Jet Airways Faces Final Blow as SC Orders Liquidation

Supreme Court Orders Liquidation of Jet Airways’ Assets, Citing “No Choice” Amid Long Delays

In a significant development that marks the end of an era for one of India’s most storied airlines, the Supreme Court of India on Thursday ordered the liquidation of Jet Airways’ assets. The court’s decision comes after years of unresolved financial and legal complications following the airline’s grounding in April 2019 and subsequent attempts to revive it.

Background: The Fall of Jet Airways

Jet Airways, once a leading airline that set benchmarks for service excellence and connectivity, ceased operations in April 2019 due to severe financial distress. The shutdown came after the airline failed to secure the necessary funding to keep its operations afloat, leaving thousands of employees jobless and a long list of creditors unpaid.

In 2021, a consortium led by businessman Murari Lal Jalan and UK-based Kalrock Capital successfully bid for ownership as part of a resolution plan under the Insolvency and Bankruptcy Code (IBC). The consortium’s plan was approved by the National Company Law Tribunal (NCLT) and later upheld by the National Company Law Appellate Tribunal (NCLAT). The plan promised an infusion of funds to settle debts and restart the airline, raising hopes for Jet Airways’ comeback.

Delays and Financial Disputes

Despite the approval, the Jalan-Kalrock Consortium encountered delays in implementing the resolution plan, including disputes over the timeline and terms for repaying creditors such as the State Bank of India (SBI) and the Punjab National Bank (PNB). This stalled progress further frustrated creditors, employees, and other stakeholders, and cast doubt over the airline’s potential to resume operations.

The consortium failed to meet its financial obligations, which led to growing dissatisfaction among creditors and allegations that the plan was being improperly executed. Amid mounting pressure, creditors filed a plea with the Supreme Court seeking intervention.

Supreme Court Invokes Article 142

On Thursday, the Supreme Court bench comprising Chief Justice DY Chandrachud and Justices JB Pardiwala and Manoj Misra invoked Article 142 of the Indian Constitution to settle the case. Article 142 allows the court to exercise its powers to ensure “complete justice” in any pending case, which can include decisions that go beyond standard legal remedies.

Citing “peculiar and alarming” circumstances and noting the impracticality of implementing the resolution plan, the court ruled that liquidation was the only viable option left. “Liquidation must be available to lenders as a last resort… since resolution plan is no longer capable of implementation,” stated Chief Justice Chandrachud during the proceedings.

Reaction from Creditors and Stakeholders

The ruling was met with a mix of relief and disappointment from various stakeholders. For the consortium led by Jalan and Kalrock Capital, the decision represents a major setback. However, for creditors, the Supreme Court’s order signals a long-awaited resolution that could allow them to recover a portion of their outstanding dues through the liquidation process.

State-owned banks, including SBI and PNB, which were among the airline’s largest creditors, welcomed the ruling, emphasizing that prolonged delays were undermining any realistic chance of recovering their investments.

What Liquidation Means for Jet Airways

The Supreme Court’s order effectively marks the end of Jet Airways as an operating airline. Liquidation implies that the airline’s assets, including aircraft, airport slots, and valuable trademarks, will be sold to repay creditors. While this may provide some financial relief to lenders, it also signals the permanent closure of an airline that once dominated India’s skies.

Employees who have been waiting for their dues since 2019 face an uncertain future. While some hope exists for partial financial compensation through the liquidation proceeds, it is unlikely that all outstanding wages and benefits will be fully recovered.

The Legacy of Jet Airways

Jet Airways leaves behind a complex legacy. Founded in 1993, the airline rapidly grew to become one of India’s most prestigious carriers, known for its superior service and international connections. At its peak, Jet Airways was a market leader, pioneering customer-centric policies that set industry standards.

However, intense competition, rising operational costs, and strategic missteps led to its downfall. The grounding of Jet Airways not only affected employees and stakeholders but also marked a shift in the Indian aviation landscape, paving the way for new market entrants and consolidating the positions of existing competitors.

Conclusion: A Cautionary Tale for Indian Aviation

The Supreme Court’s decision to liquidate Jet Airways’ assets closes a prolonged chapter filled with hope, setbacks, and legal battles. This outcome serves as a cautionary tale for the Indian aviation industry, emphasizing the importance of sustainable financial practices and clear regulatory frameworks for resolution plans. While creditors may finally see some monetary recovery, the end of Jet Airways marks the loss of a storied legacy that shaped Indian aviation for decades.