The appellate tribunal NCLAT made a pitch on Friday for the quick revival of Jet Airways, decided to give the winning bidder Jalan Kalrock Consortium more time to meet its financial obligations, and ordered the lenders not to cash the performance bank guarantee of Rs 175 crore that the consortium had provided.
NCLAT extended the deadline for payment obligations for the consortium by eliminating the time between November 16, 2022 and March 3, 2023, while it was considering the case submitted by lenders.
The appeal panel reaffirmed the need for coordination between the consortium and the monitoring committee of lenders in order for Jet Airways to resume operations “as soon as possible, which is in the interest of all stakeholders.”
Additionally, it has granted the lenders’ request to be appointed to the Jet Airways Board of Directors.
The issue must be listed for hearing on July 12 under NCLAT’s directive.
After Jet Airways ceased operations in April 2019, the consortium was chosen as the successful bidder in the bankruptcy resolution process. However, due to ongoing disagreements between the consortium and the lenders, the transfer of ownership has remained on hold.
Currently, the Monitoring Committee (MC) of lenders is in charge of running the activities of the grounded airline.
The consortium had 180 days, or May 15, 2023, to inject the first tranche of Rs 175 crore. The consortium petitioned NCLAT in order to prevent the cancellation of its bank guarantee and claimed that the first tranche of funding could not be injected since the lenders had not taken any appropriate action.
The National Company Law Appellate Tribunal (NCLAT) highlighted that the parties should cooperate for the carrier’s quick rebirth in its 16-page sharply worded ruling.
A two-member NCLAT bench slammed the MC, asserting that it must serve as a facilitator for the execution of the settlement plan. Instead, the bench noted that MC is criticising itself and adopting actions “which do not facilitate the implementation, rather delay the implementation.”
The NCLAT said that “MC lenders should take steps, which may help implementation of the plan and to achieve the objective of the resolution plan, instead of threatening to invoke performance bank guarantee.”
According to the ruling, the appeal panel was of the opinion that the performance bank guarantee provided by could not be invoked by once the SRA (Successful Resolution Applicant) was prepared to undertake to execute its duties under the plan.
NCLAT observed that the consortium and MC have both received instructions on how to carry out the settlement plan.
“The MC lenders ought to have taken the actions necessary to advance the implementation,” it said. “The NCLT instructed on January 13, 2023 to take efforts towards the execution of the plan and which decision was not stayed by this tribunal on March 3, 2023.
Furthermore, it said that there is no question that the MC lenders may use the performance bank guarantee, but that such an application may only be made in the event that the consortium has failed to carry out the plan.
“We direct that MC lenders shall not invoke the performance bank guarantee in the facts of the present case as on date, and for invocation, if any, MC Lenders may take leave of the adjudicating authority,” said the NCLAT panel, which was made up of Charirman Justice Ashok Bhushan and Member (Technical) Barun Mitra.
Additionally, it said that the resolution plan was adopted with the intention of reviving Jet Airways.
“We once again reiterate that efforts by MC lenders and SRA should be coordinated for revival of the corporate debtor (Jet Airways), so that its operations can start at an early date, which is in the interest of all stakeholders as well as in the interest of corporate debtor,” it added.
