NCLAT affirms that the Successful Resolution Applicant met all conditions precedent for the implementation of Jet Airways' Resolution Plan.
The National Company Law Appellate Tribunal (NCLAT), Principal Bench of Justice Ashok Bhushan (Chairperson) and Barun Mitra (Technical Member) was hearing appeals and upheld the NCLT's order confirming that the Successful Resolution Applicant met all conditions precedent for the implementation of Jet Airways' Resolution Plan, rejected the appellants' claims for liquidation based on non-deposit of Rs. 150 crores, and emphasized the IBC's primary objective of corporate revival.
Two appeals were filed against the National Company Law Tribunal's (NCLT) order dated January 13, 2023, by the State Bank of India, JC Flowers Asset Reconstruction Private Limited, and Punjab National Bank. The appellants contested the approval of applications related to the implementation and exclusion periods of Jet Airways' Resolution Plan.
The background facts revealed that the Corporate Insolvency Resolution Process (CIRP) against Jet Airways began on June 20, 2019, following an application by the State Bank of India, after Jet Airways had ceased operations in April 2019. A Resolution Plan was submitted by a consortium led by Mr. Murari Lal Jalan and Mr. Florian Fritsch, which was approved by the Committee of Creditors (CoC) on September 12, 2020, and subsequently by the NCLT on June 22, 2021. Appeals against this approval were dismissed by the Supreme Court on January 30, 2023.
The effective date for the Resolution Plan was set as 90 days from its approval, with extensions granted by the NCLT. On May 20, 2022, the Directorate General of Civil Aviation (DGCA) re-issued the Air Operation Certificate to Jet Airways, and the consortium declared the fulfilment of all conditions precedent for the plan's implementation. However, the Monitoring Committee Lenders disputed the fulfilment of these conditions, leading to further applications and litigations. The NCLT's order on January 13, 2023, confirmed that the consortium had met all conditions precedent, thus approving the applications for the plan's implementation and a 180-day exclusion period. Aggrieved by this, the appellants sought to set aside the order, asserting non-fulfilment of conditions precedent.
Despite these objections, the tribunal declined interim relief on March 3, 2023. Subsequent applications and appeals ensued, with the Tribunal allowing the appointment of a Board of Directors for Jet Airways and extending exclusion periods. The Appellate Tribunal directed that the Performance Bank Guarantee should not be invoked without approval. The appellants contested the tribunal's decisions before the Supreme Court, which modified the NCLAT’s order on August 28, 2023, and set specific directives for the consortium, including the deposit of Rs. 150 crores by January 31, 2024. The consortium failed to meet this deadline, necessitating further tribunal hearings.
Arguments were presented by various counsels, with the appellants contending that the failure to deposit Rs. 150 crores resulted in the Resolution Plan’s failure, warranting liquidation. The consortium’s non-compliance with other plan conditions was also highlighted. The Appellate Tribunal reserved judgment on February 22, 2024, after comprehensive hearings.
The NCLAT judgment addressed several key issues regarding the fulfilment of conditions precedent by the Successful Resolution Applicant (SRA). It confirmed that the conditions precedent were satisfactorily complied with, thus allowing the implementation of the resolution plan. The SRA was found to have met the necessary requirements for validation of the Air Operator Certificate, demerger approval, slot allotment, and business plan approval, with the International Traffic Rights Clearance to be achieved post-commencement of operations as per the National Civil Aviation Policy 2016.
The NCLAT deliberated on whether the conditions precedent were met by May 20, 2022, and whether the lenders’ objections held merit. The judgment included a detailed examination of the Resolution Plan’s clauses, the SRA’s fulfilment of conditions, and the subsequent interactions and disputes with the MC Lenders.
Ultimately, the NCLAT upheld the Adjudicating Authority's findings, confirming that the conditions precedent was satisfactorily complied with, thus allowing the implementation of the resolution plan. The SRA's compliance with conditions such as submitting a business plan and securing necessary slots was acknowledged, and the objections raised by the MC Lenders were dismissed as tactics to hinder the plan’s implementation.
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