Jet Airways Ownership Transfer Cleared by NCLAT, AOC Revival Within 90 Days

The Jalan Kalrock Consortium (JKC), slated to become the new proprietors of the defunct Jet Airways, has achieved a significant legal victory. The National Company Law Appellate Tribunal (NCLAT) has endorsed the transfer of ownership to JKC and mandated its completion within a 90-day window. This decision, rendered in the case of State Bank of India & Others v. the Consortium of Murari Lal Jalan and Mr. Florian Fritsch on March 12, also requires Jet Airways to regain its air operator’s certificate (AOC) within the same timeframe.

This development marks a crucial step forward since Jet Airways’ cessation of operations in April 2019 and the subsequent admission of creditor claims amounting to INR78 billion (USD941 million). The State Bank of India, as the airline’s principal lender, and other creditors, had initially endorsed JKC’s acquisition proposal in 2021, which involved a settlement of INR3.5 billion (USD42.2 million) to clear all creditor claims. Despite the National Company Law Tribunal (NCLT) ratifying this resolution plan, subsequent disputes led to protracted legal challenges, primarily over compliance and payment issues.

As of January 31, 2024, a balance of INR1.5 billion (USD18.1 million) from the agreed sum remained unpaid, leading to further contention between JKC and the lenders. The NCLAT’s latest ruling has directed the creation of a security against three Dubai properties proposed by JKC, against which the outstanding INR1.5 billion will be adjusted. Additionally, the court specified that the previously submitted bank guarantee of INR1.5 billion should be adjusted against the consortium’s initial tranche payment, with allowances for deductions related to employee compensations and other debts from the INR2 billion already disbursed.

This decision effectively clears the path for Jet Airways to recommence its operations, pending regulatory clearances, following the official transfer of ownership. It represents a pivotal moment in the airline’s revival efforts, setting the stage for its return to the skies.

While the State Bank of India and other lenders have the option to escalate this matter to the Supreme Court, India’s apex court has historically shown a tendency to uphold the NCLT and NCLAT’s decisions concerning Jet Airways. This latest NCLAT verdict, therefore, augurs well for the airline’s restructuring and operational reboot, subject to fulfilling the necessary regulatory prerequisites.