Holding

The Supreme Court held that the PBG cannot be adjusted against the first tranche payment and that the SRA’s failure to implement the approved resolution plan mandates liquidation of the corporate debtor.

Summary

The Supreme Court examined the dispute between State Bank of India and other creditors (petitioners) and the consortium of Murari Lal Jalan and Florian Fritsch (respondent SRA) over the implementation of the approved resolution plan for Jet Airways. The core issue was whether the Performance Bank Guarantee (PBG) of Rs.150 crore could be adjusted against the first tranche payment of Rs.350 crore, contrary to the Supreme Court’s earlier order and the terms of the resolution plan and IBC regulations. The Court held that the PBG could not be set‑off and must remain alive until full implementation, and that the SRA’s failure to infuse the required cash amount constituted a breach of the plan. Consequently, the Court set aside the NCLAT order, directed the encashment of the PBG, forfeiture of the Rs.200 crore already infused, and exercised its plenary powers under Article 142 to order the liquidation of Jet Airways. The appeals were allowed and the corporate debtor was placed in liquidation.

Issues considered

Whether the Performance Bank Guarantee (PBG) could be adjusted against the first tranche payment within 180 days from the Effective Date, in contravention of the Supreme Court’s order, the resolution plan and law.
Whether the non‑implementation of the resolution plan by the SRA necessarily leads to liquidation under Section 33(3) of the IBC, 2016.
Whether timely implementation of the resolution plan is an objective of the IBC, 2016.

Legislation cited

Code of Civil Procedure, 1908s. 100
Constitution of Indias. Article 142
Employees' Provident Fund and Miscellaneous Provisions Act, 1952
Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016s. 36B(4A), s. 38(2), s. 38(3), s. 39(4), s. 40-B
Insolvency and Bankruptcy Code, 2016s. 30(2)(a), s. 30(2)(e), s. 31(1), s. 33(3), s. 62, s. 74(3)
NCLAT Rules, 2016
NCLT Rules, 2016
Payment of Gratuity Act, 1972

Headnote

Issue for Consideration Whether the Performance Bank Guarantee (PBG) could have been adjusted against the first tranche payment which was to be made under the Resolution Plan, within 180 days from the of the order of this Court dated 18.01.2024, the terms of the Resolution Plan and the provisions of law; In other words, whether the impugned order of the NCLAT allowing the adjustment of the PBG in lieu of payment of the first tranche could be said to be perverse; Whether the

Subjects

Jet Airways liquidationPerformance Bank GuaranteeAdjustment of PBGResolution Plan implementationSection 33(3) IBCTimely liquidationInsolvency and Bankruptcy CodeArticle 142Corporate debtorWorkmen duesAirport duesConditions PrecedentMonitoring Committee

Judgment

[2024] 11 S.C.R. 2039 : 2024 INSC 852

State Bank of India & Ors.
v.
The Consortium of Mr. Murari Lal Jalan and
Mr. Florian Fritsch & Anr.
(Civil Appeal No(s). 5023-5024 of 2024)
07 November 2024
[Dr. Dhananjaya Y. Chandrachud, CJI, J.B. Pardiwala*
and Manoj Misra, JJ.]

Issue for Consideration
Whether the Performance Bank Guarantee (PBG) could have been
adjusted against the first tranche payment which was to be made
under the Resolution Plan, within 180 days from the Effective Date,
in contravention of the order of this Court dated 18.01.2024, the
terms of the Resolution Plan and the provisions of law; In other
words, whether the impugned order of the NCLAT allowing the
adjustment of the PBG in lieu of payment of the first tranche could
be said to be perverse; Whether the non-implementation of the
Resolution Plan by the Respondent No.1-Successful Resolution
Applicant (SRA) necessarily leads to the consequence of liquidation
as provided under Section 33(3) of the IBC, 2016; Whether the
timely implementation of the Resolution Plan is also one of the
objectives of the IBC, 2016.

Headnotes†
Insolvency and Bankruptcy Code, 2016 – Insolvency and
Bankruptcy Board of India (Insolvency Resolution Process
for Corporate Persons) Regulations, 2016 – Constitution of
India – Article 142 – Inordinate delay in due implementation
of the Resolution Plan; several dues including the CIRP costs
of the Corporate Debtor-Jet Airways (India) Limited multiplied;
appellants incurring huge expenditure and costs every month
towards maintenance of the Corporate Debtor – Whether the
Performance Bank Guarantee (PBG) of Rs. 150 Crore could
be adjusted against the first tranche payment of Rs. 350 Crore
which was to be made under the Resolution Plan, within 180

* Author
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days from the Effective Date – NCLAT allowed the adjustment of
the PBG in lieu of payment of the first tranche – Sustainability:
Held: 1.1 NCLAT order is unsustainable in law and perverse
as it did not consider several material and relevant facts and
misread the evidence as well – The non-infusion and payment
of funds in compliance with the applicable laws and the terms
of the Resolution Plan led to a failure of the Resolution Plan.
[Paras 186, 90]
1.2 Impugned order directing the SRA to adjust the PBG of Rs.
150 Crore against the first tranche payment of Rs. 350 Crore
was in flagrant disregard of the 18th January order of this Court,
the terms of the Resolution Plan and established law – In the
peculiar and alarming circumstances and in view of the fact that
almost five years have elapsed since the Resolution Plan was
duly approved however, there being no progress, jurisdiction under
Article 142 of the Constitution is invoked and it is directed that the
Corporate Debtor be taken in liquidation – The NCLT, Mumbai
shall take appropriate steps for appointment of liquidator and all
other necessary formalities for commencement of liquidation of the
Corporate Debtor – Rs. 200 Crore already infused by the SRA,
forfeited – The Lenders/Creditors can encash the Performance Bank
Guarantee of Rs. 150 Crore furnished by the SRA – Impugned
order set aside. [Paras 90, 186, 187, 188]
2. The nature of the Conditions Precedent laid out under the
Resolution Plan were such that several of them could not be
fulfilled before the operationalization of the Corporate Debtor –
The assertion that the Effective Date would kick in only upon
fulfilment of all the Conditions Precedent and since the Appellants
had challenged the fulfilment of the Conditions Precedent, such a
date could not be said to have yet arrived not accepted – It was
repeatedly declared by different fora that the Effective Date was
frozen on 20.05.2022 and the obligation of the SRA to implement
the Resolution Plan was absolute – All steps necessary should
have been undertaken by the SRA, at least post the impugned
order of the NCLAT dated 12.03.2024 – To contend that its
hands were tied since the Conditions Precedent were still being
challenged before this Court is nothing but a reflection of the mala
fide intention on the part of the SRA to not fulfil its obligations in
accordance with the Resolution Plan under the garb of pendency
of litigation. [Paras 97, 98]
[2024] 11 S.C.R. 2041

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

3. The Effective Date was frozen on 20.05.2022 – As per Clause
6.3.1(g) on the “Infusion of Funds and Timelines”, and Serial No.11
under Clause 7.7, the first tranche payment of Rs. 350 Crore had
to be made by the SRA, upfront, within a period of 180 days from
the Effective Date – As per the Resolution Plan, this 180-day
timeline otherwise would have expired on 16.11.2022 – Several
extensions were granted to the SRA to infuse this amount, at
different stages of this litigation, by the NCLT, the NCLAT and this
Court (vide order dtd.18.01.2024, 180 days time for infusion was
extended up to 31.01.2024) as well. [Para 98]
4. Further, an adjustment of the PBG against the first tranche
payment was also in violation of Regulation 36B(4A) of the 2016
Regulations – The PBG had to be kept alive until the complete
implementation of the Resolution Plan as per Regulation 36B(4A) –
This was also provided under Clauses 3.13.2 and 3.13.8 of the
RFRP (Request for Resolution Plan) respectively wherein the PBG
was required to be kept alive and was to be returned to the SRA
only upon 100% completion of the implementation of the Resolution
Plan – This binding nature of the RFRP was transferred onto the
Resolution Plan through Clauses 7.3 and 9.4 respectively of the
Resolution Plan – Even in light of the NCLAT’s own order dated
26.05.2023, it does not follow that the PBG could have been
adjusted by the SRA, mid-implementation, against its payment
obligation. [Paras 104, 105, 107]
5.1 Once the Adjudicating Authority has approved the plan
u/s.31(1) of the IBC, 2016, the Resolution Plan is binding on
all the stakeholders including those stakeholders who are not
direct participants of the CIRP – Therefore, there is absolutely no
scope for modification of the terms of a Resolution Plan which
has received the imprimatur of the Adjudicating Authority, be it by
the Adjudicating Authority itself, the CoC or the SRA. [Para 116]
5.2 The NCLT had approved the present Resolution Plan vide
order dated 22.06.2021, the Resolution Plan was immune to any
modification or alteration whatsoever – The submission of the
SRA that the Lender’s Affidavit required an infusion of Rs. 350
Crore in cash, while the Resolution Plan allowed for the payment
of Rs. 200 Crore in cash and Rs.150 Crore through adjustment of
the PBG, rejected – The conditions imposed on the SRA under
the Lender’s Affidavit and the Resolution Plan were one and the
same, the only difference being that the Appellants had offered
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not to press issues relating to the compliance of the Conditions
Precedent and grant of extensions/exclusions along with offering
to withdraw the Company Appeal and the Appeals pending before
this Court – In view of clear order dated 18.01.2024, the PBG of
Rs.150 Crore could not have been allowed to be adjusted with
the first tranche payment of Rs. 350 Crore – Non-compliance of
the SRA with the order of this Court has led to a dereliction of
its obligations to implement the Resolution Plan – SRA failed to
implement the Resolution Plan by not infusing the first tranche
payment of Rs. 350 Crore in cash, as required by Clause 6.3.1(g)
and the Implementation Schedule under Clause 7.7 of the
Resolution Plan. [Paras 117, 121 124, 125]

Insolvency and Bankruptcy Code, 2016 – ss.33(3), 31(1) –
Whether there were sufficient grounds before the NCLAT to
hold that Respondent No.1-SRA had contravened the terms of
the approved Resolution Plan and that the Corporate Debtor
must be directed to be liquidated u/s.33(3) – Whether SRA
failed to implement the Resolution Plan on non-payment of
the Airport Dues as per the terms of the Resolution Plan –
Whether SRA could be said to have failed to implement the
Resolution Plan on account of the non-payment of workmen
and employees’ dues as per the terms of the Resolution
Plan and the order of the NCLT dated 21.10.2022 which was
confirmed by the order dated 31.01.2023 of this Court – Need
for “timely liquidation” over “endless resolution process”
emphasised:
Held: 1.1 The Resolution Plan contemplated that the Airport
Charges be subsumed within the CIRP Dues and since all of the
different CIRP dues cannot be satisfied through the bank balance
which stands to the credit of the Corporate Debtor, a separate
sum of Rs. 25 Crore was demarcated towards the remaining CIRP
payments – Hence, NCLAT was right in arriving at the conclusion
that Airport Dues were indeed a part of the CIRP costs. [Para 129]
1.2 The impugned order of the NCLAT nowhere caps the Airport
Dues to a maximum of Rs. 25 Crore – Moreover, such a mention
of Rs. 25 Crore is plainly absent in its observations regarding
Airport Dues – The Resolution Plan, too, does not contemplate
the CIRP costs to be strictly subject to a maximum of Rs. 25
Crore – To accept such a contention of the Appellants would be
[2024] 11 S.C.R. 2043

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

to misinterpret the observations made in the impugned order.
[Paras 129, 130]
1.3 The SRA not having infused the first tranche payment of Rs. 350
Crore as per Clause 6.3.1(g) and S. No. 11 of the Implementation
Schedule under Clause 7.7 within a period of 180 days from the
Effective Date and within the multiple extensions granted therefrom,
defaulted on its obligation towards the payment of CIRP costs
(which include airport dues) under Clause 6.4.1 as well. [Para 132]
2. By not infusing the first tranche payment of Rs. 350 Crore
as per the Implementation Schedule of the Resolution Plan, the
SRA breached the terms of the Resolution Plan which required
a minimum liquidation value of Rs.113 Crore to be paid towards
the Workmen and Employees’ Dues as well – Moreover, both the
Provident Fund and Gratuity Dues amounting to Rs. 226 Crore
should also have been paid by the SRA as per the order dated
21.10.2022 of the NCLAT in fulfillment of its obligations, which it
failed to do. [Para 140]
3.1 The NCLAT declined to accept the submission of the Appellant
that on account of non-deposit of Rs.150 Crore as directed by
this Court, the Corporate Debtor should be liquidated – This was
based on the incorrect assumption that the direction of this Court
to infuse to Rs.150 Crore in cash was only confined to the terms
of the Lenders Affidavit dated 16.08.2023 – The Lender’s Affidavit
could not have provided for conditions incompatible with the terms
of the Resolution Plan – Such an affidavit would have been in
direct contravention with s.31(1) of the IBC, 2016 – Therefore, the
direction of this Court in its order dated 18.01.2024 was w.r.t both
the Lenders Affidavit and the underlying terms of the Resolution
Plan – The same was so understood by all the parties involved.
[Para 142]
3.2 The Lender’s Affidavit in precise terms stated that “Failing to
comply with the conditions mentioned in Para 8(a) to (c) above,
the Corporate Debtor should be directed to go into liquidation” –
It was in this context that this Court stated that, “the SRA shall
peremptorily on or before 31 January 2024, deposit an amount of
Rs. 150 crores into the designated account of SBI, failing which the
consequences under the Resolution Plan will follow” – Therefore,
it is incorrect to contend that this Court neither considered nor
expressed any opinion on the question of liquidation of the Corporate
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Debtor – The consequence of non-implementation of the Resolution
Plan by the SRA must necessarily be liquidation of the Corporate
Debtor in accordance with s.33(3) of the IBC, 2016. [Para 143]
3.3 The SRA failed to infuse the first tranche payment of Rs. 350
Crore as envisaged in the Resolution Plan despite the Effective
Date being fixed on 20.05.2022 – Consequently, the payment of
CIRP costs, workmen and employees’ dues etc. which must be
made in priority over the dues of the other creditors were also not
made – More than 5 years have passed and the implementation of
the Resolution Plan still seems to be a dim light at the far end of
a long tunnel – Over this period of 5 years, several dues such as
the Airport dues to be paid by the Corporate Debtor have increased
multi-fold due to the fault of the SRA and this Court must ensure
that such debts stop running at some point in time. [Para 147]
3.4 Although one of the key objectives of the IBC, 2016 is to ensure
the survival of the corporate debtor as a going concern, yet the
same must not come at the cost of efficiency – In scenarios such
as the present, “timely liquidation” is indeed preferred over an
“endless resolution process” – Such a view will prevent the likelihood
of adversely affecting the interests of all the creditors who have
been suffering due to no fault of their own and also securing the
maximization of value of the remaining assets. [Para 148]
3.5 The consequence of the failure to implement the Resolution
Plan in terms of Clause 9.4 of the Resolution Plan and Clause
3.13.7(iii) of the RFRP is that the Appellants are entitled to invoke
the PBG automatically without any reference to the SRA – The
PBG may be invoked by the Appellants in accordance with the
terms of the Resolution Plan. [Para 149]
Insolvency and Bankruptcy Code, 2016 – Preamble – Timely
implementation of the Resolution Plan is also one of the
objectives of the IBC, 2016 – Report of the Bankruptcy Law
Reforms Committee, 2015, time-bound working of the Code
emphasised; time and speed are of the essence under the
Code – NCLT Rules, 2016 – NCLAT Rules, 2016 – r.15 – Power
of NCLT and NCLAT to extend the time limits not be exercised
mechanically without any application of mind. [Paras 150, 151,
152, 154, 157, 158]

