Jet Airways Liquidation: NCLT Mumbai Rejects Jalan-Kalrock's Plea To Refund ₹370 Crore As CIRP Costs

The National Company Law Tribunal (NCLT) at Mumbai recently refused to grant any refund to the Jalan-Kalrock consortium in relation to the over Rs 370 crores infused by it during the insolvency proceedings of Jet Airways Ltd.

In an order dated December 15, a coram of Judicial Member Sushil Mahadeorao Kochey and Technical Member Prabhat Kumar dismissed the consortium's plea, holding that the amounts claimed could not be classified as insolvency resolution process costs and were therefore not refundable in the ongoing liquidation.

Jet Airways is presently undergoing liquidation pursuant to a November 7, 2024 order of the Supreme Court of India, which set aside the earlier revival plan after finding that the consortium had failed to deposit the amounts required for its implementation. The apex court directed liquidation under the Insolvency and Bankruptcy Code, thereby bringing the corporate insolvency resolution process to an end.

The airline was admitted to insolvency proceedings in June 2019 on an application filed by the State Bank of India and other lenders following prolonged financial distress . The resolution plan submitted by the Murari Lal Jalan–Florian Fritsch consortium was approved by the tribunal on June 22, 2021, after multiple rounds of bidding.

The consortium contended that they had spent an aggregate amount of approximately Rs 370.76 crore during tjethe insolvency period.

This included a Rs 150 crore performance bank guarantee, Rs 200 crore paid towards the first tranche of share capital. They also paid Rs 20.76 crore towards operational expenses such as airport charges, rentals and regulatory dues incurred between January and December 2022.

They argued that these amounts ought to be recognized as insolvency resolution process costs and reimbursed on a priority basis during liquidation. The consortium also challenged the adjustment and forfeiture of Rs 350 crore by State Bank of India.

The tribunal, however, relied on the Supreme Court's liquidation order, which had expressly permitted forfeiture of Rs 200 crore and encashment of the Rs 150 crore performance bank guarantee. The tribunal held that it could not reclassify these amounts as insolvency resolution process costs or override the binding directions of the apex court.

It further observed that the remaining Rs 20.76 crore was incurred after approval of the resolution plan, at a stage when the insolvency process had already concluded. Such expenditure, it held, flowed from the resolution plan itself and could not be treated as insolvency resolution costs.

Accordingly, the application was dismissed. The tribunal clarified that the consortium is not entitled to claim stakeholder status or seek reimbursement in the ongoing liquidation of Jet Airways.