Jet Airways will never start again. On Thursday, 7 November, the Supreme Court ordered the liquidation of Jet Airways. Liquidation means seizing the assets of a company and using the money received from selling them to pay off its debts and liabilities.
In this order, the court overturned the decision of the National Company Law Appellate Tribunal (NCLAT). In March, NCLAT had ruled to give the ownership of Jet Airways to Jalan-Kalrock Consortium (JKC) under the resolution plan (to rescue the airline from crisis).
The operation of Jet Airways is closed since 2019 due to economic crisis. At that time, the airline had a debt of Rs 4783 crore from many banks. The State Bank of India has given the highest loan. After the airline went into loss, the banks started bankruptcy proceedings. Under the resolution plan, JKC was to get the ownership. Against this, the banks had appealed in the Supreme Court.
Supreme Court said – decision in the interest of lenders and employees
The Supreme Court said in its decision that liquidation would be in the interest of its lenders and employees, as the Jalan-Kalrock consortium has failed to implement the resolution plan even after 5 years of approval. The court used its extraordinary powers under Article 142 of the Constitution to order the liquidation of Jet Airways given the ‘strange and worrying’ situation.
Actually, according to the resolution plan, Jalan-Kalrock Consortium had to pay Rs 4783 crore. Rs 350 crore was to be paid in the first installment, in which the consortium was able to pay only Rs 200 crore. A bench of Chief Justice DY Chandrachud, Justice JB Pardiwala and Justice Manoj Mishra has ordered NCLAT, Mumbai to appoint a liquidator.
What was the allegation of the banks for Jet Airways?
- Many banks said that this consortium failed to fulfill the conditions set for the acquisition of the airline. Now it is not in a position to revive the airline.
- The consortium had deposited only ₹ 200 crore out of ₹ 350 crore under the resolution plan.
- JKC failed to fulfill other important obligations including obtaining an air operator certificate and international rights.
- Due to the long delay in reviving Jet Airways, the airline was losing ₹ 22 crore every month for the maintenance of its assets. Apart from this, Jet Airways owes about ₹ 7,500 crore to its creditors, which further complicates the situation.
- JKC is a joint company of Murari Lal Jalan and Kalrock Capital. Jalan is a Dubai-based businessman. Kalrock Capital Management Limited is a London-based global firm working in the field of financial advisory and alternative asset management.
Naresh Goyal started Jet Airways
In the early 1990s, Naresh Goyal, started Jet Airways India Limited and gave people an alternative to Air India. At one time, Jet had a total of 120 planes and it used to be one of the leading airlines.
The company with the tagline ‘The Joy of Flying’ used to operate 650 flights every day. When the company closed, it was left with only 16 planes. By March 2019, the company’s loss had reached Rs 5,535.75 crore.