Constitution of India – Article 142 – Insolvency and Bankruptcy
Code, 2016 – Plenary powers u/Article 142 – When to be
[2024] 11 S.C.R. 2045

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

exercised, discussed – Inordinate delay in due implementation
of the Resolution Plan, several dues including the CIRP costs
of the Corporate Debtor multiplied; appellants have to incur
huge expenditure and costs every month towards maintenance
of the Corporate Debtor – Corporate Debtor, if to be directed
to be taken in liquidation exercising power u/Article 142:
Held: Yes – The fundamental concern of this Court must not only
be of doing substantial and complete justice but also to ensure
expeditious resolution of the issues in the interests of the underlying
objective of the IBC, 2016 and all the stakeholders involved – The
terms of the Resolution Plan have been contravened and that there
has been a failure to implement on part of the SRA – Resolution
Plan is no longer capable of being implemented – In exercise of
plenary powers u/Article 142, the Corporate Debtor is directed to
be taken in liquidation – NCLT Rules, 2016 – r.11. [Paras 163-165]

Insolvency and Bankruptcy Code, 2016 – Deficiencies/
Shortcomings – Suggestions – Functioning of the NCLTs and
NCLAT – The Guidelines for Committee of Creditors (CoC)
issued by the IBBI on 06.08.2024, enumerated – Suggestions
made to CoC – Role, duty and responsibility of Successful
Resolution Applicant; lenders and also that of creditors:
Held: 1. The Guidelines for Committee of Creditors issued by
the IBBI may go a long way in streamlining the functions of the
CoC – Adding to the aforesaid guidelines, it is suggested that
the CoC exercise their commercial wisdom and approve/reject
the Resolution Plans placed before them exhibiting fairness and
with good reasons – Such a reasoned decision making on their
part will only serve to further enable the other key players like the
Adjudicating Authorities to understand the rationale behind their
decision and to uphold the correctness of the same – Furthermore,
it is also suggested that the Central Government or the IBBI explore
the possibilities of better enforcement of the standards and practices
enumerated in the guidelines through an independent mechanism
under the auspices of an oversight committee instead of making
them self-regulatory. [Para 172]
2.1 Once a resolution plan is approved under the IBC, 2016, the
Successful Resolution Applicant undertakes a profound responsibility
to implement the plan in both letter and spirit – This obligation is
not merely an empty formality but an enduring commitment to
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restore the corporate debtor to viability and ensure a meaningful
turnaround – The role of a Successful Resolution Applicant is far
more than a transactional duty towards the creditors or stakeholders;
it embodies a pivotal responsibility to the distressed entity itself,
which must be approached with utmost dedication and an earnest
sense of duty – Regardless of the challenges that may arise, the
Successful Resolution Applicant cannot treat its obligations as
optional or conditional, nor can it abdicate its responsibility in the face
of unforeseen obstacles – Its efforts must reflect a determination to
implement the plan fully and to rejuvenate the debtor company, as
this is integral to the success of the IBC framework and the spirit
of economic revival it seeks to foster – The approach, therefore,
must not be frugal or narrowly profit-driven, limited to viewing the
transaction through a purely commercial lens – Instead, it must
recognize that rescuing a distressed company is a responsibility
of significant social and economic value, demanding a holistic and
responsible strategy. [Para 173]
2.2 In this collaborative effort, the duty to implement the plan does
not fall on the Successful Resolution Applicant alone; lenders
and creditors are equally obligated to support the process by
offering constructive and continuous cooperation – They must
not impede the implementation process through unnecessary
demands beyond the pale of the resolution plan or with delays
in implementation plan but rather should facilitate the Successful
Resolution Applicant’s efforts to revive the corporate debtor –
Given their vested interest in the corporate debtor’s successful
revival, lenders have a fundamental duty to act in good faith and
with transparency, recognizing that their cooperative stance is
essential for overcoming the inevitable challenges of the resolution
process – The lender's role is not merely passive; it requires active
support that aligns with the ultimate goal of the IBC, 2016- to
provide a fair and equitable resolution that maximizes asset value
while enabling the debtor’s recovery – Therefore, the lenders
must balance their financial interests with the broader objective
of rehabilitation – They should not take an obstructive approach
or seek to leverage the resolution process solely for individual
benefit, as such actions would risk destabilizing the corporate
debtor’s recovery trajectory – Instead, they must be prepared to
collaborate fully, sharing the responsibility to make the resolution
process work in practice. [Paras 174, 175]
[2024] 11 S.C.R. 2047

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

2.3 The IBC, 2016 is silent as regards the phase of implementation
of the Resolution Plan by the Successful Resolution Applicant – This
is mostly due to the fact that each Resolution Plan might be unique
and customized to the specific needs of the Corporate Debtor and
an excessive amount of statutory control over the implementation
of the Plan may prove to be counterproductive to the cause of
the Corporate Debtor – However, this has unfortunately led to
the consequence of giving excessive leeway to the Successful
Resolution Applicants to act in flagrant violation of the terms of the
Resolution Plan in a lackadaisical manner – The SRAs repeatedly
approach the Adjudicating Authority or the NCLAT for the grant
of reliefs in relation to relaxation of the strict compliance to the
terms of the Plan, including the timelines imposed therein – The
NCLT and NCLAT more often than not, accede to such requests in
exercise of their inherent powers under Rule 11 or their power to
extend time under Rule 15 of the NCLT and NCLAT Rules, 2016
respectively – The NCLT and NCLAT must not entertain such
repeated attempts at violating the integrity of a CoC approved
Resolution Plan by accommodating the incessant requests of the
Successful Resolution Applicants – The exercise of discretion as
regards altering the binding terms of the Resolution Plan, including
the timelines imposed, must be kept at a minimum, at best – The
NCLTs/NCLATs need to be sensitised of not exercising their judicial
discretion in extending the timelines fixed under IBC, 2016 or the
Resolution Plan, in such a way that it may make the Code lose its
effectiveness thereby rendering it obsolete. [Para 176]
2.4 Section 30(2)(d) of the IBC, 2016 states that the resolution
professional shall mandatorily examine each resolution plan that
is received to confirm that it provides for the implementation and
supervision of the resolution plan – Regulation 38 of the 2016
Regulations provides for the mandatory contents of a Resolution
Plan – Regulation 38(2) specifically states that the Resolution Plan
shall provide for the term of the plan and its implementation schedule,
along with adequate means for supervising its implementation –
Further, under Regulation 38(3), a resolution plan must demonstrate
that it addresses the cause of default, is feasible and viable, has
provisions for its effective implementation, has provisions for
approvals required and the timelines for the same and, that the
resolution applicant has the capability to implement the resolution
plan – Therefore, in light of these provisions of the IBC, 2016 and
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the 2016 Regulations, it can be seen that the resolution plan must
be impermeable to any shortcuts that prevent its implementation,
including timely implementation, by the successful resolution
applicant – A consideration of these provisions reinforces the idea
that timely implementation and strict adherence to the terms of
the resolution plan is crucial. [Para 177]
2.5 Section 74(3) of the IBC, 2016 provides for the punishment
for contravention of the resolution plan – The Code comes down
heavily on any knowing and willful contravention of the terms
of the Resolution Plan, committed by any person, on whom the
approved Resolution Plan has been made binding under Section
31 of the IBC, 2016 – A punishment of minimum one year which
may extend up to five years or minimum fine of one Lakh which
may be up to one Crore rupees, or both, has been prescribed
for such a contravention – In light of such strict consequence
provided for the contravention of the resolution plan envisaged
under the scheme of the Code itself, there is good reason for us
to ensure that the successful resolution applicants abide by their
commitments made under the Resolution Plan – Therefore, it is
suggested that the authorities including the NCLT and NCLAT must
not aid the Successful Resolution Applicants in circumventing the
strict mandates of the law by acceding to their requests to relax
the terms of the plan itself. [Paras 178, 179]
2.6 One another suggestion that may aid in a coordinated and
non-adversarial implementation of the Resolution Plan by all the
stakeholders is that the Adjudicating Authority while approving a
Resolution Plan under Section 31 of the IBC, 2016, should record
the next steps which are to be taken by the respective parties for
commencement of implementation of the approved Resolution
Plan – This will ensure that the parties are ad idem about the
next round of their obligations that each of them is required to
discharge under the approved Resolution Plan and that they do
not delay the implementation by initiating any further litigation on
this aspect. [Para 180]
2.7 As regards the implementation of the approved Resolution
Plan, it is suggested that the IBC, 2016 statutorily provide for the
constitution of a Monitoring Committee, once the plan has been
approved, for a smooth handover of the Corporate Debtor to the
Successful Resolution Applicant – Presently, such a provision is
[2024] 11 S.C.R. 2049

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

absent in the Code and it is the Adjudicating Authority that orders
for the constitution of a Monitoring Committee to ensure smooth
implementation of the Plan – The CoC must be empowered to
constitute the Monitoring Committee which may, by default, include
the Resolution Professional and also include other nominees
from the CoC and the Resolution Applicant respectively – Such
a Monitoring Committee would be entrusted with the powers of
monitoring and supervising the resolution plan till the expiry of the
term of the Resolution Plan – The Committee shall also be required
to ensure all statutory compliances during the implementation of
the plan along with updating the Adjudicating Authorities, Financial
and other Creditors about the status of implementation of the
Resolution Plan, on a quarterly basis. [Para 181]
3.1 As regards certain efficiency issues within the NCLTs and
NCLAT, it has been noticed over a period of time that there is a
serious lack of timely admission and disposal of the applications
filed as regards the initiation of CIRP, approval of the resolution
plan and liquidation – This only adds to the uncertainty of the
process and prolongs the dispute thereby jeopardizing the interest
of all the stakeholders involved – Adjudication in a time-bound
manner would help prevent any further deterioration of the value
of the corporate entity – The integrity of the original timelines laid
down by the Code and the Resolution Plan must not be allowed
to be violated since it would dilute the objective of the Code in
its entirety, erode investor confidence and hinder all corporate
restructuring efforts. [Para 182]
3.2 The Members often lack the domain knowledge required
to appreciate the nuanced complexities involved in high-stake
insolvency matters in order to properly adjudicate such matters –
One of the salutary objects of the Code, 2016 is to protect the
assets of the corporate entity in a timely manner and take prompt
decisions, however, it has become a practice of the NCLT(s) and
NCLAT to ignore the urgent mentionings and listings of time-sensitive
matters and show no deference to long-pending matters resulting in
value erosion of the assets of the Corporate Debtor and rendering
their insolvency resolution process a foregone conclusion – Over a
period of time, this Court has noticed the growing tendency amongst
Members of the NCLT(s) and NCLAT to ignore the orders of this
Court or act in its defiance – Any act of contravention of this Court’s
order and the larger rubric of judicial propriety will not be tolerated –
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The NCLT(s) and the NCLAT must seriously rethink their approach
towards admission and disposal of insolvency matters, they should
not act as a mere rubberstamping authority and must take their
roles seriously in ensuring time-bound hearings and resolutions –
Proper and effective hearings, both virtually and in-court, must be
given to insolvency matters of public importance, and the NCLT(s)
and NCLAT(s) must earnestly work towards ensuring that the IBC,
2016 achieves its avowed object. [Para 183]
3.3 One another serious issue pertaining to the functioning of the
NCLTs and NCLAT is that there is often a shortage of members
in the Tribunals and inadequate infrastructure to support their
functioning – These vacancies heavily impact the insolvency
reform initiative undertaken by the government since they lead
to operational inefficiencies – Consequently, the strict timelines
provided in Section 12 of the IBC, 2016 are not complied
with – Filling such vacancies with experts having adequate
domain knowledge in the field must be prioritized along with
addressing the infrastructure needs of the Tribunals to prevent
any adverse effect on the resolution process – There must be
strict mandates regarding the functioning of the Tribunals within
its normal working hours – The appointment of new members
must be done in a manner such that it coincides with the date
of retirement of the sitting members in a seamless manner
to avoid such operational inefficiencies – Persons with high
ideals & impeccable integrity should be appointed as Members
in the NCLT as well as NCLAT – There should be no political
appointment. [Para 184]
Insolvency and Bankruptcy Code, 2016 – s.62 – Exercise
of the jurisdiction under – Code of Civil Procedure, 1908 –
s.100 – “substantial question of law”, when arises – Discussed.
[Paras 87-90]

Case Law Cited
IFCI Ltd. v. Sutanu Sinha and Others [2023] 15 SCR 280 : 2023
SCC OnLine SC 1529; Chandrabhan (Deceased) Through Lrs.
And Others v. Saraswati and Others [2022] 7 SCR 295 : 2022
SCC OnLine SC 1273; Maria Colaco and Another v. Alba Flora
Herminda D’souza and Others (2008) 5 SCC 268; Abdul Raheem v.
[2024] 11 S.C.R. 2051

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

Karnataka Electricity Board and Others [2007] 12 SCR 389 :
(2007) 14 SCC 138; Ebix Singapore Private Limited v. Committee
of Creditors of Educomp Solutions Limited and Another [2021]
14 SCR 321 : (2022) 2 SCC 401; Kridhan Infrastructure Private
Limited v. Venkatesan Sankaranarayan and Others [2021] 2 SCR
520 : (2021) 6 SCC 94; Innoventive Industries Limited v. ICICI
Bank and Another [2017] 8 SCR 33 : (2018) 1 SCC 407; Glas
Trust Company LLC v. Byju Raveendran and Others, 2024 SCC
OnLine SC 3032; K Shashidhar v. Indian Overseas Bank and Ors.
[2019] 3 SCR 845 : (2019) 12 SCC 150 – referred to.

