NCLAT upholds Jet Airways transfer of ownership to Jalan Kalrock

Insolvency appellate tribunal NCLAT on Tuesday upheld the resolution plan of grounded carrier Jet Airways and approved the transfer of its ownership to Jalan Kalrock Consortium. The NCLAT bench has directed the Jet Airways monitoring committee to complete the transfer of ownership within 90 days.

"The impugned order passed by Adjudicating Authority (NCLT Mumbai) dated 13.01.2023 is upheld," said a two-member NCLAT bench. Besides, it has also directed the lenders of Jet Airways to adjust the Rs 150 crore paid by the consortium as performance bank guarantee (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," it said.

It has also directed the monitoring committee and lenders of Jet Airways as JKC to take steps for the creation of charge over the three Dubai-based property within 30 days from Tuesday.

Of the first tranche payment of Rs 350 crore, payments shall be made to the workmen and employees and the creditors as per the resolution plan within 60 days from the date of this judgment, NCLAT said in an 108-page long order.

It has also directed JKC to "submit an application for re-issue of Air Operation Certificate which may be obtained within 90 days from the date of this judgment". The monitoring committee, comprising a consortium of lenders led by SBI and JKC are engaged in a legal tussle over the management handover.

On this, NCLAT observed, "implementation of resolution plan is a collaborative process, which requires positive action from all the parties, including the MC Lenders." "The implementation of the resolution plan not only revives the corporate debtor (Jet Airways), but it brings along with revival, new employment, generation of revenues etc. By non-implementation of the plan, direct sufferers are the workers and employees, who have not received the payments," it said. However, it also added that lenders are entitled to take steps for the protection of their amount, but that is not the only object of the IBC.

"The lenders to protect their own financial interest cannot ignore the primary object of revival of the corporate debtor and payments to other stakeholders, including workmen and employees, who are entitled for their payments along with financial creditors," it said.

The lenders by not taking positive steps for implementation of the plan have not only adversely affected the interest of the SRA (JKC), but have also created circumstances, so that workmen and employees be not paid.

Earlier, the lenders had approached the Supreme Court, which had declined to interfere in the matter and had directed the National Company Law Appellate Tribunal (NCLAT) to take a decision on the issue.

The NCLAT directed the managing committee, consisting of lenders led by SBI, to create security on immovable properties as offered by the successful resolution applicant (SRA), JKC, within 30 days.

Upon creation of such security, lenders were directed to adjust the performance bank guarantee of Rs 150 crore towards the payment of the same amount from the SRA. Jet Airways can start business and operations, subject to regulatory approvals, after handover to SRA, it said.

Jet Airways in a statement said the "NCLAT has approved the implementation of the resolution plan as originally approved without any deviations and has given directions to lenders for specific and immediate implementation".

Jet Airways, which has remained grounded since April 2019, had in September last year said the new proposed promoters -- the Jalan-Kalrock consortium -- had completed an additional infusion of Rs 100 crore into the carrier.

With this infusion, it said, JKC has fulfilled its total financial commitment of Rs 350 crore equity as per the court-approved resolution plan. The consortium has fulfilled all other commitments to take control of the airline, it added. The airline had also said it was looking to relaunch operations from 2024.

After grounding in 2019 owing to severe liquidity crisis at that time, the full-service carrier underwent an insolvency resolution process. However, it was having a dispute with the lender. In 2021, JKC emerged as the successful bidder of Jet Airways.