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In a crucial development for the revival of the cash-strapped Jet Airways, the Supreme Court has issued a directive to the Jalan-Kalrock consortium, the new owners, to deposit ₹150 crore in the State Bank of India’s escrow account by January 31. The court emphasized that failure to comply with this deadline would indicate a breach of the terms outlined in the resolution plan for the airline’s revival.
The Supreme Court also addressed a separate plea from the Jet Aircraft Maintenance Engineers Welfare Association, seeking payment of provident fund and gratuity dues. However, the court declined this plea, expressing concerns that additional financial obligations might render the resolution plan “unworkable.”
The consortium, responsible for over ₹200 crore in dues related to provident fund and gratuity, faces scrutiny for its handling of the performance bank guarantee (PBG). The court deemed the National Company Law Appellate Tribunal (NCLAT) incorrect in allowing the adjustment of ₹150 crore from the PBG toward the consortium’s payment of ₹350 crore to lenders, led by the State Bank of India.
Escrow, a legal concept ensuring the safekeeping of assets or money by a third party during a transaction, is integral to the financial aspects of the resolution plan.
The Supreme Court stated, “The SRA (successful resolution applicant – the Jalan-Kalrock consortium) shall on or before January 31, deposit an amount of ₹150 crores to the SBI’s escrow account failing which the SRA shall be treated as non-compliant to the resolution plan.” The court refused the consortium’s request for an extension of the deposit deadline from January 31 to February 15.
The NCLAT is tasked with adjudicating the rights and contentions of all parties involved in the compliance of the resolution plan. The bench also emphasized the consortium’s obligation to restore the performance bank guarantee of ₹150 crore.
The Jalan-Kalrock Consortium emerged as the successful bidder for Jet Airways, which ceased operations in April 2019 and underwent an insolvency resolution process. Solicitor General Tushar Mehta and Additional Solicitor General N Venkataraman, representing the SBI-led consortium of banks, highlighted the financial institutions’ need to recover ₹7,800 crore, including expenses for maintaining aircraft.
The Supreme Court’s directive and scrutiny underscore the complexities involved in the revival of Jet Airways and the critical role financial compliance plays in the process. The decision ensures that the consortium meets its financial obligations promptly to facilitate the airline’s successful revival.
Sources BY Agencies