Books and Periodicals Cited
Report of the Bankruptcy Law Reforms Committee, 2015.

List of Acts
Insolvency and Bankruptcy Code, 2016; Insolvency and
Bankruptcy Board of India (Insolvency Resolution Process for
Corporate Persons) Regulations, 2016; Constitution of India; NCLT
Rules, 2016; NCLAT Rules, 2016; Code of Civil Procedure, 1908;
Employees’ Provident Fund and Miscellaneous Provisions Act,
1952; Payment of Gratuity Act, 1972.

List of Keywords
Jet Airways liquidation; Aviation sector; Adjustment of Performance
Bank Guarantee (PBG); In lieu of payment of the First tranche
payment; Within 180 days from the Effective Date; Successful
Resolution Applicant (SRA); Non-implementation of the Resolution
Plan by SRA; Inordinate delay in due implementation of the
Resolution Plan; CIRP costs; Non-infusion and payment of
funds; Failure of the Resolution Plan; Failure to implement the
Resolution Plan; Jurisdiction under Article 142 of the Constitution
of India; Plenary powers under Article 142 of the Constitution of
India; Inherent powers; Corporate Debtor to be liquidated; Non-
fulfilment of Conditions Precedent; Encash the Performance
Bank Guarantee; Extension of the timeline; Multiple extensions
granted; Maximum extension; Implementation extension; Lender’s
Affidavit; Request for Resolution Plan (RFRP); Binding nature of the
RFRP; Air Operation Certificate (AOC); Slots Allotment Approval;
Dereliction of obligations to implement the Resolution Plan; Non-
2052 [2024] 11 S.C.R.

Supreme Court Reports

payment of the Airport Dues/Charges; Non-payment of workmen
and employees’ dues; “timely liquidation”; “endless resolution
process”; CIRP dues; Implementation Schedule; Survival of the
corporate debtor as a going concern; Timely implementation of
the Resolution Plan; Objectives of the IBC; Time-bound working
of the Insolvency and Bankruptcy Code, 2016; Time and speed
essence under the Insolvency and Bankruptcy Code, 2016;
“substantial question of law”; Shortcomings in Insolvency and
Bankruptcy Code, 2016; Suggestions made to Committee of
Creditors (CoC); “commercial wisdom” of the CoC; Role, duty
and responsibility of Successful Resolution Applicant; Lenders
and creditors; Functioning of the NCLTs and NCLAT.

Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No(s). 5023-5024
of 2024
From the Judgment and Order dated 12.03.2024 of the National
Company Law Apellate Tribunal in Company Appeal (AT)
(Insolvency) Nos. 129 and 130 of 2023
With
Civil Appeal Nos. 12220-12221 of 2024

Appearances for Parties
N. Venkataraman, A.S.G., Mukul Rohatgi, Gopal Sankaranarayanan,
S. Niranjan Reddy, Amar Dave, Sr. Advs., Vikas Mehta, Mayan
Prasad, Ms. Anshula Vijay Kumar Grover, Lenpithang Sithlou,
Ms. Nitika Grover, Nishant Anshul, Sanjay Kapur, Devesh
Dubey, Ms. Divya Singh Pundir, Arjun Bhatia, Pawanshree
Agrawal, Debmalya Banerjee, Pooja Mahajan, Kartik Bhatnagar,
Rohan Sharma, Ashish Vats, Ms. Apurva, Agastya Shelat, Ms.
Arveena Sharma, Ms. Shruti Pandey, Ms. Trisha Chandran, Ms.
Tanya Srivastava, Tushar Srivastava, Ms. Aastha Prasad, M/S.
Karanjawala & Co., Surya Prakash, Ms. Mahima Kapur, Ms.
Isha Virmani, Mrs. Shubhra Kapur, Dhirajkumar Totala, Nishant
Upadhyay, Navneet R., Ankit Pal, Ajay Raj, Ms. Vasudha Jain,
Ms. Palak Arora, Ms. Alankrita Sinha, Ms. Petrushka Dasgupta,
Mridul Yadav, Raghav Bhatia, Ms. Pallavi Pratap, Pawanshree
Agrawal, Advs. for appearing parties.
[2024] 11 S.C.R. 2053

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

Judgment / Order of the Supreme Court

Judgment

J.B. Pardiwala, J.

For convenience of exposition, this judgment is divided into the
following parts: -
INDEX*

A. FACTUAL MATRIX ......................................................... 3
B. SUBMISSIONS ON BEHALF OF THE APPELLANTS..... 41
i. Issue No.1: Adjustment of PBG of Rs. 150 Crore
towards the first tranche payment ....................... 43
ii. Issue No. 2: Non-payment of Airport dues ........... 53
iii. Issue No. 3: Non-payment of Workmen and
Employees’ dues .................................................. 55
iv. Issue No. 4: Achievement of Effective Date ....... 57
v. Issue No. 5: Non-fulfilment of Conditions
Precedent ............................................................... 59
C. SUBMISSIONS ON BEHALF OF THE RESPONDENTS ... 63
D. ISSUES FOR DETERMINATION ................................... 76
E. ANALYSIS ....................................................................... 77
i. Whether the Performance Bank Guarantee
(PBG) could have been adjusted against the first
tranche payment which was to be made under
the Resolution Plan, within 180 days from the
Effective Date, in contravention of the order of
this Court dated 18.01.2024, the terms of the
Resolution Plan and the provisions of law? ..... 85

* Ed. Note: Pagination as per the original Judgment.
2054 [2024] 11 S.C.R.

Supreme Court Reports

a. Whether the Conditions Precedent were fulfilled
by Respondent No.1/SRA and the Effective Date
was fixed at 20.05.2022? ................................. 85

b. Whether the NCLAT could have directed the
Performance Bank Guarantee (PBG) to be
adjusted against the first tranche payment which
was to be made within 180 days of the Effective
Date? ............................................................... 93

I. The adjustment of the PBG was
impermissible under the terms of the
Resolution Plan read with Regulation
36B(4A) of the 2016 Regulations. ........... 94

II. The Lender’s Affidavit dated 16.08.2023
did not impose conditions which were
different from the terms of the Resolution
Plan. .......................................................... 106

ii. Whether the non-implementation of the
Resolution Plan by the SRA necessarily leads to
the consequence of liquidation as under Section
33(3) of the IBC, 2016? .......................................... 117

a. Whether Respondent No.1/SRA had failed to
implement the Resolution Plan on non-payment
of the Airport Dues as per the terms of the
Resolution Plan? ................................................ 118

b. Whether Respondent No.1/SRA could be said
to have failed to implement the Resolution
Plan on account of the non-payment of
workmen and employees’ dues as per the
terms of the Resolution Plan and the order
of the NCLT dated 21.10.2022 which was
confirmed by the order dated 31.01.2023 of
this Court? ..................................................... 124
[2024] 11 S.C.R. 2055

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

c. Whether there were sufficient grounds before
the NCLAT to hold that Respondent No.1/SRA
had contravened the terms of the approved
Resolution Plan and that the Corporate Debtor
must be directed to be liquidated under Section
33(3) of the IBC, 2016? .................................... 131

iii. Whether the timely implementation of the
Resolution Plan is also one of the objectives of
the IBC, 2016? ........................................................ 139

F. SHORTCOMINGS AND SUGGESTIONS TO THE IBC,
2016. ................................................................................ 150

G. CONCLUSION ................................................................. 167

1. These appeals arise from the judgment and order dated 12.03.2024
passed by the National Company Law Appellate Tribunal (hereinafter,
the “NCLAT”) in Company Appeal (AT) (INS) 129-130 of 2023 filed
by the Appellant herein by which the NCLAT dismissed the appeal
and upheld the order dated 13.01.2023 passed by the National
Company Law Tribunal (hereinafter, the “NCLT”). The order of the
NCLT held that Respondent No.1 had fulfilled all the Conditions
Precedent as stipulated in the Resolution Plan. The NCLAT further
issued several directions including a direction that the Performance
Bank Guarantee of Rs. 150 Crore (hereinafter, the “PBG”) could be
adjusted towards the first tranche payment of Rs. 350 Crore which
was to be made by Respondent No.1.

A. FACTUAL MATRIX
2. The NCLT vide its order dated 20.06.2019 in C.P. 2205 (IB)/ (MB)/
2019 admitted the application for initiation of Corporate Insolvency
Resolution Process (hereinafter, the “CIRP”) filed by State Bank of
India (hereinafter, “SBI”) in respect of Jet Airways (India) Limited
(hereinafter, the “Corporate Debtor”) in accordance with Section 7
of the Insolvency and Bankruptcy Code, 2016 (hereinafter, the “IBC,
2056 [2024] 11 S.C.R.

Supreme Court Reports

2016”). The total admitted claim of the Financial Creditors was Rs.
7800 Crore (approx.). Pursuant to the aforesaid Order, Mr. Ashish
Chhawchharia, was appointed as the Interim Resolution Professional
and was appointed as the Resolution Professional (hereinafter, the
“RP”) as well.
3. On 02.06.2020, the RP issued the 4th Round of the Request for
Resolution Plan (hereinafter, the “RFRP”) as approved by the
Committee of Creditors (hereinafter, “CoC”) which invited submissions
of Resolution Plans for the Corporate Debtor from potential Resolution
Applicants. The relevant clauses of the RFRP are reproduced
hereinbelow:
“3.13 Performance Security
3.13.1 The Successful Resolution Applicant shall
furnish or cause to be furnished, an unconditional and
irrevocable performance bank guarantee or a demand
draft, issued by any scheduled commercial bank in India
or a foreign bank which is regulated by the central bank
of a jurisdiction outside India which is compliant with the
Financial Action Task force Standards and is a signatory to
the International Organisation of Securities Commissions
Multilateral Memorandum of Understanding, provided that
it is acceptable to the Resolution Professional (acting for
the CoC) (“PBG Bank”), of an amount of INR 150 Crores
(Indian Rupees Hundred and Fifty Crores only) or 10%
of upfront amount (payable as per the resolution plan
by the Successful Resolution Applicant), whichever is
higher in favour of “State bank of India, (that is, SBI) (in
its capacity as an agent of the CoC (and acting on behalf
of the Company), within 7 (seven) days of declaration of
the Successful Resolution Applicant, or by way of a direct
deposit by way of the real time gross settlement system
into a bank account held by the SBI Bank, the details
of which shall be shared separately with the Successful
Resolution Applicant (“Performance Security”)
3.13.2 If the Performance Security is being provided as
a performance bank guarantee, it shall be in accordance
[2024] 11 S.C.R. 2057

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

with Format VIII-A of this RFRP (“PBG”). The PBG shall
be valid, till the later of (i) a period of 180 days from the
date of the PBG; and (ii) the date of completion of the
implementation of the Resolution Plan (as determined by
the RP and the (CoC) and shall be subject to re-issuance
or extension by the Successful Resolution Applicant as may
be required by the CoC (as assisted by the Resolution
Professional) (“PBG Validity”).

xxx xxx xxx

3.13.7 SBI, in its capacity as an agent of the CoC (and
acting on behalf of the Company), shall have the right to
invoke the Performance Security on behalf of the CoC (and
upon receiving approval from the CoC), (by issuance of
a written demand to the Bank to invoke the Performance
Security, if provided as a PBG). The Performance Security
can be invoked and appropriated at any time, upon
occurrence of any of the following conditions, without any
reference to the Resolution Applicant.
i. any of the condition under the Letter of Intent or
the Successful Resolution Plan are breached;
ii. if the Resolution Applicant fails to re-issue or
extend the Performance Security (if provided
as a PBG), in accordance with the terms of
this RFRP; or
iii. failure of the Successful Resolution Applicant
to implement the Approved Resolution Plan to
the satisfaction of the CoC, and in accordance
with the terms of the Approved Resolution Plan.
3.13.8 The Performance Security shall be returned to the
Successful Resolution Applicant within a period 7 (seven)
Business Days (based on the request received from the
Successful Resolution Applicant) upon 100% (one hundred
percent) of the completion of the implementation of the
Approved Resolution Plan by the Successful Resolution
Applicant.
2058 [2024] 11 S.C.R.

Supreme Court Reports

3.13.9 The Performance Security shall not be set-off against
or used as part of the consideration that the Successful
Resolution Applicant proposes to offer in relation to
the Company, even if expressly indicated as such by
the Successful Resolution Applicant in the Successful
Resolution Plan.”
(emphasis supplied)

4. On 21.09.2020, the Consortium of Murari Lal Jalan and Florian Fritsch
(hereinafter, the “Respondent No.1 / SRA”) submitted its Resolution
Plan. It was amended by the version dated 30.09.2020 and further
supplemented and amended by the addendum dated 02.10.2020. At
the 17th meeting of the CoC held on 03.10.2020, the Resolution Plan
was placed before the CoC by the RP and was voted upon by the CoC
from 05.10.2020 to 17.10.2020 in accordance with Regulation 39 of
the Insolvency and Bankruptcy Board of India (Insolvency Resolution
Process for Corporate Persons) Regulations, 2016 (hereinafter, the
“2016 Regulations”). The CoC, in its commercial wisdom, approved
the Resolution Plan proposed by Respondent No. 1 with a majority
of 99.22% votes. The relevant clauses of the Resolution Plan are
reproduced hereinbelow:
“2. INTRODUCTION OF THE RESOLUTION APPLICANT
2.1.4. The resolution applicant (“Resolution Applicant”)
is defined to mean a Consortium of:
a) Mr. Murari Lal Jalan who is the Lead Partner of the
Consortium;
b) Mr. Florian Fritsch is the Other Partner of the
Consortium; and
2.1.5. Mr. Murari Lal Jalan will hold shares in the Corporate
Debtor in his personal capacity.
xxx xxx xxx

6.3.1(c) Summary of Financial Proposal
THE RESOLUTION PLAN SUBMITTED BY THE
RESOLUTION APPLICANT IS UNCONDITIONAL AND
NOT SUBJECT TO SALE OF THE ASSETS OF THE
CORPORATE DEBTOR.
[2024] 11 S.C.R. 2059

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

HEADS PACKAGE OF AMOUNT PAYMENT TERMS
~RS. 4,783 (In Rs.)
CRORES
COMPRISING OF

● ~RS.
1,090.1 CR
COMMITTED
CASH
● ~Rs. 3,668
Crores –
estimated
value of 10%
Equity Stake Within After
in Jet 2.0 at 180 days 180 from
Year 5 from the Effective
● 7.5% Equity Effective Date
stake in JPPL Date
for Assenting
FCs.
● Airport
Savings
● Additional
Upside on
Aircraft + ATR
+ Spares +
BKC
● ~ Rs. 25
Crores for
acquisition
of additional
50.1% stake
in JPPL from
Etihad
CIRP Cost CIRP COST 25 Cr 100%
ASSENTING ● Rs. 195 Cr 380 Cr 185 Cr 195 Cr
+ up to Rs. (Incl. 10 Cr in Yr. 2
FCS
185 Cr + for BKC)
Guaranteed
NPV of Guaranteed
Rs. 391 Cr 9.5% NPV of 391
(using the Equity in Cr (using
discount rate Jet 2.0 the discount
specified in rate
the Evaluation specified
7.5% in the
Matrix)
equity in Evaluation
JPPL Matrix) in
Yr. 3, 4, 5
2060 [2024] 11 S.C.R.

