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NEW DELHI – In a landmark decision impacting India’s aviation sector, the Supreme Court on Wednesday directed the liquidation of Jet Airways under the Insolvency and Bankruptcy Code (IBC), marking an end to its lengthy insolvency resolution process. The ruling came in the case State Bank of India and ors v Consortium of Mr Murari Lal Jalan and Mr Florian Fritsch and anr.
The bench, led by Chief Justice DY Chandrachud, along with Justices JB Pardiwala and Manoj Misra, overturned the National Company Law Appellate Tribunal (NCLAT) ruling that had allowed the transfer of the airline’s ownership to the Jalan Kalrock Consortium (JKC). The Court found the NCLAT’s decision flawed, highlighting its erroneous interpretation of evidence, particularly regarding JKC’s use of a ₹150 crore performance bank guarantee towards an initial payment of ₹350 crore.
The Court asserted that JKC, the chosen resolution applicant, had failed to meet the terms of the resolution plan, resulting in its inability to implement a sustainable revival for the airline. “The resolution applicant contravened the terms of the resolution plan,” the Court stated, underscoring the need for swift dispute resolution. Consequently, the Court instructed the National Company Law Tribunal (NCLT) in Mumbai to appoint a liquidator without delay.
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This verdict emerged from a complex dispute over Jet Airways’ ownership, primarily between JKC—a consortium led by UAE-based Murari Lal Jalan and Kalrock Capital—and the airline’s primary lenders led by the State Bank of India (SBI). The lenders had appealed to the Supreme Court after the NCLAT upheld JKC’s ownership bid. Jet Airways, once a major player in Indian aviation, ceased operations in 2019 due to significant financial troubles, leading SBI to initiate insolvency proceedings against it.
In 2021, JKC had won the bid to revive the airline, with plans to pay over ₹8,000 crore to the lenders. However, disagreements over specific conditions, particularly the acquisition of an air operator’s certificate, delayed the ownership transfer. NCLT had approved JKC’s bid, which was subsequently contested by the lenders due to unresolved conditions. In March 2023, the NCLAT ordered the ownership transfer to JKC but permitted JKC to use its bank guarantee funds as partial payment—a decision met with opposition from lenders and employees.
Representing JKC, Senior Advocate Gopal Sankaranarayanan argued that the NCLAT had fully addressed all points raised by the lenders. However, Additional Solicitor General N Venkataraman, representing the lenders, argued that JKC had no real intention of implementing the plan. He stressed that the protracted litigation had led to substantial financial losses for creditors.
With this ruling, Jet Airways now moves toward liquidation, closing a significant chapter in Indian aviation while highlighting the challenges and complexities of corporate insolvency in the sector.
