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Jet Airways Aircraft Sale Upheld by NCLAT; Ex-Employees' Dues Protected Under IBC Section 53
The has dismissed an appeal filed by former employees of , who sought to challenge the sale of three Boeing 777-300ER aircraft during the airline's liquidation proceedings. The bench, comprising Justice Mohd Faiz Alam Khan (Member Judicial) and Arun Baroka (Member Technical), held that the former employees, whose dues are secured under the prescribed by , had no to question the liquidator's completed sale process.
The Long Road from Insolvency to Liquidation
Jet Airways was admitted into the on under . A submitted by the was approved on , and a was constituted to oversee its implementation. During the CIRP, a decision was taken to sell certain aircraft assets, including three Boeing 777 aircraft, and letters of intent were issued to entities belonging to the on . However, the sale was never completed as no sale deed was executed.
On , the directed that the sale process be resumed and completed. This order was upheld by the NCLAT in and affirmed by the in . Despite these orders, the successful bidder failed to deposit the balance sale consideration within the stipulated period.
On , the ordered the liquidation of Jet Airways under . The liquidator was appointed on , and all assets of the corporate debtor, including the aircraft, formed part of the under . In , the aircraft were sold for approximately USD 12.5 million, USD 16 million, and USD 17.5 million, respectively.
Ex-Employees' Challenge: Allegations of Undervaluation and Irregularities
The appellants, Aman Monga and another former employee, filed an application (IA No. 1604 of 2026) before the NCLT seeking to declare the sale as vitiated. They argued that the aircraft were sold at undervalued prices based on valuations determined in 2022, without any fresh assessment during the liquidation. They also alleged irregularities in the sale process, pointing to the involvement of third-party entities such as and the execution of agreements outside India despite the aircraft being physically located within India.
The NCLT dismissed the application on , observing that the individual employees could not maintain an application merely based on their opinions. Aggrieved, the former employees appealed to the NCLAT.
Liquidator and Bidders Defend the Process
The liquidator and the successful bidders (Respondent Nos. 4 to 6) submitted that the sale process had been subjected to continuous judicial scrutiny. They pointed out that the NCLT's order of to resume the sale was upheld by the , and upon liquidation, the ratified the sale in its meeting on with a 79.81% voting share. The SCC also approved and adopted the .
The respondents further highlighted that the appellants had waited 16 months to challenge the sale, and that their dues were fully protected under the of Section 53 of the IBC. They also noted that earlier applications by employee associations seeking to restrain the sale had been dismissed by the NCLT.
NCLAT's Legal Analysis: No Illegality in Sale
The NCLAT observed that the sale of the aircraft was contemplated in the approved , directed by the NCLT in October 2023, and affirmed by the . Upon liquidation, the SCC adopted the decision of the to proceed with the sale. The Tribunal found no or illegality in the process.
It also noted that the former employees' interests had already been protected by the earlier orders of the NCLT and the NCLAT, which ensured that the employees would receive their dues under Section 53 of the IBC.
Key Observations
The Tribunal made the following pivotal observations:
"Appellants are also former employees of the corporate debtor, and certainly they will get their due under theas provided under Section 53 of the Code. Therefore, being the employees of the CD, the appellants should not have any concern with the process of sale conducted by the liquidator, which is stated to have been completed."
"The payment of all the employees of the CD has been ensured by the Ld. Adjudicating Authority as well as by the Appellate Tribunal by stating that the employees would get their due as provided under Section 53 of the Code."
"Therefore, we do not find any illegality so far as the decision of sale of aircraft is concerned."
"The Appellant, in our considered opinion, has failed to indicate anyor illegality in the process of sale."
Decision and Implications
The NCLAT dismissed the appeal with no order as to costs, disposing of all pending interlocutory applications. The decision underscores the conducted under judicial supervision and clarifies that individual stakeholders, particularly those whose claims are statutorily prioritized, cannot stall or challenge asset realization processes merely on apprehensions of undervaluation. The ruling reinforces the when acting with the approval of the SCC and in compliance with the IBC and its regulations.