Supreme Court Reports

● Rs. 40 Cr of Additional Upside
Positive Cash Upside on on BKC
Balance Aircrafts Savings on
Sales + Airport
● 9.5% equity
ATR Sales
in Jet 2.0 (5th
+ Spares
Yr Value ~Rs.
3,485 Crore)
● 7.5% equity in Savings
JPPL on CIRP
Costs
● Upside on
Aircrafts +
ATR Inventory Positive
+ Spares + Cash
BKC Property Balance
(if given)
● Savings on
CIRP Costs
● Savings
on airport
and parking
charges
● Savings on
Contingency
Fund
● All payments
are secured
against
tangible
security
● Dissenting
FCs will be
paid in priority
as per IBC
Workmen &
Rs. 52 Crores 52 Cr 100%
Employees
OCs ● Rs. 15,000 to
each of the
Operational
Creditors, 10 Cr 100% -
irrespective of
their claim

OC (Dutch
Admin) 10,000 100% -
[2024] 11 S.C.R. 2061

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

Other
Creditors
(other than 10,000 100% -
FCs and
OCs)
Shareholders
(promoters,
10,000 100% -
Etihad and
PNB)
Contingency 100%
8 Cr
Fund Established
JPPL Offer from RA to
acquire 50.01%
shareholding
in JPPL from
Etihad.

25 Cr - 100%
The said sum of
Rs. 25 Crores
will be infused
by the RA in
addition to the
abovementioned
amounts.
475 Cr
TOTAL +
25 Cr

*THIS IS A SUMMARY OF THE FINANCIAL PROPOSAL.
PLEASE REFER TO THE DETAILED PROVISION
UNDER THE RESPECTIVE HEAD.

xxx xxx xxx

(d) PROPOSAL FOR RESOLUTION OF OUTSTANDING
AIRPORT AND PARKING DUES (RS. 240 CRORES AS
OF AUGUST 31, 2020)
[…]
BKC Property not part of resolution - If CoC decides
to retain the BKC Property as a non-core asset and not
offer it as part of this resolution process as proposed
above, then the Resolution Applicant will not pay the
upfront sum of Rs. 10 Crores to the Assenting Financial
2062 [2024] 11 S.C.R.

Supreme Court Reports

Creditors as envisaged in the above Clause for BKC
Property. Further, then the airport dues and parking
charges after the ICD (approx. Rs. 240 Crores as of
August 31, 2020) will be paid by the Resolution Applicant
upfront in priority over any other payments to the creditors
of the Corporate Debtor, subject to a maximum of Rs.
475 Crores. As per the general aviation practice in
respect to parking and airport space, as and when the
Corporate Debtor will intend to use/ move the aircrafts
or use the airport space, such claimants will seek their
past dues. Therefore, their payments need to be resolved
upfront by pro rata reduction of amounts payable to other
creditors, to enable the Corporate Debtor to re-commence
its operation, which is why the Resolution Applicant
has suggested that their payments be made upfront
against the BKC Property. SUCH PAYMENTS WILL
BE SETTLED UPFRONT IN FULL IN FIRST 180 DAYS
FROM THE EFFECTIVE DATE AND WITHOUT ANY
CONDITIONS (INCLUDING NOT BEING STAGGERED
PAYMENTS SPREAD ACROSS A PERIOD OF TIME) SO
THAT FLYING CAN START IMMEDIATELY WITHOUT
ANY FUTURE DISPUTES AND CONCERNS WITH
SUCH CLAIMANTS FOR PAST DUES. Alternatively,
the Resolution Professional can provide the Resolution
Applicant with a no-dues certificate from such contingent
creditors, in which case, these creditors will be treated
in compliance with the provisions of the IBC.
The Resolution Applicant states and confirms that this
“Proposal for Resolution of outstanding airport and
parking dues (approx. Rs. 240 Crores as of August 31,
2020)” which deals with the appropriation of the BKC
Property is merely a proposal and not a condition to
the implementation of this Resolution Plan and the CoC
has the discretion to accept/ reject such proposal. If the
above-mentioned proposal is acceptable to the CoC, then
it is acceptable to the Resolution Applicant in the manner
stated hereinabove.
[2024] 11 S.C.R. 2063

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

(g) Infusion of funds and timelines
Infusion Amount (In Rs.) Purpose/Utilization
Timelines (In As Equity As ECB
Days)
Upfront (within 350,00,00,000 - CIRP Cost;
180 days) Contingency
Fund; Payment to
FCs, OCs, Other
Creditors, and
other stakeholders;
working capital for
business; Misc.
Admin Expenses
181-365 days 250,00,00,000 - Working capital
for business;
Portion of funds
can be used for
acquiring Etihad’s
stake in JPPL;
making payments
to creditors if
RA is inclined in
advancing any
payment timelines
Year 2 - 175, 00,00,000 Remaining payment
to FCs.; Misc.
expenses for
general corporate
and day-to-day
operations, in
compliance with
the extant ECB
Regulations.
After Year 2 - 600,00,00,000 Working capital for
business
Sub-Total 600,00,00,000 775,00,00,000

TOTAL 1,375,00,00,000

xxx xxx xxx

6.4. Treatment of Stakeholders
6.4.1. Treatment of outstanding CIRP Costs
(a) In terms of Section 30(2)(a) of the IBC, the CIRP
Costs are to be paid in priority to any other creditor of
the Corporate Debtor.
2064 [2024] 11 S.C.R.

Supreme Court Reports

(b) As per the information disclosed by the Resolution
Professional on August 14, 2020, the CIRP Costs includes:
i. Operating and Process Costs (Rs. 27.16 Crores,
as of August 31, 2020) which includes fees,
charges, salaries of Asset Protection Team
(APT) of the Corporate Debtor and other costs
incurred by the Resolution Professional in
running the operations of the Corporate Debtor
as a going concern;
ii. Interim Finance Cost (Rs. 54.4 Crores, as of
August 31, 2020).
[…]
(d) The Resolution Professional has also disclosed to
the Resolution Applicant that the Corporate Debtor has
a positive bank balance of approx. Rs. 92 Crores and
estimates to collect a further sum of Rs. 40 Crores in the
next 2-3 months.
[…]
(f) The Resolution Professional has estimated an approx.
sum of Rs. 240 Crores (as of August 31, 2020) towards
parking charges for aircrafts and airport space lease
charges. Such amounts are good faith estimates of the
Resolution Professional based on previous invoices as
it has not received any invoice/ demand from any of
the lessors/ owners for such amounts. The Resolution
Applicant shall endeavour to negotiate the parking fee
and rental fee for the Corporate Debtor with the various
airports and will endeavour that the cost for such heads
is kept to the minimum.
[…]
(h) Based on the information provided, the Resolution
Applicant have assumed that the amounts standing to
the credit of the bank account of the Corporate Debtor
(including amounts estimated to be received subsequently)
are sufficient to cover for the CIRP Costs of the Corporate
Debtor (excluding parking charges, rental charges,
employee dues, taxes etc). Accordingly, the Resolution
[2024] 11 S.C.R. 2065

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

Applicant has set aside a sum of Rs. 25 Crores as CIRP
Costs towards payment of any such costs until the Approval
Date. Any expenses incurred by the Corporate Debtor from
the Approval Date until the Effective Date will be incurred
out of the positive bank balance of the Corporate Debtor.
(i) As stated in Clause 6.3.1(d) above, if the CoC agrees
to offer a clear and marketable title in the BKC Property
(one floor) to the Resolution Applicant, then the Resolution
Applicant shall settle the airport and parking charges
(estimated at approx. Rs. 240 Crores, as of August 31,
2020). Savings from such charges will be distributed to the
Assenting Financial Creditors. If the airport and parking
charges over are over Rs. 245 Crores, then amounts over
and above Rs. 245 Crores will be first paid out of Rs. 25
Crores reserved as CIRP Costs (if there are no outstanding
CIRP Costs) and then out of the positive cash flows of
the Corporate Debtor. Any amounts over and above such
amounts will be shared between the Resolution Applicant
and the Assenting Financial Creditors in equal proportion.
(j) The Resolution Applicant states that if the CIRP Cost is
less than the estimated amounts and the airport dues are
less than Rs. 245 Crores, then the differential amounts will be
paid by the Resolution Applicant to the Assenting Financial
Creditors, which amounts are over and above the amounts
reserved for them this Resolution Plan. However, if the CIRP
Cost exceeds the current estimates, then the CIRP Costs
will be paid by the Resolution Applicant as per actuals in
compliance with the provisions of the IBC and commercial
proposal for other creditors of the Corporate Debtor will be
adjusted accordingly, subject however to a maximum of Rs.
475 Crores. It is clarified that on account of such payments
from the amounts infused by the Resolution Applicant in the
Corporate Debtor, the pay-outs towards other claimants as
currently stated will be reduced proportionately to account
for such additional CIRP Costs, subject to a minimum
payment of liquidation value to the Operational Creditors
and Dissenting Financial Creditors of the Corporate Debtor
and subject to a maximum of Rs. 475 Crores.
(k) The outstanding CIRP Costs shall be paid by
the Resolution Applicant out of funds infused by the
2066 [2024] 11 S.C.R.

Supreme Court Reports

Resolution Applicant in the Corporate Debtor and as per
the Implementation Schedule set out in Clause 7.7 below.
[…]
(m) Priority of Payment CIRP Cost shall be fully paid and
discharged after the Effective Date before payment is
made to any of the Creditors as per the Resolution Plan.
The Resolution Applicant will be entitled and will use funds
available with the Corporate Debtor on the Effective Date
for making any portion of CIRP payments.
(n) The Resolution Applicant has sufficient funds and do
not envisage any challenge in terms of source for making
such payments. The net worth and financial capabilities
of the Resolution Applicant are evident from its financial
statements submitted at the time of submitting its EOI.
Regarding the Source of Funds, the CIRP Costs shall be
met out of funds infused by the Resolution Applicant in
the Corporate Debtor.
xxx xxx xxx
6.4.2. Treatment of Employees/Workmen dues,
including dues of Authorized Representatives of
Employees/ Workmen
(a) The Resolution Applicant proposes to pay a fixed sum
of Rs. 52 Crores to the Workmen/ Employees towards
settlement of all the claims made by the Employees
and Workmen of the Corporate Debtor, including to the
Authorized Representatives of Employees and Workmen
as set out in the List of Creditors (“Admitted Workmen
and Employees Dues”).
(b) The payments towards Admitted Workmen and
Employees Dues shall be made out of funds infused by
the Resolution Applicant in the Corporate Debtor and as
per the Implementation Schedule set out in Clause 7.7
below. The said payment is also being made in priority to
the payment to the financial creditors.
(c) In any case, if the Liquidation Value due to Operational
Creditors (Employees/ Workmen dues, including dues of
the Authorized Representatives of Employees/ Workmen)
[2024] 11 S.C.R. 2067

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

is not “NIL”, then the Resolution Applicant undertakes that
the Liquidation Value due to such Operational Creditors
(Employees/ Workmen dues including dues of Authorized
Representatives of Employees/ Workmen) shall be paid
and shall be given priority in payment over Financial
Creditors as is already reflected in the Implementation
Schedule in Clause 7.7 below. The entire payment to the
Employees/ Workmen dues including dues of Authorized
Representatives of Employees/ Workmen is being made
in priority within 175 (one hundred seventy five) days from
the Effective Date.
[…]
(g) Other than Admitted Workmen and Employees Dues
which the Resolution Applicant proposed to pay, all other
potential obligations and workmen dues including any
dues towards Provident Fund (Contribution of Employees /
Company), Gratuity, Employees State Insurance Scheme,
Professional Tax or any other taxes in nature of employment
owed or payable to, (including any demand for any penalty,
penal interest already accrued/ accruing or in connection
with any claims) and all rights and entitlements of present
or past, direct or indirect, permanent or temporary,
employees and/or workmen of the Corporate Debtor,
whether admitted or not, due or contingent, asserted
or unasserted, crystalized or uncrystallized, known or
unknown, secured or unsecured, disputed or undisputed,
present or future, whether or not set out in the balance
sheet of the Corporate Debtor or the profit and loss account
statements of the Corporate Debtor or the List of Creditors,
claim submitted or not submitted, claim admitted or not
admitted, in relation to any period prior to the ICD will be
written off in full and shall be deemed to be permanently
extinguished and waived off subject to Clause 9.9 of this
Resolution Plan by virtue of the order of Adjudicating
Authority approving the Resolution Plan and neither the
Corporate Debtor nor the Resolution Applicant shall, at no
point of time be, directly or indirectly, held responsible or
liable in relation thereto.
[…]
2068 [2024] 11 S.C.R.

