Tribunal affirms Supreme Court's directive on forfeiture and encashment of Performance Bank Guarantee, denying CIRP cost claims
The National Company Law Tribunal (NCLT), Mumbai Bench, on December 15, 2025, dismissed the application filed by the consortium led by Mr. Murari Lal Jalan and Mr. Florian Fritsch, who were the Successful Resolution Applicants (SRA) for Jet Airways India Limited. The tribunal upheld the forfeiture of Rs. 350 Crores infused by the SRA, as per the Supreme Court's directive.
The consortium had approached the NCLT seeking to declare the amounts infused, including Rs. 200 Crores as share capital and Rs. 150 Crores as Performance Bank Guarantee, as Corporate Insolvency Resolution Process (CIRP) costs. The plea also sought to reverse the forfeiture and encashment of these amounts, claiming them to be against the Supreme Court's order.
The NCLT, comprising Member (Technical) Sh. Prabhat Kumar and Member (Judicial) Sh. Sushil Mahadeorao Kochey, ruled that the amounts infused by the SRA could not be classified as CIRP costs under Section 5(13) of the Insolvency and Bankruptcy Code, 2016. The tribunal emphasized that the Supreme Court's judgment, which directed the forfeiture and encashment, was binding under Article 141 of the Constitution of India.
The tribunal noted that the Supreme Court, in its judgment dated November 7, 2024, had observed the failure of the SRA to implement the Resolution Plan, leading to the decision to liquidate the Corporate Debtor. The apex court had explicitly directed the forfeiture of Rs. 200 Crores and allowed lenders to encash the Performance Bank Guarantee of Rs. 150 Crores.
The NCLT further clarified that the amounts infused by the SRA post-approval of the Resolution Plan for keeping the Corporate Debtor as a going concern did not qualify for reimbursement as CIRP costs. It held that expenses incurred after the approval of the Resolution Plan do not fall under the purview of CIRP costs, as the Insolvency Resolution Process is deemed to have concluded.
The order reflects the tribunal's adherence to the Supreme Court's directives, highlighting the binding nature of the apex court's decisions across judicial bodies in India. The judgment also underscores the limited scope for resolution applicants to claim infused amounts as CIRP costs post-approval of the Resolution Plan.
The decision brings a significant development in the ongoing liquidation proceedings of Jet Airways, marking a pivotal step in the airline's resolution process under the Insolvency and Bankruptcy Code.
Bottom Line:
Insolvency and Bankruptcy Code - Resolution Applicant's failure to implement the Resolution Plan as per approved terms leads to forfeiture of amounts infused and encashment of Performance Bank Guarantee as per Supreme Court directions.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016 Section 60(5), Section 5(13), Article 141 of the Constitution of India, Companies Act, 2013 Section 42, CIRP Regulations 36(4A), Regulation 36B (4A)
State Bank of India v. Jet Airways India Limited, (NCLT)(Mumbai Bench) : Law Finder Doc Id # 2828345
