Jalan Kalrock Consortium moves NCLAT to stop SBI for invoking guarantee

The Jalan Kalrock Consortium (JKC), which won the bid to revive the grounded Jet Airways, moved an application in the National Company Law Appellate Tribunal (NCLAT) to stop the State Bank of India (SBI) from invoking its bank guarantee of Rs 150 crore.
 
The appellate tribunal will hear the matter on May 22.
 
The consortium on Friday urged the tribunal to grant an interim injunction stopping SBI from invoking its bank guarantee. Meanwhile, SBI told the tribunal that the consortium had to pay certain dues to it by May 15, but it has not done so yet.
 

Jet Airways’ air operator permit (AOP) – which was revalidated by the Directorate General of Civil Aviation (DGCA) on May 20 last year – expired on Friday, indicating that the airline is unlikely to start flights anytime soon. By May last year, JKC had deposited a total of Rs 150 crore with lenders as performance bank guarantee (PBG).

 
The National Company Law Tribunal (NCLT) had in December ordered the lenders to hand over Jet Airways to JKC. It had also told JKC to submit Rs 185 crore – decided under the resolution plan – with the lenders by May 14, so that the process of ownership transfer could begin. The lenders have not received this amount yet.

 
As per the resolution plan, JKC was required to deposit with lenders a PBG of Rs 150 crore in two tranches: The first tranche of Rs 47.5 crore when the Committee of Creditors (CoC) approve the resolution plan and a second tranche of Rs 102.5 crore on “effective date” when all conditions precedent were fulfilled.
 
A refundable earnest deposit of Rs 15 crore was made to the lenders in July 2020, when JKC submitted its resolution plan to lenders. The first performance bank guarantee tranche of Rs 47.5 crore was deposited in October 2020, when the CoC approved the resolution plan. The remaining Rs 87.5 crore was deposited in the second PBG tranche on May 20 last year – called the “effective date” – when all CPs were fulfilled.