempts at revival, primarily due to the non-implementation of a resolution plan by the Jalan-Kalrock Consortium (JKC).
Background: The Rise and Fall of Jet Airways
Jet Airways was once one of India’s premier airlines, known for its extensive domestic and international routes. However, financial mismanagement and mounting debts led to its suspension from operations in 2019. Since then, the airline has been embroiled in insolvency proceedings under the Insolvency and Bankruptcy Code (IBC), with various attempts made to revive it through resolution plans.The JKC was selected as the successful bidder for Jet Airways in 2021, with a resolution plan that promised to infuse funds and restart operations. However, the consortium’s inability to meet key financial commitments ultimately led to today’s ruling.
Supreme Court’s Ruling: Key Highlights
- Failure of Resolution Plan: The Supreme Court found that JKC had failed to fulfill critical obligations outlined in the resolution plan, including the infusion of ₹350 crore and payment of employee dues totaling ₹226 crore. The court deemed this failure as a breach of trust towards creditors and stakeholders.
- Setting Aside NCLAT Ruling: The Supreme Court set aside a previous order by the National Company Law Appellate Tribunal (NCLAT) that had upheld JKC’s ownership transfer despite these failures. The court emphasized that allowing such adjustments undermined established legal principles under the IBC.
- Liquidation Order: Citing a “peculiar and alarming” situation where five years had elapsed without progress on the resolution plan, the court invoked its extraordinary powers under Article 142 of the Constitution to mandate liquidation. This article allows the Supreme Court to make orders necessary for complete justice in any matter before it.
- Forfeiture of Payments: The court ordered that the 200 crore paid by JKC as part of its initial payment be forfeited, highlighting the consortium’s failure to comply with its financial commitments.
- Appointment of Liquidator: The Supreme Court directed the National Company Law Tribunal (NCLT) in Mumbai to appoint a liquidator immediately, initiating the formal liquidation process for Jet Airways.
Implications for Stakeholders
The Supreme Court’s decision has significant implications for various stakeholders involved with Jet Airways:
- Employees: With liquidation now confirmed, employees face uncertainty regarding their futures and outstanding dues. Many have been awaiting payment for months or even years.
- Creditors: The ruling provides creditors with a clearer path forward but underscores their losses due to non-compliance by JKC. Lenders had previously expressed frustration over JKC’s inability to meet financial commitments.
- Aviation Industry: This ruling serves as a cautionary tale within India’s aviation sector regarding compliance with insolvency regulations and the importance of fulfilling commitments made during resolution processes.
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