The Supreme Court has declined to overturn the decision made by the National Company Law Appellate Tribunal (NCLAT). The tribunal had ordered the Jalan Fritsch consortium, which is the successful bidder of the debt-ridden Jet Airways, to pay the outstanding provident fund and gratuity amount of ?250 crore to the former employees of the defunct airline.
A Supreme Court bench, led by the Chief Justice, declined to alter the order issued by the NCLAT. The bench stated that “any prospective buyer must be aware of the outstanding labour obligations. The order must be final and binding. We will not make any changes.”
Saurabh Kripal, a senior attorney representing the consortium, expressed concern that the ruling would require the consortium to allocate an additional ?200 crore, making it difficult to revitalize the airline. Kripal argued that once the resolution plan was approved, it could not be altered or revoked.
The NCLAT had instructed the consortium to pay the outstanding provident fund and gratuity amount of ?250 crore to the former employees of the bankrupt airline. Earlier this month, the consortium filed an appeal with the Supreme Court challenging this order.
The appeal, submitted by lawyer Avinash B Amarnath, argued that the appellate tribunal had rejected the consortium’s request to limit its payment obligation to ?475 crore under the approved resolution plan.
The approved resolution plan did not include the payment of the outstanding provident fund and gratuity amount, which was set at only ?52 crore out of a total of ?475 crore allocated for settlements to all stakeholders.
In June 2021, the Mumbai branch of the NCLT approved the resolution plan submitted by the Jalan-Kalrock Consortium (JKC). Last week, the tribunal also approved the transfer of ownership of the bankrupt airline to the winning bidder, the JKC.
Presently, the ownership of the airline is in the hands of a monitoring committee composed of Jet’s creditors, JKC leaders, and a resolution professional.
The JKC has stated that it will invest ?1,375 crore, with ?900 crore being used as capital infusion and ?475 crore being paid to creditors. Out of the ?475 crore, ?380 crore will be allocated to financial creditors. The JKC will hold a 89.79 per cent stake in the company, while 9.5 per cent will be given to the lenders.
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