The Jalan-Kalrock Consortium (JKC), the successful bidder for bankrupt Jet Airways, told the Supreme Court on Tuesday that lenders led by the State Bank of India are intentionally pushing the company towards liquidation to maximise profits by selling the airline's assets as scrap.
A three-judge bench led by Chief Justice of India D.Y. Chandrachud was addressing the lenders' plea against the National Company Law Appellate Tribunal's March ruling upholding the handover of Jet Airways to JKC.
JKC, represented by senior lawyer Mukul Rohatgi, claimed that the lenders have deliberately not cooperated with JKC's efforts to revive Jet Airways.
"They haven't lifted a finger to help... They want to drive this plan into the ground so that it can be sold as scrap. They feel if they sell the planes as scrap, they will get more," Rohatgi said.
Chief Justice Chandrachud said they had directed JKC to deposit ₹150 crore in cash in January and emphasised that failing to do so would indicate non-compliance with the resolution plan.
"We didn't give you an option; we direct you to pay ₹150 crore. If you don't have it, then that means you are not compliant with the resolution," he stated.
The Supreme Court will continue hearing the case on Thursday.
As per the resolution plan, JKC is allowed to adjust ₹150 crore as a performance bank guarantee, a provision upheld by the NCLT and NCLAT. Rohatgi contended that not bringing ₹150 crore in cash was related to SBI's earlier offer to not pursue any case against them if they brought in the first tranche of ₹350 crore, but non-compliance with this offer does not equate to non-compliance with the resolution plan.
Rohatgi noted that JKC was ready to release properties for the adjustment of a ₹150 crore performance bank guarantee, but it was the lenders that failed to take actions such as writing to the Reserve Bank of India for the release of Dubai properties meant to be used as security for the bank guarantee.
Jet Airways, founded by Naresh Goyal, went bankrupt in April 2019 and suspended flight operations due to financial troubles. JKC comprises Murari Lal Jalan, a UAE-based non-resident Indian, and Florian Fritsch, who holds shares in Jet Airways through his Cayman Islands-based investment holding company Kalrock Capital Partners Ltd. The National Companies Law Tribunal approved the consortium's resolution plan for Jet Airways on June 22, 2021.
Rohatgi contended that the lenders have not assisted JKC in reviving the airline at every stage of the insolvency process. He claimed that despite JKC's best efforts, including financial contributions and compliance with all conditions outlined in the resolution plan, the lenders hindered their progress by rejecting deadlines and dragging them into litigation.
According to Rohatgi, JKC complied with the resolution plan effective May 20, 2022, but the lenders refused to accept this date as the effective date of compliance, which led to extensions that caused the loss of 48 crucial airport slots and the expiration of the airline’s air operator certificate.
"Neither do I have planes nor does the company have an operational crew. How can anyone expect me to secure airport slots without these essentials?" Rohatgi asked.
Rohatgi stressed the importance of reviving Jet Airways for India’s airline industry, pointing out that IndiGo and Air India are currently operating profitably, while SpiceJet is struggling.
The lenders alleged that JKC failed to fulfil key obligations in the takeover plan. They claimed JKC had not released the full ₹350 crore first tranche, breaching a Supreme Court order requiring a ₹150 crore deposit in cash. They also asserted that only ₹200 crore of the ₹4,783 crore promised by JKC had been received while incurring ₹22 crore in monthly losses maintaining Jet’s assets.
They said JKC failed to meet conditions such as securing the air operator’s certificate and paying ₹272 crore in dues to Jet's workers. Moreover, JKC had not released three Dubai properties offered as security, complicating the ownership transfer.
The lenders informed the Supreme Court that JKC has not yet obtained security clearance from the home ministry to operate.
The lenders also said JKC was not cooperating with an investigation to determine the source of the ₹200 crore payment, as directed by the NCLT, after Fritsch was investigated for fraud and money laundering offences in Europe.
The NCLAT, in its March order, affirmed the NCLT's January 2023 ruling allowing the transfer of ownership and directed the lenders to complete the handover process within 90 days, including transferring Jet Airways' shares to JKC and obtaining the air operator's certificate.
The appellate tribunal instructed the lenders to a create security on the three Dubai-based properties within 30 days and adjust the ₹150 crore performance bank guarantee, with JKC required to complete payment of the first tranche of ₹350 crore as a condition precedent to ownership.
The appellate tribunal noted that JKC had already raised ₹200 crore out of the ₹350 crore. However, the lenders disagreed with the findings and subsequently challenged the matter in the Supreme Court, leading to the ongoing proceedings.
Jet Airways currently owes about ₹7,500 crore to lenders.
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