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(i)(xi) For the avoidance of doubt it is hereby clarified that
notwithstanding the acceptance or rejection of the terms of
the proposed demerger by the employees and/or workmen,
the Resolution Applicant shall ensure the payment of (i)
minimum value due and payable to such employees and
workmen (under Section 30(2) of the IBC); and (ii) the CIRP
costs admitted by the Resolution Professional, subject to
a maximum of Rs. 475 Crores.
xxx xxx xxx
6.4.4. Treatment of Financial Creditors
[…]
Summary of payments and security package
Head Amount Security Value of Date of Date of
Payable Offered Security Creation Release of
of Security
Security
Cash Up to Rs. PBG of Rs. Rs. 393.5 Effective PBG
Payment 185 Crores 47.5 Crores Cr (with Date adjusted
BKC)
BKC Property To be
(if given) released on
sale of BKC
Or
Mortgage over Year 5 or
Dubai on complete
payment,
Property No. Rs. 147.5
whichever
1 valued at Cr is earlier
more than Rs. (without
100 Crores BKC)
Cash Rs. 195 BKC Property Rs. 445 Effective To be
Payment Crores (if given) Cr Date released on
sale of BKC
(with
Mortgage over BKC) Effective Year 5 or
Dubai Date on complete
payment,
Property No.
whichever
1 valued at Or
is earlier
more than Rs.
100 Crores
Mortgage over Rs. 200 Effective
Dubai Cr Date
Property No. (without
2 valued at BKC)
more than Rs.
100 Crores
[2024] 11 S.C.R. 2069

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

Cash NPV of Mortgage over Rs. 600 Effective Year 5 or
Payment Rs. 391 Dubai Crores Date on complete
Crores payment,
Property No.
(using the whichever
1 valued at
discount is earlier
more than Rs.
rate 100 Crores
specified
in the Mortgage over Effective
Evaluation Dubai Date
Matrix) Property No.
2 valued at
more than Rs.
100 Crores
Mortgage over Effective
Dubai Date
Property No.
3 valued at
more than Rs.
50 Crores.
Floating Effective
charge Date
by way of
hypothecation
on India POS
Credit Card
Receivables of
Year 3, Year
4, Year 5 of
the Corporate
Debtor of Rs.
350 Crores
or the total
outstanding
dues of the
Assenting
FCs,
whichever is
lower.
Upside Rs. 60 Three 737s; BV of Rs. Effective On sale of
on Crores + Five 777s & 1,900 Date relevant
Aircrafts upside as aircraft(s)
per terms Three A330 as it could
of Series B be sold in
ZCB Lots and in
phases or
on relevant
redemption
date,
whichever
is earlier.
2070 [2024] 11 S.C.R.

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Upside Rs. 15 Entire ATR BV of Rs. Effective On sale of
on ATR Crores + Inventory 134 Cr Date ATR
Inventory upside as
Inventory
per terms
on relevant
of Series C
redemption
ZCB
date,
whichever
is earlier.
Upside Rs. 50 Aircraft Spares BV of Rs. Effective On sale of
on Crores + 600 Cr Date Spares on
Spares upside as relevant
per terms redemption
of Series D date,
ZCB whichever
is earlier.

(a) COMMITTED CASH PAYMENTS
(i) The Resolution Applicant will pay the Assenting
Financial Creditors a total sum of Rs. 185 Crores on
180th day from the Effective Date. If the BKC Property
is not provided to the Resolution Applicant as per the
proposal stated in Clause 6.3.1(d), then the Resolution
Applicant will pay the Assenting Financial Creditors, a
total sum of Rs. 175
Crores on 180th day from the Effective Date. The said
amounts shall be paid on the following principal terms:

Amount Payable Up to Rs. 185 Crores/ up to Rs. 175 Crores

Payable By Jet Airways (India) Limited

Payable To Financial Creditors against conversion of
admitted claims of equivalent amount.

Date of Payment 180th day from the Effective Date.

Security ● Performance bank guarantee of Rs. 47.5
Crores
● Mortgage over BKC Property (if given to the
RA).
● Mortgage over Dubai Property No. 1 valued
at more than Rs. 100 Crores.

Date of creation of Effective Date
security
[2024] 11 S.C.R. 2071

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

Date of release of ● BKC Property - On sale of BKC Property (if
Security given to the RA) or on the date of payment,
whichever is earlier.

● Charge over Dubai Property No. 1 with
respect to this payment will be released on
the date of payment.

Security Related RBI approval required for creating charge
Terms over Dubai Property No. 1 will be applied after
the CoC approves this Resolution Plan. If the
RBI approval for creating such charge is not
received by the Effective Date, then alternate
security will be provided in India of equivalent
value on the Effective Date.

Event of Default Corporate Debtor’s failure to make such
committed payment

Consequences of Enforcement of security for recover the
Event of Default outstanding amounts.

Governing Law and Indian Law and courts of Mumbai will have
Jurisdiction exclusive jurisdiction.

xxx xxx xxx
6.4.12. Request for the consideration of the CoC - As
required under the RFRP, the Resolution Applicant shall
provide the performance security bank guarantee (“PBG”)
for a total sum of Rs. 150 Crores. The PBG will be provided
in two parts, with the first PBG of Rs. 47.5 Crores provided
within 7 (seven) days from the date of receipt of LOI; and
PBG for the remaining sum of Rs. 102.5 Crores provided
on the Effective Date.
7.3. Compliance with respect of Regulation 36B (4A)
The Resolution Applicant undertakes to provide the
performance security bank guarantee as per the terms
of the RFRP in favour of “State Bank of India” (in its
capacity as an agent of the CoC (and acting on behalf of
the Corporate Debtor)), within 7 (seven) days of it being
declared the “Successful Resolution Applicant”, or by way
of a direct deposit by way of the real time gross settlement
system into a bank account held by the SBI Bank, as per
the terms of the RFRP.
xxx xxx xxx
2072 [2024] 11 S.C.R.

Supreme Court Reports

7.1. Term of the Resolution Plan
7.1.2. The effectiveness and implementation of the
Resolution Plan by the Resolution Applicant shall be subject
to the approval of the NCLT. Notwithstanding anything
set out in this Resolution Plan, the implementation of this
Resolution Plan by the Resolution Applicant shall not be
conditional upon satisfaction of any conditions, other than
approval of the NCLT.
7.6. Conditions to the Implementation of the Resolution
Plan
7.6.1. Conditions Precedent - The obligation of the
Resolution Applicant to re-commence operations as
an aviation company, being the business proposed to
be acquired is subject to the fulfilment of the following
conditions after the Approval Date (“Conditions Precedent”):
(a) Validation of AOP of the Corporate Debtor by DGCA
& MoCA - The AOP of the Corporate Debtor shall
have been validated by the DGCA, the MoCA and
any other relevant Government Authority and grant
of all other mandatory approvals to the Corporate
Debtor to enable it to re-commence flying operations
(including commercial/ cargo operations) and related
on-ground services.
(b) Submission and approval of the Business Plan
to DGCA & MoCA - The Business Plan of the
Resolution Applicant shall have been submitted
after the Approval Date to the DGCA and MoCA for
their review, and approval. The Resolution Applicant
agrees to modify its business plan to incorporate all
reasonable changes required by the DGCA/ MoCA,
which otherwise does not make the business unviable
for the Resolution Applicant.
(c) Slots Allotment Approval - The DGCA and MoCA
shall have approved the reinstatement of all the
suspended slots (including the bilateral rights and
traffic rights) back to Jet Airways/ Corporate Debtor.
The slots (along with related bilateral rights and
[2024] 11 S.C.R. 2073

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

traffic rights) can be allotted to the Corporate Debtor
gradually as per its Business Plan with immediate
slots allotment approval (along with related bilateral
rights and traffic rights) for sectors on which Jet
2.0 proposes to recommence operations after the
Effective Date.
(d) International Traffic Rights Clearance - The Corporate
Debtor shall have received the International Traffic
Rights Clearance in compliance with Applicable Laws.
(e) Demerger - The Scheme filed as part of this
Resolution Plan shall have been approved under
Applicable Laws and the Demerged Employees
shall have demerged from the Corporate Debtor to
AGSL along with all their past dues, liabilities and
outstanding’s with effect from the Approval Date,
without the requirement of any further consent or
approval of any other stakeholder of AGSL (since we
understand that AGSL currently does not have any
creditor) or any stakeholder of the Corporate Debtor
(including existing or past employee or workmen or
employees’ unions of the Corporate Debtor).
7.6.2. Fulfilment of Conditions Precedent - The date
of fulfilment of all the Conditions Precedent as stated
in Clause 7.6.1 above shall be the effective date for the
purposes of this Resolution Plan (“Effective Date”).
7.6.4. Automatic Withdrawal - The Resolution Applicant
is confident of completing all the Conditions Precedent
(as set out in Clause 7.6.1 above) within 90 (ninety) days
from the Approval Date. In the unlikely event that all the
Conditions Precedent cannot be fulfilled within 90 (ninety)
days, the Resolution Applicant takes the responsibility of
completing the outstanding Conditions Precedent at the
earliest and seeks to extend the Conditions Precedent
fulfilment period by another term of maximum 180 (one
hundred and eighty) days. If all the Conditions Precedent
are not fulfilled within such period (i.e. 270 (two hundred
and seventy) days from the Approval Date), then this
Resolution Plan shall automatically stand withdrawn without
2074 [2024] 11 S.C.R.

Supreme Court Reports

any further acts, deeds, or things. On such withdrawal,
the members of the Resolution Applicant in the Monitoring
Committee shall resign, and the remaining members of
the Monitoring Committee shall assume absolute control
of the Corporate Debtor.
7.7. Implementation Schedule -
7.7.1. The Resolution Applicant shall take the following
steps in the order of sequence (except otherwise mentioned
in any step for any part of the step) as an integral part
of the Resolution Plan. It is provided that the procedure,
timelines and the sequence of steps listed below are only
indicative and that they may be re-arranged/ changed as
may be required or directed based on discussions with
the necessary Governmental Authorities/ stock exchange
(on account of past non-compliances of the Corporate
Debtor or otherwise) or for the purposes of advancing
any payments to the stakeholders, and at all times in
compliance with Applicable Laws:
Step Activity Days
1. Receipt of approval from the Competition Before
Commission of India under the provisions of the approval of
Competition Act, 2002 read with the provisions Resolution
of the IBC. Plan by CoC
2. Declaration of the Successful Resolution Applicant X
and Receipt of LoI from the CoC
3. Unconditional acceptance of the LoI X+3
4. Issuance of Performance Security Bank Guarantee X+7
5. Finalization of the members of the Monitoring Between X
Committee and Approval
Date
6. Approval Date Y
7. Monitoring Committee to take control as per Y
Clause 7.8.2.
8. Fulfilment of Conditions Precedent as per After Y
Clause 7.6.1
9. Filings of the certified copy of the Order of Approval Y + 10
received from Adjudicating Authority sanctioning
the Resolution Plan with the relevant Government
Authorities/ Stock Exchange/ Departments.
10. Effective Date Z
[2024] 11 S.C.R. 2075

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

11. Infusion of Rs. 350 Crores in the Corporate Z + 150
Debtor
12. Setting up the Contingency Fund Z + 170
13. Cancellation of Shares (excluding Public Shares) Z + 170
as per Clause 7.4.1(c).
14. Reconstitution of Share Capital as per Clause Z + 170
7.4.2 above.
15. Steps towards issuance of equity shares as per Z + 170
Clause 7.4.3
above.
16. Payment of CIRP Costs as per Clause 6.4.1. Z + 170
17. Payment to the Operational Creditors (Workmen and Z + 175
Employees, including Authorized Representatives
of Workmen and Employees) as per Clause 6.4.2.
18. Payment to all the Operational Creditor (other Z + 175
than Workmen and Employees) as per Clause
6.4.3 above.
19. Payment to Other Creditors and Stakeholders as Z + 175
per Clause 6.4.5, Clause 6.4.6, 6.4.7, and 6.4.8
20. Payment to Dissenting Financing Creditors as per Z + 176
Clause 6.4.4(m)(i).
21. 1st Tranche payment to Financial Creditors as per Z + 180
Clause 6.4.4.
22. Monitoring Committee to be released and Z + 180
Reconstituted Board of Directors to take over the
management of the Corporate Debtor.
23. Closing Date. Z + 180
24. Redemption of Series B, Series C; and Series Z + 365
D ZCBs
25. Necessary statutory approvals Y + 365
(in
accordance
with Sec
31(4) of the
IBC)
26. Redemption of Series A ZCB Z + 730
27. Release of charge (if any) over assets of the Z + 730
Corporate Debtor (which have not been previously
released).
28. Redemption of NCDs and release of any charge Z + 5 Years
(if any)

xxx xxx xxx
2076 [2024] 11 S.C.R.

Supreme Court Reports

9.4. Implementation - The performance guarantee
provided by the Resolution Applicant can be invoked in
accordance with the terms of the RFRP.”
5. The RP preferred an application under Section 30(6) read with
Section 31 of the IBC, 2016 before the NCLT seeking approval of
the Resolution Plan submitted by Respondent No.1 and vide order
dated 22.06.2021, the NCLT approved the Resolution Plan. In
view of the uncertainty regarding the achievement of the “Effective
Date” under Clauses 7.6.2 and 7.6.4 of the Resolution Plan, it was
clarified that the same would be fixed on the 90th day from the Plan
Approval Order dated 22.06.2021. Respondent No.1 was also given
liberty to approach the NCLT for appropriate orders with respect to
an extension of the timeline, subject to a maximum of another 180
days, in case they fail to fulfill all the Conditions Precedent within
90 days. The relevant observations are reproduced hereinbelow:
“33. During the hearing, the uncertainty of the time frame
for implementation of the Resolution Plan was discussed.
It is stated by the SRA in clause no. 7.6.2 (pdf 276) of
the Resolution Plan that the effective date would mean
the date of the fulfilment of all the conditions precedent
as stated in clause 7.6.1 thereof. The SRA, at clause no.
7.6.4, has gone on to add that the consortium would make
all endeavor to ensure all the compliances are done for the
fulfillment of the conditions precedent within a period of 90
days. In the unlikely event that the conditions precedent
are not complied within this period, SRA would require a
maximum of 180 days more to fulfil the conditions. Failing
which the Resolution Plan would stand automatically
withdrawn without any further act, deed or thing. In view of
such uncertainty in the ‘effective date’ the Bench suggested
that let the effective date be the 90th day from the Approval
Date (clause 3.1 at pdf page 201). The SRA as well as
the Applicant (RP of the Corporate Debtor) had agreed
to the suggestion. This in our opinion is not in the nature
of a substitution or addition to the decision, commercial
or otherwise, of the CoC. The suggestion is made only to
give finality and certainty to the effective date, which the
SRA has otherwise committed in the Resolution Plan to
endeavor to do. It could accordingly be ordered so. Failing
[2024] 11 S.C.R. 2077

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

which the SRA / Corporate Debtor would be at liberty to
approach this Authority for appropriate orders with regard
to extension of the timeline, as would be deemed proper.
That would help prevent the SRA from the frustration of
‘automatic withdrawal’ referred to in clause 7.6.4 of the
Resolution Plan.”
(emphasis supplied)

6. Since the initial period of 90 days for fulfilment of the Conditions
Precedent expired on 22.09.2021, an extension of another 90 days
was granted by the NCLT vide order dated 29.09.2021 (1st extension).
The 1st extension of 90 days expired on 22.12.2021. The NCLT vide
order dated 20.01.2022, again, granted an extension of another
90 days (2nd extension). The 2nd extension of 90 days expired on
22.03.2022. The maximum extension that could have been provided
under Clause 7.6.4 of the Resolution Plan i.e., an additional 180 days,
had now come to an end. However, vide order dated 11.04.2022, the
NCLT granted exclusion of a period of 65 days from 17.01.2022 to
22.03.2022, which was spent in moving the application for grant of
time. This finally extended the time for achieving the Effective Date
from 22.03.2022 to 25.05.2022 (3rd extension).
7. On 20.05.2022, Respondent No.1 obtained the Air Operation
Certificate (hereinafter, the “AOC”) and asserted that all the Conditions
Precedent required under Clause 7.6.1 of the Resolution Plan had
been met and that the Effective Date in accordance with Clause 7.6.2
had been achieved. As a consequence, Respondent No.1 had 180
days from 20.05.2022 i.e., until 16.11.2022 to infuse an amount of
Rs. 350 Crore in the Corporate Debtor as per Clause 6.3.1(g) and the
Implementation Schedule under Clause 7.7.1 of the Resolution Plan.
8. The workmen and employees of the Corporate Debtor and several
Operational Creditors challenged the order of the NCLT dated
22.06.2021 by which the Resolution Plan was approved before the
NCLAT. Vide order dated 21.10.2022, the NCLAT upheld the order
of the NCLT dated 22.06.2021. However, it was observed that the
workmen and employees are entitled to the payment of their full
provident fund and gratuity which was unpaid as on the insolvency
commencement date and that the balance of the above dues should
be paid by the Successful Resolution Applicant i.e., Respondent No.1,
in order to satisfy its statutory obligations. It was further stated that
2078 [2024] 11 S.C.R.

