THE JET SAGA ENDS

The Supreme Court's decision to order the liquidation of Jet Airways is a stinging reflection on how the bankruptcy code is being interpreted by the NCLT and how it has become an impediment rather than a transformative institution that can help companies come back to life.

On November 7, the Supreme Court ordered the liquidation of Jet Airways after concluding that the National Company Law Appellate Tribunal's (NCLAT) ruling violated the apex court's judgment of January 2023. The SC verdict was a followup of several appeals including from lenders challenging the NCLAT's approval of the airline's takeover by a consortium comprising UK's Kalrock Capital and UAE-based businessman Murari Lal Jalan that had emerged as the had emerged as Successful Resolution Applicant (SRA).

While allowing appeals by the lenders, including the State Bank of India (SBI), its largest lender, a bench of Chief Justice of India D Y Chandrachud and Justices J B Pardiwala and Manoj Misra said: "In the peculiar and alarming circumstances as discussed in this judgment and also keeping in mind the fact that almost five years have elapsed since the Resolution Plan was duly approved by the NCLAT and there being no progress worth the name, we are left with no other option but to invoke our jurisdiction under Article 142 of the Constitution and direct that the corporate debtor be taken in liquidation," the bench said and asked the National Company Law Tribunal (NCLT), Mumbai, "to take appropriate steps for appointment of liquidator and all other necessary formalities for the commencement of liquidation of the corporate debtor".

The court's view that the case was an 'eye-opener' that spelt out important lessons for India's Insolvency and Bankruptcy Code (IBC) is spot on. According to the resolution plan, SRA was to pay ₹4,783 crore and infuse ₹350 crore as the first tranche of the payment. The deadline for infusing the ₹350 crore was subsequently extended. In January this year, the SC had set aside the NCLAT's decision to allow the SRA to adjust the first tranche of payment of ₹350 crore against a Performance Bank Guarantee (PBG), given as security.