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The State Bank of India-led lenders on the monitoring committee of debt laden airline Jet Airways on Monday told the Supreme Court that the Jalan Fritsch consortium’s approved resolution plan has been rendered “unviable” and “unworkable” as nothing has been paid to it so far and even no money has been infused for the revival of the grounded carrier.
Additional Solicitor General N Venkataraman, appearing for the lenders, told a Bench led by Chief Justice DY Chandrachud that the Jalan-Kalrock consortium’s resolution plan for the takeover of the airline was approved by the National Company Law Tribunal on June 22, 2021 and since then it had spent “public money of around INR 400 crore including airport dues” and the consortium had neither paid a “single penny” to it nor had “infused” any funds in the airline. The total claim of the financial creditors is INR 7,453.62 crore.
After brief arguments, the apex court sought response from the Jalan Fritsch consortium, the successful bidder, and Ashish Chhawchharia, the authorised representative of the monitoring committee, on two appeals filed by the SBI-led lenders and the Jet Aircraft Maintenance Engineers Welfare Association. While lenders want the consortium to deposit some amount to prove bonafide, the employees body want their dues to be cleared.
The lenders have challenged the National Company Law Appellate Tribunal’s May 26 order that granted the Jalan Fritsch consortium three-and-a-half months more to make payments as per the approved resolution plan. The appellate tribunal while asking the lenders not to invoke the consortium’s INR 150 crore bank guarantee (BG) that was submitted at the time of bidding said that the banks should work towards revival of the company undergoing insolvency process rather than penalising the successful bidder for lapses.
The SBI in its petition filed through counsel Sanjay Kapur said the appellate tribunal failed to appreciate that granting of multiple extensions have cascading effect on implementation of the resolution plan which ultimately results in decreasing the asset value of the company due to inordinate delay that follows. The petition also stated that it is a well settled principle of law that a BG is an independent contract between the beneficiary SBI and the guarantor bank ICICI Bank and a successful resolution applicant has no locus to seek any relief under it.
Naresh Goyal-founded Jet Airways, once India’s biggest private carrier, stopped operations in April 2019, unable to cope with its financial liabilities. It was taken to bankruptcy court by its lenders in 2019. In 2020, the committee of creditors chose the resolution plan submitted by UK-based Kalrock Capital and United Arab Emirates-based entrepreneur Murari Lal Jalan to revive and operate the airline.
The consortium had said it will spend INR 1,375 crore-INR 900 crore as capital infusion and INR 475 crore paid to creditors. Of that, INR 380 crore will go to financial creditors. The successful bidder is to have an 89.79 per cent stake while 9.5 per cent will go to lenders.
Prior to this, the top court had ordered that the bank guarantee of INR 270 crore furnished by SpiceJet to Maran and his firm must be encashed immediately if the airlines failed to pay INR 75 crore towards interest on the arbitral award by May 13. A bench of Chief Justice D Y Chandrachud and Justice P S Narasimha on Friday did not accept the vehement submissions of senior advocate Mukul Rohatgi, appearing for SpiceJet, and refused to the extend the time, saying the entire award has now become executable.
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