Supreme Court Reports

“Non-payment of full PF and Gratuity shall lead to violation of Section
30(2)(e) and hence, to save the plan, the above payments have to
be made”. On 20.12.2022, Respondent No.1 preferred Civil Appeal
Nos. 465-469 of 2023 against the aforesaid order dated 21.10.2022
passed by the NCLAT, before this Court.
9. It is the case of Respondent No.1 that between May 2022 and
October 2022, the Appellants disputed the fulfilment of the Conditions
Precedent by Respondent No.1 on one ground or another. Therefore,
on 18.10.2022, Respondent No.1 filed two Interim Applications – First,
IA No. 3398 of 2022 (hereinafter, “Implementation Application”)
before the NCLT seeking necessary directions for the implementation
of the Resolution Plan and a declaration that all the Conditions
Precedent have been fulfilled; Second, IA No. 3508 of 2022
requesting that the period from 20.05.2022 till the date on which
the Implementation Application would be decided by the NCLT be
excluded for the purpose of calculating 180 days from the Effective
Date, for the purpose of making the first tranche payment of Rs.
350 Crore.
10. The NCLT allowed both the aforesaid IAs and vide its common order
dated 13.01.2023 held that all the Conditions Precedent have been
duly complied with and therefore, 20.05.2022 would be the Effective
Date. Further, it excluded the period from 20.05.2022 to 16.11.2022
(180 days) from the period of 180 days within which the first tranche
payment had to be made, in the interests of justice and to achieve
the primary objective of maximization of assets and resolution of
the Corporate Debtor. As a consequence, the deadline to meet with
the first tranche payment obligation of Rs. 350 Crore was extended
till 15.05.2023 (hereinafter, “1st implementation extension”). The
appellants challenged this common order dated 13.01.2023 passed
by the NCLT before the NCLAT by way of Company Appeal (AT)
(INS) Nos. 129-130 of 2023 (hereinafter, “Company Appeal”) and
also sought a stay on the same.
11. On 30.01.2023, this Court dismissed Civil Appeal Nos. 465-469 of
2023 filed by Respondent No.1 and upheld the order dated 21.10.2022
passed by the NCLAT. In such circumstances, Respondent No.1 was
obliged to pay the full provident fund and gratuity that the workmen
and employees were entitled to within 180 days from the Effective
Date.
[2024] 11 S.C.R. 2079

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

12. The NCLAT vide its order dated 03.03.2023, declined to stay the
order dated 13.01.2023 passed by the NCLT while observing that the
steps regarding the implementation of the Resolution Plan have to
be taken by the SRA which needs to be overseen by the Monitoring
Committee. On 17.04.2023, the Appellants filed Civil Appeal Nos.
3736-3737 of 2023 before this Court against the order of the NCLAT
declining the grant of stay.
13. Since 15.05.2023 was fixed as the deadline to make the first tranche
payment of Rs. 350 crore, Respondent No.1, on 11.05.2023, filed
IA Nos. 2028-2029 of 2023 respectively before the NCLAT in the
Company Appeal for the purpose of seeking exclusion of the period
from 16.11.2022 till the time the Company Appeal is decided from
the calculation of 180 days stipulated for the infusion of first tranche
of funds under the Resolution Plan. Immediately thereafter, on
17.05.2023, IA Nos. 2059-2060 of 2023 in the Company Appeal were
also filed by Respondent No.1 seeking to restrain the Appellants
from encashing or appropriating the Performance Bank Guarantee
and Earnest Money deposited by Respondent No.1 in favor of the
Appellants under the Resolution Plan.
14. The NCLAT vide its common order dated 26.05.2023, stated that the
period between 16.11.2022 and 03.03.2023 (107 days) be excluded
from the calculation of 180 days for the infusion of first tranche of
funds under the Resolution Plan and also held that the Appellants
could invoke the PBG only with the leave of the NCLT. This, effectively,
extended the period to infuse Rs. 350 Crore under the first tranche
till 31.08.2023 (2nd implementation extension). Soon thereafter, on
13.06.2023, the Appellants filed Civil Appeal Nos. 4131-4134 of 2023
against the common order dated 26.05.2023 passed by the NCLAT.
15. On 16.06.2023, Respondent No. 1 filed two other IA Nos. 3789-3790
of 2023 (hereinafter, “Gratuity Application”) in the Company Appeal
requesting that they be allowed to discharge the gratuity claims of the
employees and workmen of the Corporate Debtor in three tranches and
also allow them to approach the EPFO authorities in order to reduce
or waive off the claim towards damages amounting to Rs. 24.4 Cr
imposed on the Corporate Debtor or grant permission to challenge the
imposition of damages in an appeal before the appropriate authority.
16. In the meantime, vide letter dated 27.07.2023, the Office of the
Director General of Civil Aviation, Government of India (hereinafter,
2080 [2024] 11 S.C.R.

Supreme Court Reports

“DGCA”) extended the validity of the AOC issued to the Corporate
Debtor until 03.09.2023 subject to certain conditions. The relevant
extracts from the letter are reproduced hereinbelow:
“Sir,
Reference is invited to Jet Airways Letter dated 16.05.2023
followed by email dated 12.06.2023 and discussions with
Sh Ankit Jalan, representative of Jalan-Kalrock Consortium
(SRA) on 14.07.2023 and 27.07.2023 regarding extension
of validity of AOC.
2. In view of the fact that Jet Airways is still undergoing CIRP
under IBC, 2016, NCLT and NCLAT having the jurisdiction
in respect of the insolvency of the Company have granted
extension(s)/exclusion(s) of time for implementation of the
approved Resolution Plan upto 03.09.2023, the AOC No. 6A
in respect of Jet Airways (India) Ltd. shall be considered as
valid until 03.09.2023, subject to the following conditions:-
i. This extension shall be applicable only for the limited
purpose of completing the ongoing CIRP.
ii. Jet Airways shall be required to undergo re-certification
in accordance with the procedure contained in
CAP 3100, as applicable for issuance of AOC
and demonstrate compliance of all the applicable
regulatory requirements afresh before commencement
of flight operations.
iii. Fee as applicable for issuance of AOC, shall be
payable for such re-certification.
iv. Jet Airways shall submit a firm action plan for revival
of operations after the company is taken over by
the SRA in accordance with the NCLT approved
resolution plan.
This issues with the approval of the Director General.”.
17. While the Company Appeal was pending before the NCLAT, the
Appellants filed an Affidavit dated 16.08.2023 (hereinafter, “Lender’s
Affidavit”) before the NCLAT. The Lender’s Affidavit provided that,
if Respondent No.1, firstly, infuses Rs. 350 Crore by 31.08.2023;
secondly, complies with the payment obligations to the workmen and
[2024] 11 S.C.R. 2081

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

employees, and; thirdly, scrupulously follows the other terms and
conditions of the Resolution Plan - the Appellants would not contest
the issues relating to the grant of exclusion/extension of time as well
as the issue relating to the compliance of all Conditions Precedent by
the Respondent and would withdraw the Company Appeal pending
before the NCLAT along with the Civil Appeals filed before this Court.
The Lender’s Affidavit also provided that, upon failure to comply with
the aforesaid conditions, the Corporate Debtor should be directed to
go into liquidation. This opportunity was given to Respondent No.1/
SRA as a one-time measure. Para 8 of the Lender’s Affidavit which
stipulates these conditions is reproduced hereinbelow:
“8. In the present appeal, the lenders are agreeable that
in case;
a) SRA infuses Rs. 350 Crores by 31.08.2023, the date
by which said payment is to be made as per the
Resolution Plan, read with Order dated 26.05.2023
passed by this Hon’ble Tribunal; and
b) SRA Undertakes to scrupulously follow the other terms
and conditions of the resolution plan and
c) SRA complies with the liabilities relating to payment
to the employees as per order of NCLAT dated
21.10.2022 which has been upheld by the Hon’ble
Supreme Court in its order dated 30.01.2023,
the Lenders would not contest the issues relating to
granting of exclusion/extension of time (in terms of the
orders dt. 13.01.2023 passed by NCLT and order dt.
26.05.2023 passed by this Hon’ble Tribunal) as well
as on the issue relating to compliance of condition
precedent by the SRA and accordingly undertakes
to withdraw the present Company Appeal (AT) Ins
129-130 of 2023 which is pending adjudication before
this Hon’ble Tribunal along with Civil Appeal Nos.
4131-34 of 2023 & 3736-37 of 2023 filed before the
Hon’ble Supreme Court, on the said two issues. In
other words, lenders would not contest the granting
of exclusions as well as on the issue regarding the
compliance of Conditions Precedent, in case the
aforesaid steps are taken by SRA without any further
2082 [2024] 11 S.C.R.

Supreme Court Reports

delay. Failing to comply with the conditions mentioned
in Para 8(a) to (c) above, the Corporate Debtor should
be directed to go into liquidation.”
18. In response to the aforesaid Lender’s Affidavit, Respondent No.1
on 18.08.2023 filed IA Nos. 3801 and 3802 of 2023 (hereinafter,
“Adjustment application”) in the Company Appeal seeking inter
alia – First, a direction to the Appellants to adjust the PBG of Rs. 150
Crore towards part payment of the first tranche under the Resolution
Plan; second, to allow Respondent No.1 to infuse Rs. 100 Crore as
share application money on or by 31.08.2023 and; thirdly, to allow
Respondent No.1 to infuse the remaining Rs. 100 Crore as share
application money on or before 30.09.2023. Through these applications,
Respondent No.1 further urged that, in the event the Gratuity Application
was not allowed, the Resolution Plan would not be implemented and
in such eventuality, the Appellants and the Corporate Debtor may be
directed to refund all the amounts infused or deposited by Respondent
No.1. including the share application money and the PBG.
19. The NCLAT, vide its order dated 28.08.2023, partly allowed the
Adjustment Application so far as the payment of the first tranche
of Rs. 350 Crore was concerned and stated that as regards the
prayer with respect to the Gratuity Application, the submissions
required further consideration. The PBG of Rs. 150 was allowed
to be adjusted against the first tranche payment and the remaining
Rs. 200 Crore was allowed to be infused on or by 31.08.2023
and 30.09.2023 respectively. Therefore, the deadline to infuse the
aforesaid amount and implement the Resolution Plan was further
extended to 30.09.2023 (3rd implementation extension). Immediately
thereafter, the Appellants filed Civil Appeal Nos. 6427-6428 of 2023
before this Court against the aforesaid order dated 28.08.2023
passed by the NCLAT.
20. Meanwhile, on 03.09.2023, the conditional AOC issued by the DGCA
came to an end. Before the expiry of the 3rd implementation extension
i.e., 30.09.2023, Respondent No. 1 had deposited an amount of Rs.
200 Crore. However, it is the case of the Appellants that the manner
of infusion of the same was in contravention of the Resolution Plan,
specifically Clause 2.1.5, since Respondent No.1 infused a portion
of the funds through a third party, thereby inducting them into the
Resolution Plan as a shareholder.
[2024] 11 S.C.R. 2083

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

21. Before this Court, the following three Interim Orders passed by the
NCLAT came to be challenged by the Appellants over a period of time:
i) Civil Appeal Nos. 3736-3737 of 2023 challenging the Interim
Order dated 03.03.2023 passed by the NCLAT by which it
declined to stay the NCLT Order dated 13.01.2023 which held
that all the Conditions Precedent had been fulfilled;
ii) Civil Appeal Nos. 4131-4134 of 2023 challenging the Interim
Order dated 26.05.2023 passed by the NCLAT through which
the NCLAT restrained the Appellants from invoking the PBG
and extended the time for infusion of first tranche payment of
Rs. 350 Crore up to 31.08.2023; and
iii) Civil Appeal Nos. 6427-6428 of 2023 challenging the Interim
Order dated 28.08.2023 passed by the NCLAT allowing the
PBG of Rs. 150 Crore to be adjusted against the first tranche
payment and allowing the remaining amount of Rs. 200 Crore
to be infused by 30.09.2023.
22. All the aforementioned appeals were heard together and vide common
judgment and order dated 18.01.2024, this Court held that the PBG
cannot be permitted to be adjusted against the first tranche payment
and therefore, directed that the amount of Rs. 150 Crore be infused
in cash on or before 31.01.2024 (4th implementation extension).
In the event of failure by Respondent No.1 to infuse the said amount
within the said date, this Court held that the consequences under
the Resolution Plan would follow. It disposed of the appeals as thus:
“25. The lenders have argued in the appeals that there
has been a failure on the part of the successful resolution
applicant to comply with the conditions precedent. If the
successful resolution applicant were to comply with the
terms as envisaged in SBI's affidavit dated August 16,
2023, evidently issues pertaining to compliance with the
conditions precedent were not to be pressed thereafter.
In order to furnish this successful resolution applicant a
final opportunity to comply and consistent with the above
position, we issue the following directions:
(i) The successful resolution applicant shall peremptorily
on or before January 31, 2024, deposit an amount of Rs.
150 crores into the designated account of SBI, failing
2084 [2024] 11 S.C.R.

