Jet Airways' assets will be liquidated, the Supreme Court said Thursday afternoon, invoking 'extraordinary' powers under Article 142 to set aside a tribunal's decision to uphold a resolution plan and transfer ownership - to the Jalan-Kalrock Consortium - without full payment to creditors.
Article 142 allows the court to make orders for 'complete justice' in any pending matter. In this instance, it noted "peculiar and alarming" circumstances of the case - referring to improper implementation of the resolution plan - and said it had, therefore, "no choice but to send Jet Airways into liquidation".
"Liquidation must be available to lenders as a last resort... since resolution plan is no longer capable of implementation," Chief Justice DY Chandrachud and Justices JB Pardiwala and Manoj Misra said, allowing a plea by creditors, including the State Bank of India and the Punjab National Bank.
The court said liquidation would best serve the interests of creditors, workers and other stakeholders, and also rapped the National Company Law Appellate Tribunal for its decision to uphold resolution despite non-payment to creditors.
The tribunal, on March 12, had upheld the resolution plan and cleared transfer of ownership, but that was challenged by the raft of creditors after the consortium's alleged failure to pay dues.
One of the primary issues before the Supreme Court in this hearing was that the NCLAT had allowed transfer of ownership despite JKC failing to pay an initial Rs 350 crore as required by the resolution plan. Overall JKC was required to pay Rs 4,783 crore.
In this context the court ruled the Rs 200 crore already infused is to be forfeited and directed the NCLAT's Mumbai bench to appoint a liquidator.
JKC earlier asked the NCLAT for permission to move the Rs 200 crore to an escrow account, but withdrew that plea in May after the tribunal denied relief, noting the top court is hearing the matter.
READ | Jet Winning Bidder Withdraws Plea To Put Rs 200 Crore In Escrow
Jet Airways was grounded in April 2019 and, two years later, JKC - a consortium of Murari Jalan, a United Arab Emirates-based non-resident Indian, and Florian Fritsch, a Jet shareholder via an offshore holding company called Kalrock Capital Partners Limited - successfully bid for ownership.
READ | Jet Says Resolution Plan Being Implemented, Q4 Result Delayed
Subsequently, a monitoring committee was set up to oversee plan implementation, but there have been legal and financial delays. In May Jet announced a delay in declaring financial results for the quarter and year ending March, and that the monitoring committee would meet soon to clear the data.
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