TBM Staff - Mumbai
The Supreme Court of India ruled on Thursday that Jet Airways’ assets will be liquidated, invoking its extraordinary powers under Article 142. The decision overturned a previous ruling by the National Company Law Appellate Tribunal (NCLAT), which had upheld a resolution plan and allowed the transfer of ownership to the Jalan-Kalrock Consortium, despite the consortium’s failure to fully pay the creditors. The court cited “peculiar and alarming” circumstances, including the improper implementation of the resolution plan, which led to the decision for liquidation.
The court emphasised that liquidation should be considered a last resort but deemed it necessary in this case, as the resolution plan could no longer be executed. Chief Justice DY Chandrachud and Justices JB Pardiwala and Manoj Misra also criticised the NCLAT for permitting the transfer of ownership without ensuring the required payment to creditors, including major lenders like the State Bank of India and Punjab National Bank.
The case had arisen from the consortium’s failure to meet its obligations, particularly the initial INR 350 crore payment, out of a total INR 4,783 crore owed under the resolution plan. Despite a partial payment of INR 200 crore, the Supreme Court ruled that this amount would be forfeited, further stressing the importance of adhering to agreed-upon payment terms in such resolutions.
In a final directive, the Supreme Court ordered the NCLAT’s Mumbai bench to appoint a liquidator to manage the liquidation process, ensuring that the interests of creditors, workers, and other stakeholders are safeguarded moving forward.
