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In a significant ruling on Thursday, the Supreme Court of India ordered the liquidation of Jet Airways, invoking its extraordinary powers under Article 142 of the Indian Constitution. The court's decision came after it set aside a previous ruling by the National Company Law Appellate Tribunal (NCLAT) that had upheld the resolution plan proposed by the Jalan-Kalrock Consortium, allowing them to take over ownership of the airline.
The Supreme Court expressed concern over the "peculiar and alarming" circumstances of the case, particularly the improper implementation of the resolution plan approved five years ago. Despite the Jalan-Kalrock Consortium being cleared to take over Jet Airways in 2019, the consortium failed to make the required payments to creditors, including State Bank of India (SBI) and Punjab National Bank (PNB), with a ₹350 crore payment still outstanding. This failure prompted a plea from the creditors, who challenged the NCLAT's decision to allow the ownership transfer without full payment being made.
In their ruling, Chief Justice DY Chandrachud, along with Justices JB Pardiwala and Manoj Misra, emphasized that liquidation must be considered a last resort when a resolution plan is no longer feasible or capable of being implemented. The court found that the interests of the creditors, employees, and other stakeholders could no longer be served by allowing the resolution plan to proceed, given the serious lapses in its implementation.
The court also criticized the NCLAT's decision, calling it flawed and inconsistent with the principles of corporate insolvency resolution. By ordering liquidation, the Supreme Court sought to ensure that creditors could recover as much as possible from Jet Airways' remaining assets.
This ruling marks a dramatic turn in the long-running legal and financial struggles of Jet Airways, which has been grounded since April 2019. The airline's assets will now be liquidated, and the process will be overseen by the Insolvency and Bankruptcy Board of India (IBBI).
The court's decision is seen as a significant move in the ongoing efforts to resolve India's corporate insolvency cases, sending a strong message to companies and resolution applicants that compliance with payment obligations and the effective implementation of resolution plans is crucial.
