Jet Airways Liquidation Case: Facts, Background, and Judgment
Facts of the Case
Jet Airways, once a prominent airline in India, ceased operations in April 2019 due to severe financial distress. A Corporate Insolvency Resolution Process (CIRP) was initiated under the Insolvency and Bankruptcy Code (IBC). The Jalan-Kalrock Consortium (JKC) was declared the Successful Resolution Applicant (SRA) in 2021, with a resolution plan approved by the National Company Law Tribunal (NCLT). However, JKC failed to meet its financial obligations, including infusing ₹350 crores and clearing ₹226 crores in employee dues, as per the resolution plan.
Background
The airline’s financial woes began in the late 2010s due to rising debt, operational inefficiencies, and stiff competition. After the 2019 grounding, lenders led by the State Bank of India (SBI) sought a resolution under the IBC. JKC’s resolution plan raised hopes for revival, but delays in financial infusion, regulatory approvals, and other commitments led to mounting challenges. The National Company Law Appellate Tribunal (NCLAT) granted JKC concessions, such as adjusting a ₹150-crore Performance Bank Guarantee (PBG) against its obligations. However, these actions were contested by creditors, arguing non-compliance with the IBC.
Key Highlights of the Judgment
The Supreme Court of India, in its judgment dated November 7, 2024, ordered the immediate liquidation of Jet Airways. This decision followed prolonged litigation over the failure of the Jalan-Kalrock Consortium (JKC) to meet financial and operational obligations outlined in the 2021 resolution plan approved under the Insolvency and Bankruptcy Code (IBC).
- The court ruled that JKC failed to fulfill critical commitments, including injecting ₹350 crores into Jet Airways and paying ₹226 crores in employee dues. These financial contributions were deemed vital for the airline’s revival.
- The court ordered the forfeiture of the ₹200 crores already invested by JKC. Additionally, the ₹150-crore Performance Bank Guarantee (PBG) submitted by JKC was authorized for invocation by creditors, led by the State Bank of India (SBI).
- The Supreme Court overturned the National Company Law Appellate Tribunal’s (NCLAT) earlier order that allowed JKC to adjust the PBG against its payment obligations. The court stated this decision violated the IBC’s principles and set a concerning precedent.
- The National Company Law Tribunal (NCLT), Mumbai, was directed to appoint a liquidator to oversee the process. The decision marked the end of Jet Airways’ revival efforts after five years of stalled proceedings.
- Justice Pardiwala, delivering the judgment, emphasized the need for stricter adherence to IBC provisions and criticized leniency in appellate decisions. He remarked that the case provided significant lessons about insolvency law and its enforcement.