SC questions Jalan-Kalrock consortium over Jet Airways resolution plan
The Supreme Court has questioned the compliance and merits of the successful resolution applicant’s (SRA’s) performance as per the resolution plan of Jet Airways. The Bench sought clarification on why the Consortium of Murari Lal Jalan and Kalrock Capital had not complied with the court’s previous directives, specifically the infusion of funds in cash and the execution of the Performance Bank Guarantee.
The Supreme Court is hearing a civil appeal by the lenders, led by SBI, challenging the March 2024 judgment of the National Company Law Appellate Tribunal, which upheld the handover of Jet Airways to the Jalan-Kalrock Consortium (JKC). The Consortium, having won the bid to revive the once-grounded airline, is facing a complex legal battle over compliance with the Resolution Plan.
During the previous hearing, additional solicitor general N Venkatraman submitted that the SRA had defaulted on payments prescribed under the Plan. The ASG contended that the SRA is currently four years behind on its payment schedule. He added that despite these defaults, lenders continue to bear monthly costs running into crores to maintain the Corporate Debtor.
According to the ASG, the total amount under the Jet Airways Resolution Plan, was to be paid over five years, but the SRA has struggled to meet even the first tranche, which was due within 180 days from the effective date.
Representing the consortium, senior advocate Mukul Rohatgi strongly contested these points, arguing that the creditors have delayed the resolution process by raising continuous appeals at every stage of compliance by the SRA. He emphasized that the conditions precedent were fulfilled as of May 2022, but subsequent delays were caused by the creditors, not the SRA.
During the arguments, Rohatgi emphasized that the revival of Jet Airways is a commercial endeavor, subject to various external factors. He argued that the SRA cannot be held solely responsible for delays caused by security clearances and other procedural hurdles.
Rohatgi also questioned the conduct of the creditors, stating that they have obstructed the process at every stage, causing the Consortium to incur losses of more than Rs 600 crores. He apprised the Court that the airline’s revival is dependent on reciprocal obligations and that creditors cannot prolong the conditions precedent indefinitely. He further emphasised on the way forward as suggested by the NCLAT and submitted that the SRA is ready to take all the steps as required for the revival of the airlines.
The Court was concerned that while the resolution process has been prolonged, it is essential for all parties to ensure compliance with the terms of the Resolution Plan to avoid further delays in the revival of Jet Airways.
The matter will continue to be heard by the Supreme Court on 16 October 2024.
Also See: NCLAT paves way for Kalrock-Jalan to take control of Jet Airways
