The Supreme Court has delivered a landmark decision that has sent shockwaves through India's aviation industry, ordering the liquidation of Jet Airways. The ruling, delivered on November 7, came in response to a plea from the airline's lenders, led by the State Bank of India (SBI), who had challenged the transfer of ownership to the Jalan Kalrock Consortium (JKC). The bench, headed by Chief Justice of India D.Y. Chandrachud and comprising Justices J.B. Pardiwala and Manoj Misra, invoked its extraordinary powers under Article 142 of the Constitution to ensure complete justice between the parties.

The court's decision effectively ends a five-year-long resolution plan that had been approved but was deemed no longer viable for implementation. The court's ruling also ordered the forfeiture of Rs 200 crore that had been infused by the JKC and directed lenders to invoke a Rs 150 crore Performance Bank Guarantee (PBG). This decision comes after the Supreme Court had earlier this year ordered JKC, the successful resolution professional bidder for the beleaguered airline, to deposit Rs 150 crore in an escrow account jointly held by the SBI and JKC.

Supreme Court's Stance on the Revival Plan

The Committee of Creditors (CoC), led by the SBI, had expressed reservations about the proposed revival plan, arguing that it did not serve the best interests of the lenders. The CoC had also questioned the National Company Law Appellate Tribunal (NCLAT) order that upheld the resolution plan. The Supreme Court had instructed the NCLAT to decide by the end of March 2024 on the lenders' plea challenging the ownership of the grounded Airways to JKC.

The Jalan Kalrock Consortium had committed to an infusion of Rs 350 crore equity as per the court-approved resolution plan to assume ownership of Jet Airways. A three-member bench of the NCLAT had consented to an adjustment of Rs 150 crore from the Performance Bank Guarantee (PBG) towards the payment of Rs 350 crore. The appellate tribunal had also accepted an undertaking given by the consortium committing to pay Rs 100 crore by August 31 last year and another Rs 100 crore by September 30, 2023.

Jet Airways: A Fallen Titan

Jet Airways, once a leading player in India's aviation industry, was forced to enter the corporate insolvency resolution process under the Insolvency and Bankruptcy Code (IBC) in June 2019 due to severe financial distress. The airline's downfall was a significant blow to the industry, and its potential revival has been a topic of intense speculation and anticipation. The Jalan Kalrock Consortium's strategy to revive the airline remains unchanged. The new promoters are determined to re-establish the operations of the airline and have it up and running in 2024.

This case bears a striking resemblance to the insolvency case of Kingfisher Airlines, another major player in India's aviation industry that went bankrupt. Like Jet Airways, Kingfisher Airlines had also entered the corporate insolvency resolution process under the IBC due to severe financial distress. However, unlike Jet Airways, Kingfisher Airlines was unable to find a successful bidder and was eventually liquidated.

The Supreme Court's decision to liquidate Jet Airways marks a significant turning point in the airline's history and serves as a stark reminder of the challenges facing the aviation industry. The ruling also underscores the importance of effective financial management and the need for robust insolvency and bankruptcy laws to protect the interests of lenders and other stakeholders. The future of the aviation industry in India now hangs in the balance, with the fate of Jet Airways serving as a cautionary tale for other airlines.