India’s NCLAT Holds Off on Decision Regarding Jet Airways’ ₹1.5 Billion Payment Dispute

India’s National Company Law Appellate Tribunal (NCLAT) has postponed making a decision in the ongoing payment conflict between the committee of creditors (CoC) of Jet Airways and the Jalan Kalrock consortium (JKC), the designated future proprietors of the defunct airline. During a session held on February 22, 2024, involving the case “State Bank of India & Ors vs. The Consortium of Murari Lal Jalan and Florian Fritsch & Anr,” Justices Ashok Bhushan and Barun Mitra chose not to issue a verdict on the CoC’s appeal. The CoC, spearheaded by the State Bank of India, has contested that JKC did not fulfill its financial obligations as outlined in the 2021 resolution plan that facilitated the consortium’s acquisition of Jet Airways.

The tribunal’s recent order allows for the submission of concise notes from the parties’ counsel, limited to ten pages, within the subsequent week. Nevertheless, a date for the subsequent hearing has not been established, leaving the resolution of this dispute in uncertainty.

Jet Airways faced operational cessation in April 2019, with the administration later acknowledging creditor claims totaling INR78 billion (approximately USD941.3 million). The State Bank of India emerged as the airline’s largest creditor. In an agreement reached in 2021, JKC committed to a settlement of INR3.5 billion (USD42.2 million) to resolve all creditor claims, with INR1.5 billion (USD18.1 million) still pending as of January 31, 2024. The consortium proposed that the CoC utilize an already provided bank guarantee to cover the remaining amount, a suggestion the lenders rejected. Additionally, the lenders have raised concerns regarding the origin of the funds used for the initial two payments of INR1 billion (USD12 million) each, indicating that the money might have originated from an unapproved source as per the resolution plan.

JKC maintains that it has adhered to the resolution plan’s stipulations, attributing any payment delays to the CoC’s interventions and ensuing legal battles. Following a directive from India’s Supreme Court in January 2024, the consortium was instructed to deposit the outstanding INR1.5 billion into an escrow account controlled by the State Bank of India by January 31, failing which could jeopardize their acquisition rights over Jet Airways. This legal standoff highlights the intricate challenges involved in reviving the once-prominent airline, with stakeholders eagerly awaiting a resolution that could potentially mark a new chapter for Jet Airways.