The Supreme Court today on November 7 ordered the liquidation of troubled Jet Airways, i.e. sale of its assets. There is no chance of Jet Airways starting now. Its assets will be given to lenders. The Supreme Court rejected the decision of the National Company Law Appellate Tribunal (NCLAT) in this matter.
NCLAT in its order in March 2024 allowed the transfer of ownership of cash-strapped Jet Airways to Jalan-Kalrok Consortium (JKC) without full payment under a resolution plan. The airline was to be transferred to the Jalan-Kalrok consortium within 90 days.
The NCLAT order was challenged in the Supreme Court by lenders led by State Bank of India. After the hearing, a bench of CJI DY Chandrachud and Justice JB Pardiwala and Justice Manoj Mishra reserved its decision on October 16.
The settlement plan was not implemented for 5 years, so the decision was reversed
The Supreme Court, using its extraordinary powers under Article 142 of the Constitution, ordered the liquidation of Jet Airways in view of the “grave and alarming” situation. The court did this because the resolution plan had not been implemented for 5 years.
Order to confiscate Rs 200 crore given by the consortium
The court directed the Mumbai bench of NCLT to appoint a liquidator immediately. A sum paid by the Jalan-Kalrok Consortium of Rs. An amount of 200 crores has been confiscated.
The airline was shut down on 17 April 2019
Jet Airways was shut down on 17 April 2019 amid mounting financial difficulties. State Bank of India had given the largest loan to the airline, so the bank initiated insolvency proceedings against the company before the NCLT Mumbai.
Jett was later included in the settlement process. In June 2021, the Jalan-Kalrok consortium won Jet Airways' bid under NCLT's insolvency resolution process. Since then there was a dispute between JKC and the Landers regarding the transfer of ownership.
JKC claimed that the landers were not initiating the transfer process of the airline. Landers contended that JKC has not yet deposited any funds.
Understand the whole matter in three points
- According to the resolution plan, the Jalan-Kalrok consortium will receive Rs. 4783 crore was to be paid. As per the agreement, Rs 350 crore was to be deposited in the first installment of payment.
- The consortium deposited only ₹200 crore out of ₹350 crore under the scheme. Landers also pointed out that JKC had failed to fulfill other key obligations, including obtaining an air operator certificate and international authorizations.
- Due to the long delay in reviving Jet Airways, the airline was incurring a loss of ₹22 crore per month on maintenance of its assets. Additionally, Jet Airways owed its creditors around ₹7,500 crore, further complicating the situation.
A joint venture between Murari Lal Jalan and Colorrock Capital
JKC is a joint venture of Murari Lal Jalan and Colorrock Capital. Jalan is a Dubai based businessman. Culrock Capital Management Limited is a London-based global firm operating in the financial advisory and alternative management sectors.
Naresh Goyal started Jet Airways
In the early 1990s, ticketing agent-turned-entrepreneur Naresh Goyal started Jet Airways India Limited, giving people an alternative to Air India. At one time Jet had a total of 120 aircraft and was one of the leading airlines.
At its peak, the company with the tag line 'The Joy of Flying' was operating 650 flights per day. When the company closed, it had only 16 aircraft left. By March 2019, the company's losses had reached Rs 5,535.75 crore.
Image Credit: (Divya-Bhaskar): Images/graphics belong to (Divya-Bhaskar).
