 "Jet airways")
The National Company Law Appellate Tribunal (NCLAT) on Tuesday greenlit the transfer of ownership of Jet Airways to the Jalan Kalrock Consortium (JKC), the successful bidder for the grounded airline. It upheld the order of the National Company Law Tribunal (NCLT), which had permitted the transfer of ownership to JKC in January last year. Consequently, the appeal by the State Bank of India (SBI) against the takeover of the airline by JKC was dismissed.
The appellate tribunal directed the lenders to complete the transfer within 90 days and instructed JKC to obtain an air operator certificate within the same period. The NCLAT also allowed JKC to adjust Rs 150 crore from its bank guarantee towards the first tranche of payment of Rs 350 crore to the lenders.
The tribunal asked the lenders to create security on immovable properties as offered by JKC within 30 days from Tuesday. Upon the creation of such security, the lenders are to adjust the performance bank guarantee of Rs 150 crore towards the payment of the same amount from the successful resolution applicant (SRA), i.e JKC.
Within 30 days of the creation of security, the lenders have been directed to issue shares of Jet Airways to JKC and hand over the company. And within 30 days from the date of such handover, JKC and the lenders should complete all payments to the lenders as per the approved resolution plan, the appellate tribunal said.
“Before we close, we hope and trust that all concerned shall take steps to implement the resolution plan so as to make the first corporate insolvency resolution process (CIRP) of an aviation company in this country a success,” said the order by Chairperson Justice Ashok Bhushan and Member (Technical) Barun Mitra.
This means that Jet Airways can start business and operations, subject to regulatory approvals, after the handover to the SRA.
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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”.
The lenders of Jet Airways and the Jalan Kalrock Consortium are in a legal tussle for more than a year over the transfer of the management of the grounded carrier. The lenders had approached the Supreme Court, which on January 18 declined to interfere in the matter and had directed the NCLAT to decide on the issue.
The appellate tribunal stated that of the first tranche payment of Rs 350 crore, payments shall be made to the workmen and employees and the lenders under the resolution plan. This includes the payment of the insolvency process cost as per the resolution plan within 60 days from the date of the judgment.
Earlier the Supreme Court had set aside the order of the appellate tribunal permitting JKC to adjust Rs 150 crore from its performance bank guarantee. “The question of adjustment of Rs 150 crore (through bank guarantee), we will keep it with the NCLAT. You (JKC) have to (pay),” it had said.
JKC was supposed to pay Rs 350 crore as part of the first payment. It had deposited Rs 100 crore by August 31, 2023, and another Rs 100 crore by the end of September 2023. The lenders in the NCLAT had questioned the source of the money and said it was non-compliant with the resolution plan.
Jet Airways was grounded in 2019 amid mounting financial woes and its largest lender, State Bank of India, had started insolvency proceedings against the company before the NCLT Mumbai. The company was subsequently admitted to the resolution process. In 2021, JKC emerged as the successful resolution applicant to resuscitate the airline.
But JKC later claimed that the lenders had not begun the process of transferring ownership of the airline, while the lenders argued that JKC had not infused any funds into Jet Airways.
In February 2023, the lenders approached the NCLAT against the NCLT’s order on the transfer of ownership. The NCLAT, however, refused to issue any injunction in favour of the lenders.
While the lenders and JKC kept warring, in September 2023, the NCLAT permitted JKC to adjust its Rs 150 crore rupee performance bank guarantee to infuse Rs 350 crore into Jet Airways.
Solicitor General Tushar Mehta, appearing for the lenders, had told the apex court that total admitted claim of the financial creditors is Rs 7,800 crore but the financial package offered by JKC is Rs 4,783 crore, which is payable in tranches in five years. “The financial creditors (banks/lenders) are struggling to get an amount of Rs 350 crore towards the first tranche payment, even two years after approval of the resolution plan," he told the court.
But senior advocate Mukul Rohatgi, appearing for JKC, had said: “At every stage, they (lenders) are objecting. If you don't want the bank guarantee, give it back.”
Last week, the Supreme Court dismissed a plea by JKC challenging the NCLAT order permitting the sale of three Jet aircraft to Malta-based Ace Aviation. It moved the apex court against the sale after losing the NCLAT appeal.
The apex court said that it did not find anything wrong with the NCLAT order and that JKC could benefit from the sale of the aircraft.
