STATE BANK OF INDIA & ORS vs THE CONSORTIUM OF MR. MURARI LAL

Bench: 3 — Dhananjaya Y. Chandrachud, J.B. Pardiwala, Manoj Misra

In Brief

In the Jet Airways insolvency case, the Supreme Court held that a Performance Bank Guarantee of Rs. 150 Crore cannot be adjusted against the first tranche payment obligation. The Consortium (SRA) failed to infuse Rs. 350 Crore in cash within 180 days of the Effective Date (20.05.2022) despite multiple extensions. The Court found that the SRA breached the Resolution Plan on multiple grounds: non-payment of Airport Dues, non-payment of employee Provident Fund and Gratuity dues mandated by earlier orders, and non-creation of security over Dubai properties. Despite receiving extensions till 31.01.2024, the SRA failed to comply. The Court held that timely implementation is essential to the IBC's purpose and invoked Article 142 to direct liquidation of the Corporate Debtor. Rs. 200 Crore already infused by SRA stands forfeited, and lenders may encash the Rs. 150 Crore Performance Guarantee.

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Insolvency and Bankruptcy Code Resolution Plan Performance Bank Guarantee Liquidation Implementation of Resolution Plan Effective Date First Tranche Payment Conditions Precedent Corporate Debtor Air Operator Certificate Judicial Discretion Time-bound Resolution

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