Supreme Court reserves verdict in Jet Airways ownership case

The Supreme Court on Wednesday reserved its verdict in the dispute over the ownership of Jet Airways between Jalan Kalrock Consortium (JKC) and a number of the airline's former lenders led by State Bank of India (SBI).

A Bench of Chief Justice of India (CJI) DY Chandrachud and Justices JB Pardiwala and Manoj Misra today heard elaborate arguments by Senior Advocate Gopal Sankaranarayanan and Additional Solicitor General (ASG) N Venkataraman, who appeared for JKC and SBI respectively.

The lenders moved the apex court against an order the National Company Law Appellate Tribunal (NCLAT), which upheld the transfer of ownership of the airline to JKC as a part of the Corporate Insolvency Resolution Process (CIRP).

For over a year, JKC and the lenders of Jet Airways have been involved in a legal battle regarding the airline's ownership transfer.

Jet Airways was grounded in 2019 due to severe financial troubles. SBI, its largest lender, initiated insolvency proceedings against the company before the NCLT in Mumbai, leading to the CIRP.

In 2021, JKC was selected as the successful resolution applicant to restart the airline's operations. JKC claimed that the lenders have not commenced the ownership transfer process, while the lenders contended that JKC has not injected any funds into Jet Airways.

In January 2023, the NCLT allowed JKC to take ownership of Jet Airways. The following month, the lenders appealed to the NCLAT against the NCLT's ownership transfer order, but the NCLAT declined to grant any injunction in their favour.

On March 12 that year, the NCLAT confirmed the transfer of ownership of the grounded airline to JKC. The appellate tribunal also instructed the lenders to complete the transfer within 90 days and directed JKC to secure an air operator's certificate within that time frame.

The NCLAT also permitted JKC to use the ₹150 crore from its bank guarantee as part of the initial payment of ₹350 crore to the lenders.

The lenders and former employees of the airline moved the Supreme Court against this order.

During the course of the hearing today, Sankaranarayanan, appearing for JKC, contended that the NCLAT has rendered a detailed judgment on all the issues and the lenders have raised no substantial question of law in the appeal.

"The NCLAT judgment splits itself into issues. They spend 35 pages on interpreting the Supreme Court's January 2024 judgment. The only issue before NCLAT was whether conditions precedent (CP) had been met. No substantial question of law has been shown to this court. A lot of prejudice has been created (against JKC)," he said.

Further, he argued that the lenders were put in a tight spot because of SBI's decision to grant thousands of crores in loans to the previous management of Jet Airways.

"I am not the bad guy, I am trying to get the company back in the air."

Sankaranarayanan contended that it is because of the decision of the lenders to prolong the litigation that the airport dues of the airline have piled up.

Responding to these arguments, ASG Venkataraman contended that JKC has no intention to implement the resolution plan.

"The Committee of Creditors, which has over 30 banks will have to bear the airport dues of ₹1,100 crore, going by their contention. Neither the CoC nor the employees will get anything. The resolution plan will become unworkable."

Venkataraman urged the apex court to use its inherent powers under Article 142 of the Constitution to liquidate the company to avoid another round of litigation.

"The resolution plan has failed miserably and the legal consequences should follow. The court must use its inherent powers under Article 142 to liquidate this airline to avoid another round of litigation," he submitted.

The ASG also clarified that it was not the government's intention to bring down the airline. However, they have been left with no other option in the case.

"Whenever this matter gets heard, the news in the media says government is pulling down one airline or the other. We are not doing this. We are left with no choice in this case," he said.

Venkataraman reiterated that the lenders are spending more money in the case of Jet Airways rather than recovering it. According to the ASG, the lenders are spending over ₹20 crore a month and have so far spent over ₹300 crore.