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which the consequences under the resolution plan
shall follow;
(ii) The performance bank guarantee of Rs. 150 crores shall
continue to remain in operation and effect, pending the final
disposal of the appeal before the National Company Law
Appellate Tribunal, and shall abide by the final outcome of
the appeal and the directions that may be issued by the
National Company Law Appellate Tribunal; and
(iii) Whether or not the successful resolution applicant has
been compliant with all the conditions of the resolution
plan as well as of the conditions set out in paragraph 8
of the affidavit dated August 16, 2023 shall be decided
by the National Company Law Appellate Tribunal in the
pending appeal.”
(emphasis supplied)

23. Respondent No.1 failed to deposit Rs. 150 Crore in cash by
31.01.2024 as directed by this Court. Therefore, on 27.01.2024,
Respondent No.1 filed Misc. Application Nos. 216-217 of 2024 in the
Civil Appeal Nos. 6427-6428 of 2023 seeking an extension of time
for making the deposit of Rs. 150 Crore. The same was dismissed
by us vide order dated 02.02.2024 as being misconceived in view
of our previous order dated 18.01.2024. This order is reproduced
hereunder:
“ORDER
1. The Miscellaneous Application is misconceived in view
of the final order passed by this Court on 18 January 2024.
2. The Miscellaneous Application is accordingly dismissed.
3 Pending applications, if any, stand disposed of.”
24. Later, the NCLAT, vide its impugned order dated 12.03.2024,
dismissed the Company Appeal filed by the Appellants against
the order of the NCLT dated 13.01.2023 while holding that
Respondent No.1 had fulfilled all the Conditions Precedent and
had also complied with all the other terms of the Resolution Plan.
The following were the concluding observations in the impugned
order of the NCLAT:
[2024] 11 S.C.R. 2085

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

“129. In view of our foregoing discussions and conclusions,
we dispose of these Appeals in the following manner:
1. The impugned order passed by the Adjudicating
Authority dated 13.01.2023 is upheld.
2. The Monitoring Committee and MC Lenders
as well as SRA are directed to take steps for
creation of charge over the Dubai Property No. 1,
Dubai Property No. 2, and Dubai Property No.3
within a period of 30 days from today. The SRA
to bear all necessary expenses for creation of
necessary charge.
3. The Performance Bank Guarantee of INR
150 Crores, which is lying with the Monitoring
Committee/MC Lenders, shall be adjusted
towards the first tranche payment of INR 350
crores as INR 200 crores have already been
paid by the SRA. By adjustment of PBG as per
the Resolution Plan, the first tranche of payment
of INR 350 crores shall be completed.
4. Steps shall be taken for re-constitution of the
shares as per the Resolution Plan forthwith.
5. Out of the first tranche payment of INR 350
crores, payments shall be made to the workmen
and employees and the creditors as per the
Resolution Plan, including the payment of CIRP
cost as per the Resolution Plan, which payment
shall be completed within 60 days from the date
of this judgment.
6. The SRA shall submit an Application for
re-issue of Air Operation Certificate which may
be obtained within 90 days from the date of
this judgment.
7. The closing date shall be 90th day from the
date of this judgment, on which date, handing
over of the Corporate Debtor to the SRA by
the Monitoring Committee shall be completed.
2086 [2024] 11 S.C.R.

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8. Towards the payment of provident fund dues, as
per the order dated 21.10.2022 passed by this
Tribunal in Company Appeal (AT) (Insolvency)
Nos. 643 of 2021, SRA has undertaken to make
payment of provident fund upfront along with
payment of dues of workmen and employees
as per the Resolution Plan, which payment of
INR 12 Crores as undertaken, shall be made
in addition to the payments as directed above.”
(emphasis supplied)

25. The aforesaid judgment and order of the NCLAT once again
extended the time limit for implementation of the Resolution Plan
and satisfaction of the first tranche payment obligation of Rs. 350
Crore to 11.04.2024 i.e., the date within which the creation of
charge over the various Dubai properties was to be completed (5th
implementation extension). The same charge has, admittedly, not
been created as on date.
26. In light of the above, the Appellants have challenged the aforesaid
impugned order of the NCLAT dated 12.03.2024 by way of the present
Civil Appeals filed under Section 62 of the IBC, 2016.

B. SUBMISSIONS ON BEHALF OF THE APPELLANTS
27. Mr. N. Venkataraman, learned ASG appearing for the Appellants
broadly classified his submissions into the following issues:
i. That the direction of the NCLAT in the impugned order dated
12.03.2024 allowing Respondent No.1 to adjust the PBG of
Rs. 150 Crore towards the first tranche payment of Rs. 350
Crore, runs counter to the judgement of this Court dated
18.01.2024. The Resolution plan mandates a cash infusion
and the question of PBG adjustment would arise only when the
three Dubai properties valued at Rs.250 crores are mortgaged
by Respondent No.1.
ii. That the NCLAT, through its impugned order dated 12.03.2024
erroneously limited the Airport Dues to Rs. 25 Crore and further
categorising it as a part of the CIRP costs especially when
the Resolution Plan obligates an upfront payment of Rs. 475
Crore towards Airport Dues. Such an error is glaring since the
[2024] 11 S.C.R. 2087

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

Resolution Plan clearly excludes the Airport Dues from the
ambit of CIRP costs.
iii. That the NCLAT while approving the Resolution Plan vide its
Order dated 21.10.2022 increased the workmen’s dues from Rs.
52 Crore to Rs. 289.2 Crore (which according to the appeals
filed by the workmen would be reduced to Rs. 226 Crore post
the demerger of the ground handling business). An appeal
against the order stood dismissed by this Court on 30.01.2023.
Therefore, it is a matter of concern that the impugned order of
the NCLAT limited the workmen’s compensation to a mere Rs.
12 Crore which is contrary to its earlier order dated 21.10.2022
as upheld by this Court on 30.01.2023.
iv. Clause 7.6.1 of the Resolution Plan deals with the five Conditions
Precedent and imposes an obligation on the SRA to fulfil the
same in order to recommence the operations of the Corporate
Debtor as an aviation company. The SRA could be said to
have breached three of these conditions i.e. Condition (a) on
obtaining the AOC; Condition (c) on obtaining the Slots Allotment
Approval, and; Condition (d) on obtaining the International Traffic
Rights Clearance. The NCLT, vide its order dated 13.01.2023
had held that the Conditions (a) and (c) stood fulfilled and
amended Condition (d) which effectively transformed it from a
condition precedent to a condition subsequent. Such erroneous
findings came to be wrongly affirmed by the NCLAT through its
impugned order dated 12.03.2024.

i. Issue No.1: Adjustment of PBG of Rs. 150 Crore towards
the first tranche payment
28. As far as the first tranche payment of Rs. 350 Crore is concerned,
it was submitted that a payment of only Rs. 200 Crore in cash has
been made and the SRA has failed to infuse the remaining Rs. 150
Crore in cash.
29. The learned ASG submitted that Clause 6.3.1(g) relating to the
“Infusion of Funds and Timelines” provides that the timeline for the
infusion of the upfront first tranche payment of Rs. 350 Crore was
within 180 days from the Effective Date. The clause also indicates the
manner in which the first tranche would be utilized and obligates a
distribution pattern towards the CIRP costs, contingent fund, payments
2088 [2024] 11 S.C.R.

Supreme Court Reports

to FCs, OCs, other creditors and other stakeholders, working capital
for business and miscellaneous administrative expenses.
30. The learned ASG then elaborated on the scope of Clause 7.7 of
the Resolution Plan which provides the “Implementation Schedule”
and requires that the Resolution Plan be completed within 5 years
from the Effective Date. According to this clause, the performance of
different obligations was to be completed within the said corresponding
timelines. S.No. 11 under this table specifically requires the infusion
of Rs.350 Crore in the Corporate Debtor by the SRA within “Z+150
days” where “Z” represents the Effective Date. The expression
“infusion” has been interpreted by this Court vide its judgement dated
18.01.2024 to mean “payment in cash”.
31. Reference was made by the learned ASG to the RFRP, more
particularly to Clauses 3.13.1, 3.13.2, 3.13.7(iii) and 3.13.9 which
mandate the execution of a PBG for an amount of Rs. 150 Crore
and also provide that the PBG cannot be set-off against or used
as a part of the consideration which the SRA proposes to offer in
relation to the company even if expressly indicated as such in the
successful Resolution Plan. It also provides for an automatic right to
invoke the PBG without any reference to the SRA, should the SRA
fail to implement the approved Resolution Plan in accordance with
the terms of the Resolution Plan and to the satisfaction of the CoC.
It was also submitted that vide Clauses 7.3 and 9.4 of the Resolution
Plan respectively the spirit and intention of the RFRP stood translated
into the Resolution Plan. Under Clause 7.3 of the Resolution Plan,
the SRA undertook to provide the PBG as per the RFRP and in
compliance with Regulation 36B(4A) of the 2016 Regulations. Clause
9.4 of the Resolution Plan authorizes the invocation of the PBG in
terms of the RFRP.
32. The learned ASG submitted that Clause 6.4.4 of the Resolution Plan
on “Treatment of Financial Creditors - Summary of payments and
Security package” under its tabular column evidently conveys the
mandate that the SRA is under an obligation to execute a mortgage
over the three Dubai properties i.e., Property No. 1 valued at Rs.
100 Crore, Property No.2 valued at Rs. 100 Crore and Property No.3
valued at Rs. 50 Crore. The table provides that the date of creation
of such security would be the Effective Date. This security had to be
created at the cost of the SRA. Therefore, the SRA was obliged to
[2024] 11 S.C.R. 2089

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

not only infuse an amount of Rs. 350 Crore within 180 days of the
Effective Date, but also execute the mortgage of the three Dubai
properties on the Effective Date. In other words, the Resolution
Plan obligated the SRA to satisfy the following twin conditions for
the PBG to be discharged – (a) infusing Rs. 350 Crore as the first
tranche payment and (b) executing a mortgage on the three Dubai
properties worth Rs. 250 Crore on the Effective Date. The learned
ASG submitted that, it is not in dispute that the NCLT vide its order
dated 11.04.2022 extended the time for achieving the Effective Date
to 25.05.2022 and Respondent No.1 claimed to have achieved the
same on 20.05.2022. Consequently, all the three Dubai properties
ought to have been mortgaged on or before 20.05.2022.
33. It was submitted that the Respondent SRA failed to make the first
tranche payment of Rs. 350 Crore despite the fact that it ought to
have been infused within 6 months from 20.05.2022. Instead, the
Respondent SRA continuously contended that the order of the NCLT
dated 13.01.2023 (holding that the Conditions Precedent have been
fulfilled) was challenged by the Appellants before the NCLAT and that
they could not therefore bring in Rs. 350 Crore since the Effective
Date had not yet materialized.
34. It was submitted that the Appellants filed the Lender’s Affidavit dated
16.08.2023 before the NCLAT and vide Para 8 of the Lender’s
Affidavit, the Appellants agreed not to contest the issues relating
to the grant of exclusion of time (granted by the Order of the NCLT
dated 13.01.2023 and the NCLAT dated 26.05.2023) and the issue
relating to the compliance with the Conditions Precedent. In the
said affidavit, the Appellants also agreed to withdraw the Company
Appeal pending before the NCLAT along with the Civil Appeal Nos.
4131-4134 of 2023 and Civil Appeal Nos. 3736-3737/2023 filed before
this Court. However, this would be subject to the fulfilment of the
three conditions imposed vide Para 8 by the SRA. The conditions
were that – firstly, the SRA infuses an amount of Rs. 350 Crore by
31.08.2023 i.e., the date by which the said payment is to be made
as per the Resolution Plan read with order dated 26.05.2023 passed
by the NCLAT; secondly, the SRA undertakes to scrupulously follow
the other terms and conditions of the Resolution Plan and; thirdly,
the SRA complies with the liabilities in relation to the payment to be
made to the employees as per the order of NCLAT dated 21.10.2022,
which has been upheld by this Court vide order dated 30.01.2023
2090 [2024] 11 S.C.R.

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35. It was submitted that in terms of Serial No. 11 under Clause 7.7.1
read with Clause 6.1.3(g), the SRA had to infuse cash amounting to
Rs 350 Crore and it was for this reason alone that Para 8(a) of the
Lender’s Affidavit refers specifically to the infusion of Rs. 350 crore in
cash by 31.08.2023. It was reiterated that the first tranche payment
had to necessarily be made in cash since such a requirement flows
from the Resolution Plan. It was not open to the SRA to contend
that the Resolution Plan had a different mode of payment namely,
the payment of Rs. 200 Crore in cash and Rs. 150 Crore by way
of adjusting the PBG. The learned ASG contended that none of
the clauses in the Resolution Plan stipulates such condition. To the
contrary, under Clause 6.4.4, the PBG could be released or adjusted
only upon the satisfaction of the twin requirements abovementioned.
Therefore, the assumption by the Respondent that the infusion of
Rs. 350 Crore emanates only out of the Lender’s Affidavit dated
16.08.2023, is totally incorrect. The Lender’s Affidavit has not and
cannot impose any condition over and above those which are
provided under the Resolution Plan. The Lender’s Affidavit was filed
to only set out a deadline for infusing Rs. 350 Crore by 31.08.2023,
which was subsequently extended by the order dated 28.08.2023
of the NCLAT to 30.09.2023. The Lender’s Affidavit only insisted on
compliance with payment obligations within specified timelines and
neither did it alter the Resolution Plan nor lay out new conditions.
36. The NCLAT in its order dated 28.08.2023 fell in error in allowing the
adjustment of PBG of Rs. 150 Crore as a part of the first tranche
payment. This is evident from the order of this Court dated 18.01.2024,
specifically under Para 21, wherein it was held that an infusion of Rs.
350 Crore would only mean an infusion by cash and the same could
not be substituted for the adjustment of PBG. This Court, further,
under Para 25 directed that a failure to make this payment on or
before 31.01.2024 would necessitate the consequences under the
Resolution Plan to follow. This Court further issued a direction that the
NCLAT shall decide whether the SRA had been compliant with all the
conditions contained in the Resolution Plan as well as the conditions
in Clause 8 of the Affidavit dated 16.08.2023. This Court made it
clear that the non-infusion of Rs. 150 Crore in cash would lead to
consequences both in terms of the Affidavit and also the Resolution
Plan since the condition insofar as infusion was concerned, remained
the same both in the Affidavit and in the Resolution Plan. Therefore,
[2024] 11 S.C.R. 2091

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

the observation of the NCLAT in the impugned order holding that
the consequences of non-deposit of Rs. 350 Crore was that “the
SRA was not entitled to take any benefit of the offer” is contrary to
the Resolution Plan and the order of this Court dated 18.01.2024.
37. This Court had directed a cash payment of Rs. 150 Crore on or before
31.01.2024 and the SRA had admittedly failed to remit the same.
Realizing that this would lead to the initiation of the consequences
under the Resolution Plan, Respondent No.1 had applied for an
extension before this Court which was declined outright as being
misconceived vide order dated 02.02.2024. Therefore, the SRA
having failed to make the payment and having breached this Court’s
order dated 18.01.2024, the NCLAT ought to have concluded that
the Resolution Plan had failed.
38. In the alternative, the ASG argued that, assuming without admitting
that the non-compliance of this Court’s Judgement dated 18.01.2024
would only have the consequence of bringing a closure to the offer
made in the Lender’s Affidavit dated 16.08.2023 and not have any
effect on the Appeal that was pending before the NCLAT, the NCLAT
while passing it’s final order dated 12.03.2024 ought to have insisted
on the payment of Rs. 150 Crore in cash. That would have been in
tune with the specific direction that was issued by this Court & the
intent with which the direction was issued, and the SRA having not
paid the same, had committed a breach of the Resolution Plan. The
NCLAT went to the extent of swapping the conditions laid out in the
Resolution Plan by directing the adjustment of the PBG first and the
execution of the mortgage on the three Dubai properties later i.e.,
within 30 days from its order dated 12.03.2024. It was submitted that
even the extension that was allowed for the execution of mortgage
expired on 11.04.2024 and the SRA continues to be a defaulter in
this regard as well.
39. The ASG vehemently contended that, there has been a triple breach
on the part of SRA – Firstly, breach of the Resolution Plan; secondly,
violation of the directions issued by this Court dated 18.01.2024
and; thirdly, the failure to execute the mortgage of the three Dubai
properties before 11.04.2024.
40. The ASG submitted that the impugned order of the NCLAT dated
12.03.2024 at Para 129, granted 30 days’ time to the SRA for the
creation of charge over the Dubai properties and directed the SRA
2092 [2024] 11 S.C.R.

