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The Supreme Court of India has delivered a decisive blow to the revival hopes of Jet Airways, ordering its liquidation in accordance with the Insolvency and Bankruptcy Code (IBC). This landmark ruling, issued on Thursday, effectively ends the long-running saga of the once-iconic airline's attempt to regain its place in the Indian aviation landscape. The court, leveraging its extraordinary powers under Article 142 of the Constitution, bypassed the National Company Law Appellate Tribunal (NCLAT) order that had previously sanctioned the transfer of ownership to the Jalan Kalrock Consortium, a UK-based private investor group.
The Supreme Court's decision stems from a series of events that unfolded over the past few years. In 2019, Jet Airways, grappling with mounting financial distress, was admitted into the Corporate Insolvency Resolution Process (CIRP) initiated by State Bank of India (SBI), its primary lender. This process aimed to facilitate a turnaround of the airline through a resolution plan formulated by a successful resolution applicant (SRA). In 2021, the Jalan Kalrock Consortium emerged as the chosen SRA, pledging to inject funds and revive Jet Airways' operations. However, the consortium's journey was fraught with obstacles, as SBI-led lenders challenged the NCLAT's approval of the ownership transfer.
A crucial turning point arrived in January 2023 when the Supreme Court intervened. The court challenged the NCLAT's decision allowing the Jalan Kalrock Consortium to offset a substantial payment against a performance bank guarantee (PBG) provided by the consortium. The Supreme Court deemed this adjustment “perverse” and a violation of its previous order, ultimately leading to the decision to liquidate Jet Airways. The court's rationale centered around the consortium's failure to uphold the terms of the resolution plan, specifically regarding the maintenance of the PBG until plan completion. The violation of these terms effectively severed the foundation upon which the consortium's ownership was based.
The Supreme Court's action underscores the stringent nature of the IBC framework and its commitment to ensuring a fair and transparent resolution process. The court's decision to liquidate Jet Airways signifies that even with the best intentions, deviation from the established guidelines can result in severe consequences. The outcome also serves as a stark reminder of the importance of adherence to contractual obligations and the sanctity of financial agreements, particularly within the context of insolvency proceedings. The future of Jet Airways remains uncertain, with the appointed liquidator tasked with the arduous process of winding down the airline's assets and settling its outstanding liabilities. The legacy of Jet Airways, once a symbol of India's burgeoning aviation sector, is now deeply entwined with the legal complexities that unfolded during its final chapter.