MUMBAI- Indian FSC Jet Airways (9W) has achieved a substantial legal triumph as the National Company Law Appellate Tribunal (NCLAT) dismissed the creditor’s attempt to cash in a bank guarantee worth 1.5 billion rupees (USD 18.1 million).
Jet Airways, established in 1993, was known for its premium air travel service for discerning travellers in India. Before suspending operations in April 2019, the airline operated over 124 narrow-body and wide-body aircraft. Subsequently, covering more than 65 destinations in India and worldwide.

Jet Airways Win over Lending Bank
The State Bank of India (SBI) sought to encash the Jalan Kalrock Consortium’s (JKC) guarantees. Further claiming that the consortium had not fulfilled its payment obligations.
In November 2022, the National Company Law Tribunal (NCLT) granted the JKC a six-month deadline to pay USD 22.4 million to creditors who had incurred losses when the airline collapsed in 2019.
The deadline expired on May 14 without any payment being made. Subsequently prompting the encashment attempt.
Following the airline’s collapse, administrators acknowledged claims totaling INR 77.08 billion (USD 942 million) against Jet Airways. The State Bank of India (SBI) is one of the largest claimants.
The SBI and other creditors have resisted the smooth transfer of ownership to the Jalan Kalrock Consortium (JKC). In late 2020, the consortium successfully obtained the right to acquire Jet Airways. The NCLT was later ratified through an approved resolution plan.
The JKC committed to recapitalizing Jet Airways and paying creditors as part of the agreement. Including the SBI, a total of INR 4.75 billion (USD 57.3 million). In return, the creditors agreed to facilitate the transfer of ownership.
However, the relationship between the consortium and the creditors has deteriorated. Subsequently led to legal challenges, demands outside the scope of the resolution plan, and missed payment deadlines.
In an attempt to prevent the SBI from cashing in the bank guarantees, the consortium’s counsel argued that the bank intentionally obstructed the ownership transfer. Further causing the JKC to run out of time to fulfill the agreed-upon payments.

Court Verdict
According to a report by LiveMint, Justices Ashok Bhushan and Barun Mitra stated on May 26, while dismissing the State Bank of India’s (SBI) bid, that although the bank had the right to encash the guarantees, it also had a responsibility to uphold the resolution plan and facilitate the transfer of ownership.
The ruling emphasized that while the performance bank guarantee could be invoked, it should only be done if the successful resolution applicant (the consortium) fails to implement the plan.
The justices urged the lenders to focus on taking steps that would support the plan’s implementation. Further, achieving the objective of the resolution plan rather than resorting to threats of invoking the performance bank guarantee.
As a minor concession to the bank, the consortium’s counsel mentioned that they would deposit INR 500 million (USD 6.05 million) into an escrow account.
However, they requested an order to prevent the SBI from making further attempts to encash the bank guarantees generated by the Jalan Kalrock Consortium (JKC).
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