Jet Airways Crashlands. End of the Runway.

Supreme Court Ends Jet Airways Journey with Liquidation

The Supreme Court ruled on November 7 that the grounded airline Jet Airways must be sent to liquidation. The court determined that the Jalan Kalrock Consortium (JKC) failed to implement its resolution plan, providing sufficient grounds for this decision. Jet Airways, now the second major airline to shut down following GoFirst, will undergo liquidation as a last resort for lenders. The Supreme Court stated that the resolution plan can no longer be executed.

The successful resolution applicant, JKC, failed to implement the resolution plan as it did not infuse ₹350 crore. The court noted that, according to the resolution plan, employee dues of ₹226 crore have also not been paid.

The top court ruled that the Performance Bank Guarantee (PBG) of ₹150 crore could not be used to offset the first tranche of payment. The National Company Law Appellate Tribunal (NCLAT) had allowed this adjustment, but the Supreme Court found that such action was inconsistent with established legal principles. The court emphasized that adjusting the PBG was a direct violation of its orders and settled the law.

“Allowing such an adjustment by NCLAT was in direct violation of IBC regulations,” it added.

On the other hand, JKC had argued against liquidation and claimed that payment delays were caused by lenders’ failure to adhere to their obligations. The consortium also alleged that lenders were looking to drive the airline into the ground. JKC, which has invested ₹200 crore in the airline, also cited external factors for delays in securing necessary approvals and clearances. The top had reserved its judgment on October 16.