NCLAT grants 3-month extension to Jalan Kalrock Consortium to make payments to lenders
Appellate tribunal NCLAT on Friday pitched for early revival of the grounded Jet Airways decided to give more time to the winning bidder Jalan Kalrock Consortium to fulfill payment obligations and directed the lenders not to encash the performance bank guarantee of Rs.175 crore furnished by the consortium. In a relief for the consortium, NCLAT extended the timeline for payment obligation by excluding the time period between November 16, 2022, and March 3, 2023 — the time period when it was hearing the petition filed by lenders.
The appellate tribunal reiterated that efforts by the monitoring committee of lenders and the consortium should be coordinated for the revival of Jet Airways “so as to start its operations at an early date, which is in the interest of all stakeholders”.
The appellate tribunal has also allowed the lenders’ plea for appointment to the Board of Directors of Jet Airways. NCLAT has directed listing of the matter on July 12 for hearing. Jet Airways owned by debt ridden Naresh Goyal stopped flying in April 2019 and later the consortium emerged as the winning bidder under the insolvency resolution process. However, ownership transfer has been hanging fire amid continuing differences between the lenders and the consortium. Currently, the affairs of the grounded airline is being managed by the Monitoring Committee (MC) of lenders.
The consortium was to infuse Rs.175 crore, first tranche of money within 180 days by May 15, 2023. The consortium approached NCLAT fearing encashment of its bank guarantee and said as no corresponding steps are taken by lenders, first tranche of money could not be infused. In its 16-page strongly-worded order, the National Company Law Appellate Tribunal (NCLAT) emphasised that the parties should work on early revival of the carrier.
Slamming the MC, a two-member NCLAT bench said it has to act as a facilitator for the implementation of the resolution plan. Instead of that, MC is finding fault and taking steps ” which does not facilitate the implementation, rather delay the implementation”, the bench observed. “MC lenders instead of threatening to invoke performance bank guarantee, should take steps, which may help implementation of the plan and to achieve the objective of the resolution plan,” NCLAT said.
According to the order, when the SRA (Successful Resolution Applicant) is ready to undertake to perform its obligations under the plan, the appellate tribunal said it was of the view that the performance bank guarantee given by cannot be permitted to the invoked by. NCLAT noted that directions have been issued to both MC and the consortium to implement the resolution plan plan.
“When the NCLT has directed on January 13, 2023 to take steps towards the implementation of the plan and which order was not been stayed by this tribunal on March 3, 2023, the steps ought to have been taken by the MC lenders in furtherance of the implementation,” it said.
Further, the NCLAT Order said there is no doubt that the performance bank guarantee can be invoked by the MC lenders but the said invocation can only take place when the consortium has failed to implement 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,” NCLAT bench, comprising Charirman Justice Ashok Bhushan and Member (Technical) Barun Mitra, said.
Further, it said the resolution plan has been approved with the intent and purpose to revive Jet Airways. “We again reiterate that efforts by MC lenders and SRA should be coordinated for revival of the corporate debtor (Jet Airways), so as to start its operations at an early date, which is in the interest of all stakeholders as well as in the interest of corporate debtor,” it said.
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