The Jet Airways rescue plan has hit an air pocket with Punjab National Bank (PNB) alleging gross irregularities in it. With the National Company Law Appellate Tribunal (NCLAT) agreeing to hear the bank’s plea that its claim amount has been ‘arbitrarily’ and ‘illegally’ reduced by the Resolution Professional (RP), the return to flying of the grounded airline is set for further delay.

PNB has said that the RP, or the court-appointed official in charge of Jet’s revival, had initially accepted the bank’s claim of Rs 1,000 crore but then reduced it by Rs 200 crore. 

While the debt-laden Jet Airways was put in the bankruptcy court or the National Company Law Tribunal (NCLT), PNB had invoked the share pledge agreement. This led to the RP bringing down the claim amount of PNB. The country’s second-largest state lender, however, has maintained that its claim can be set off only upon sale of pledged shares; it cannot be reduced merely upon invocation.

NCLAT, the bankruptcy court’s appellate authority, has agreed to hear PNB’s plea on 21 September. 

After two years of deliberations at the bankruptcy court, the NCLT approved Jet’s resolution plan on June 23, 2021. While the financial creditors had agreed on the plan last year, PNB had maintained that since it mandated only minimum payment of liquidation value for dissenting creditors, it was left with no choice but to approve of it.

“The consent (of the revival plan) by the appellant (PNB) amounts to forced consent as in case of dissenting financial creditors the resolution plan entails only minimum payment of liquidation value. This differential treatment of assenting and dissenting financial creditors is discriminatory,” it said.

In October last year, a consortium of London-based Kalrock Capital and Jalan, a UAE-based businessman emerged as the winning bidder for Jet Airways, which has not flown since April 2019. The consortium was planning to resume services with 25 planes this year with a mix of narrow-body and wide-body planes.

A consortium of London-based Kalrock Capital and a UAE-based businessman last year agreed to pump in ₹1,000 crore as working capital and give funds to creditors of Jet, which was hit hard due to piling up debt in 2019.

Jet Airways has a debt pile of Rs 8,500 crore which it owes to the banks. State Bank of India has the largest exposure with admitted claims of Rs 1,636.22 crore, followed by Yes Bank with Rs 1,084.44 crore, PNB with Rs 1,000 crore, IDBI Bank with Rs 594.42 crore, Canara Bank with Rs 543.61 crore, ICICI Bank with Rs 519.08 crore and Bank of India with Rs 263.57 crore.

Deep financial distress led to the airline suspending operations on April 17, 2019. Former SBI chairman Rajnish Kumar led the rescue attempts by trying to get all the banks to support the revival plan. Though he succeeding in ousting the founder-promoter Naresh Goyal, who ran the airline for 28 years, from the board, a revival plan could not be implemented as the airline ran out of cash and did not have money even to buy fuel to fly.  Lenders failed to agree on providing additional finance to Jet Airways and once the airline got grounded, the suitors lost interest.  In June 2019, NCLT admitted the insolvency petition against Jet Airways filed by the SBI-led lenders' consortium.