In a historic ruling, the Supreme Court of India has ordered the liquidation of Jet Airways, invoking Article 142 of the Constitution. This decision follows the failure of the Jalan KalRock Consortium (JKC), the Successful Resolution Applicant (SRA), to implement the resolution plan and make the necessary payments over five years. The court’s action overturns a previous National Company Law Appellate Tribunal (NCLAT) ruling that allowed JKC ownership transfer without full payment. Chief Justice DY Chandrachud, Justice JB Pardiwala, and Justice Manoj Misra, who made up the bench, deemed this decision a violation of the established resolution terms, criticizing NCLAT’s approval as “perverse.”
Justice Pardiwala highlighted the case’s handling as a significant lesson on the Insolvency and Bankruptcy Code (IBC) and NCLAT’s operations, emphasizing that the Performance Bank Guarantee (PBG) must remain secure until full resolution plan compliance. The Supreme Court criticized NCLAT’s earlier decision to let JKC use Rs 350 crore from the PBG against its payment obligations, stating this directly contradicted an earlier Supreme Court order from January 18, 2024.
The judgment marks a pivotal moment in Jet Airways’ prolonged financial troubles since its grounding in 2019. The court’s decision to liquidate underscores the consequences of failing to adhere to resolution terms under the IBC, noting liquidation as the only remaining option due to the SRA’s non-payment. This outcome reinforces the need for strict compliance in the resolution process and addresses lenders’ long-standing concerns led by the State Bank of India (SBI) about the stalled revival of the airline.
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