Supreme Court orders Jet Airways' liquidation: Says, "left with no choice"

In a significant development, the Supreme Court of India has ordered the liquidation of Jet Airways’ assets, bringing the once-iconic airline's struggles to a final, legal close. This decision comes as the court invoked its extraordinary powers under Article 142, which allows it to ensure "complete justice" in pending cases. The move overturns an earlier ruling by the National Company Law Appellate Tribunal (NCLAT) that had permitted the transfer of Jet Airways’ ownership to the Jalan-Kalrock Consortium (JKC) despite a lack of full payment to creditors.

The Supreme Court bench, led by Chief Justice DY Chandrachud and comprising Justices JB Pardiwala and Manoj Misra, emphasized the "peculiar and alarming" circumstances surrounding the case, particularly the consortium's failure to fulfill financial commitments outlined in the resolution plan. "Liquidation must be available to lenders as a last resort… since the resolution plan is no longer capable of implementation," the court stated. Major creditors, including the State Bank of India and the Punjab National Bank, had raised concerns over the incomplete payment and the consortium's ability to manage the airline’s debt.

The court’s order underscores the importance of creditors’ rights, noting that liquidation would best serve their interests, as well as those of Jet Airways' employees and other stakeholders. The NCLAT’s decision to uphold the resolution plan despite the consortium’s non-payment had drawn criticism from these creditors, who challenged the tribunal’s approval of ownership transfer to JKC.

A key issue was JKC's failure to meet an initial Rs.350 crore payment requirement stipulated in the resolution plan, which totals an expected infusion of Rs.4,783 crore. As of now, the consortium has invested only Rs.200 crore, which the Supreme Court has ruled will be forfeited. The court has directed NCLAT’s Mumbai bench to appoint a liquidator to oversee Jet Airways’ assets.

Previously, JKC had requested permission from the NCLAT to move the Rs.200 crore to an escrow account, a plea it later withdrew after the tribunal dismissed it, indicating that the matter was being considered by the Supreme Court. The liquidation marks an end to attempts to revive the airline, with the Supreme Court signaling the importance of accountability and adherence to financial commitments.