The Supreme Court has delivered a significant ruling on the Jet Airways case, siding with lenders who challenged the National Company Law Appellate Tribunal’s (NCLAT) decision to transfer the struggling airline to the Jalan Kalrock Consortium. The top court has overturned the NCLAT’s order and directed the sale of Jet Airways, exercising its special powers to do so.
The bench, led by Chief Justice DY Chandrachud and including Justices JB Pardiwala and Manoj Mishra, reached this decision after reserving judgment on October 16 following a petition from the State Bank of India and other creditors. The lenders argued that the NCLAT’s move violated prior court instructions.
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In its judgment, the Supreme Court criticized the NCLAT’s decision to allow Jalan Kalrock Consortium to adjust a performance bank guarantee (PBG) of Rs 150 crore against the first installment of the resolution plan. The court ruled this adjustment a clear breach of the approved plan’s terms, emphasizing that the PBG cannot be used in this way. The Supreme Court noted that the resolution plan had already established terms for the guarantee, and any modification would undermine the agreement’s integrity.
Previously, the NCLAT had upheld the Jalan Kalrock Consortium’s takeover of Jet Airways under the resolution plan. However, Justice Pardiwala, agreeing with the petition from SBI and other creditors, concluded that liquidation of Jet Airways would be in the best interest of creditors, employees, and stakeholders.
This verdict reaffirms the Supreme Court’s commitment to uphold the clarity of resolution plans and support stakeholders’ interests in corporate insolvency cases.