Supreme Court Reports

to bear all the necessary expenses. It was submitted that there was
complete inaction on the part of the SRA for 29 days from the date
of the impugned order and on 10.04.2024 at 16:38 hours, the SRA
sent an email stating that they are willing to proceed with the security
creation of the Dubai properties and also informed that since its value
had reduced by Rs. 14 Crore, they would bridge the gap with an
additional property or a cash security. On the same date, another
email was sent by the SRA at 17:18 hours stating that an account
balance of Rs. 76.07 Lakh is available with the Appellants and the
same may be used to execute the mortgage. The ASG submitted
that the Appellants replied to the said communication on the same
day at 19:18 hours stating that:
(a) The assenting financial creditors on 13.10.2023 have appointed
Mashreq Bank to act as the agent for creation of the mortgage in
terms of the prevailing law in Dubai and the necessary amount
required to be paid to them had not yet been received.
(b) After the impugned order of the NCLAT came to be passed
on 12.03.2024, the Appellants sent an email on 22.03.2024
regarding the cost for the creation of a mortgage over the
properties located in Dubai, which had not been paid till date.
(c) That, instead of remitting the amount for creation of security
as already advised, the SRA was sending an email that it had
“no objection with the MC lenders immediately proceeding with
the security creation of the Dubai properties”.
(d) It was also brought to the notice of the SRA that 11.04.2024
would be the last date for complying with the impugned order
of the NCLAT and that the SRA was well aware of the fact
that the cost of creation of securities is Rs. 2,36,00,767 and
not Rs. 76.07 lakh. This shows the SRA’s clear disinclination
to execute the mortgage. It was further brought to the SRA’s
notice that they had failed to comply with the Resolution Plan
and the impugned order of the NCLAT dated 12.03.2024.
Further, on the same day, at 21:05 hours, the SRA sent an email
referring to 12 acres of contiguous land situated in Aligarh, Uttar
Pradesh which had been valued in excess of Rs. 250 Crore, owned
by a reputed individual entrepreneur resident in India and that the
SRA was ready to offer this property as an alternative security in
[2024] 11 S.C.R. 2093

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

India. The Appellants replied to the said email on 16.04.2024 and
stated that the period of 30 days had already expired on 11.04.2024,
the expenses for creation of charge had not been paid and that
accepting the property in India which belongs to a third party would
tantamount to modification of the Resolution Plan.
41. The ASG therefore submitted that the above exchanges patently
bring out the SRA’s non-cooperation, defiance to judicial orders and
desperate attempts to suggest the creation of security of unknown
third-party properties, all of which were done after the expiry of the
time period of 30 days provided by the NCLAT for compliance with
their order dated 12.03.2024. Consequently, even in terms of the
impugned Order of the NCLAT, there has been a total breach on the
part of the SRA which only indicates that they have no inclination
worth the name to implement the Resolution Plan. Consequently,
in terms of Clause 9.4 of the Resolution Plan and Clause 3.13.7(iii)
of the RFRP respectively, the Appellants are entitled to invoke the
PBG automatically without any reference to the SRA.

ii. Issue No. 2: Non-payment of Airport dues
42. It was submitted that in terms of Clause 6.3.1(d), the airport dues
and parking charges are to be paid by the SRA upfront in priority
over any other payment to the creditors of the Corporate Debtor.
Clause 6.4.1(f) provides that on 31.08.2020, an approximate figure
of Rs 240 Crore towards parking charges for aircrafts and airport
space lease charges was arrived at through the estimate given
by the RP and this was subject to a maximum of Rs. 475 Crore.
Specific attention was drawn to the expression in Clause 6.3.1(d)
which states that “such payments will be settled upfront in full in
first 180 days from the effective date and without any conditions
(including not being staggered payments spread across a period of
time) so that flying can start immediately without any future disputes
and concerns with such claimants for past dues”. The respondents,
however, have not remitted any amount towards the airport dues
nor have they allowed the Resolution Plan to be implemented. As a
result of the several extensions/exclusions given by the NCLT and
NCLAT to the SRA, the airport dues as on date stand at a staggering
figure of Rs. 1100 Crore approx., which amount, again, is to be paid
by the respondents alone.
2094 [2024] 11 S.C.R.

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43. The ASG submitted that, when the aforesaid is the position in the
Resolution Plan, the NCLAT in its impugned order dated 12.03.2024
vide Paras 53-55 respectively has chosen to restrict the Airport
dues to a mere Rs. 25 Crore and has erroneously construed it to
be a part of the CIRP cost. The counsel drew specific attention to
Para 53 of the impugned order wherein the NCLAT had referred to
Clause 6.4.1(h) and stated that “…CIRP cost of the Corporate Debtor
(excluding parking charges, rental charges, employees dues, taxes
etc.) Accordingly, the Resolution Applicant has set aside a sum of
Rs 25 crores as CIRP cost towards payment of any such cost until
the approval date…”. Thus, despite the fact that Clause 6.4.1(h)
on treatment of Outstanding CIRP Costs excludes the parking
charges, rental charges, employees’ dues, taxes etc., the NCLAT
has surprisingly read the same to mean as “inclusive of/included in”
the CIRP costs while directing the payment of a mere Rs. 25 Crore.
Therefore, this is an error apparent on the face of it which requires
interference by this Court.
44. It was submitted that, in case the argument of the SRA that a maximum
of only Rs. 475 Crore is to be paid by the SRA under the Resolution
Plan, is accepted, then the entire amount of Rs. 475 Crore shall
go towards the airport dues and as a consequence, nothing would
become payable to the financial creditors, operational creditors,
workmen etc. The amount of Rs. 240 Crore was a mere estimate of
the dues payable in the year 2020. Due to non-payment and non-
commencement of flying operations, the same amount in the year
2024 has increased multi-fold. To contend that such an increased
amount does not fall under the Resolution Plan and therefore, is
not payable, will cast a further burden on the CoC of the Corporate
Debtor. Further, it would be unfair to accept that, for the reason of
the Respondent’s default in payment, the CoC would have to bear
the Airport dues of Rs. 1100 Crore and none of the creditors or
workmen would get anything out of this plan. This misconceived
contention which intentionally makes the plan unworkable needs to
be outrightly rejected.

iii. Issue No. 3: Non-payment of Workmen and Employees’ dues
45. The ASG submitted that the Resolution Plan originally provides
for a sum of Rs. 52 Crore towards the payment of workmen’s
and employees’ dues. However, the NCLAT vide its order dated
[2024] 11 S.C.R. 2095

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

21.10.2022, in Para 78, had increased the same to Rs. 289.2 Crore
which now stands modified to about Rs. 226 Crore. The NCLAT
in the order dated 21.10.2022 under Para 80 had observed in
unambiguous terms that “the workmen are entitled to full payment of
provident fund and gratuity, hence the balance of above dues ought
to be paid by the SRA to satisfy statutory obligations. Non-payment
of full provident fund and gratuity shall lead to violation of Section
30(2)(e) and hence, to save the Plan the above payments have to
be made”. This view of the NCLAT had also been upheld by this
Court vide its order dated 30.01.2023. The Resolution Plan under
Clause 6.3.1(c) obligates the payment of such dues within 180 days
from the Effective Date.
46. It was submitted that, the NCLAT, vide Paras 111-114 had erroneously
directed the payment of an amount of Rs. 12 Crore towards the
Provident Fund and has completely ignored the payment of dues
pertaining to gratuity of the workmen and employees. The Appellants
contend that this finding is not only an error apparent but completely
inconsistent with the NCLAT’s own earlier order dated 21.10.2022,
which stood upheld by this Court on 31.01.2023.

iv. Issue No. 4: Achievement of Effective Date
47. It was submitted that Clause 7.6.2 of the Resolution Plan provided
that the date of fulfilment of all the Conditions Precedent as stated
in Clause 7.6.1, shall be the Effective Date for the purposes of
the Resolution Plan. A failure to fulfill the Conditions Precedent
within 270 days of the Approval Date would lead to an automatic
withdrawal of the Resolution Plan as per Clause 7.6.4. However,
the NCLT, vide its order dated 22.06.2021, expressed its opinion
that there was uncertainty with respect to the achievement of the
Effective Date under the Resolution Plan and therefore, modified
Clause 7.6.4. As a consequence, it fixed the Effective Date to be
the 90th day from the Approval Date of 22.06.2021 and stated that
this could be extended for a maximum period of another 180 days.
The Effective Date, therefore, became 22.09.2021 i.e., 90 days
from 22.06.2021. Subsequently, three extensions were given to the
SRA with respect to the achievement of the Effective Date – First,
vide order dated 29.09.2021, the NCLT extended it to 22.12.2021;
Secondly, vide order dated 20.01.2022, the NCLT extended to
22.03.2022 through which the maximum extension of 270 days that
2096 [2024] 11 S.C.R.

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could be provided under the Resolution Plan had been reached and;
Thirdly, vide order dated 11.04.2022, the NCLT further extended it
to 25.05.2022 by excluding a period of 65 days spent in moving
the application for grant of time. Therefore, the Effective Date was
finally frozen on 25.05.2022.
48. The learned ASG submitted that the SRA, however, contended
that the Effective Date had been achieved on 20.05.2022 and the
same was accepted by the NCLT in its order dated 13.01.2023.
Therefore, the calculation of 180 days for the infusion of the First
Tranche Payment begins from 20.05.2022. The initial 180 days had
expired on 16.11.2022. However, several extensions were given to
the SRA for infusion of the first tranche payment – Firstly, vide order
dated 13.01.2023, the NCLT extended the timeline for infusion of
First Tranche Payment till 15.05.2023; Secondly, vide order dated
26.05.2023, the NCLAT further extended the timeline of 180 days
till 31.08.2023; Thirdly, vide order dated 28.08.2023, the NCLAT
extended the timeline of 180 days till 30.09.2023 and; Fourthly, vide
Order dated 18.01.2024, this Court extended the time of 180 days
for infusion till 31.01.2024.
49. The learned ASG highlighted that Respondent No.1 had failed to
make the first tranche payment of Rs. 350 Crore, airport dues of Rs.
475 Crore and the workmen’s and employees’ dues of Rs. 226 Crore
within the initial 180 days from the Effective Date as well as within the
multiple extensions granted by the NCLT, NCLAT and this Court. The
ASG submitted that multiple extensions and accommodations have
already been granted to the SRA for implementation of the Resolution
Plan. Therefore, it is too late in the day to claim that the non-infusion
of Rs. 150 Crore to complete the first tranche payment of Rs. 350
Crore is only a breach of the Lender’s Affidavit dated 16.08.2023 and
not the Resolution Plan. The same needs to be rejected outrightly.

v. Issue No. 5: Non-fulfilment of Conditions Precedent
50. The ASG submitted that the respondents have failed to comply with
3 Conditions Precedent, specifically under Clauses 7.6.1(a), (c)
and (d) of the Resolution Plan respectively.
51. It was submitted that Clause 7.6.1 (a) requires the SRA to obtain
an AOC which has to be validated by the DGCA and the Ministry
[2024] 11 S.C.R. 2097

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

of Civil Aviation (hereinafter, “MoCA”). The Respondent possessed
an AOC on 20.05.2022 i.e., the Effective Date as contended by the
SRA. The validity of the AOC was further extended by the DGCA
on 27.07.2023 up to 03.09.2023 subject to certain conditions. It
was clearly stated that the extension is only for the limited purpose
of completing the ongoing CIRP process and the Corporate Debtor
would be required to undergo fresh re-certification in accordance
with the prescribed procedure for issuance of an AOC and also
submit a firm action plan for the revival of its operations. The AOC
expired on 03.09.2023 and the same was never extended by the
SRA.
52. It was submitted that the NCLT in its order dated 13.01.2023 had
recorded a finding that the Condition Precedent with respect to the
AOC was fulfilled but it must be noted that this was an observation
made during a time when the SRA had a valid subsisting AOC, which
subsequently expired.
53. It was further submitted that vide letter dated 26.12.2023, the Director
General of Civil Aviation confirmed that no further extension of the
AOC was granted to the Corporate Debtor beyond 03.09.2023. The
NCLAT in its impugned order dated 12.03.2024 required the SRA
to submit an application for re-issuance of the AOC within 90 days
from the date of its order and the deadline for the same had expired
on 12.06.2024. It was submitted that, even today, the Respondents
do not have a valid AOC and the fact that the Respondents are
contending that they had not renewed the AOC solely because of
the matter being under litigation, only exposes their disinterest and
disinclination in taking their obligations forward.
54. It was then submitted that Clause 7.6.1(c) requires the SRA to obtain
Slot Allotment Approval. The NCLT in its order dated 13.01.2023 vide
para 124 had clearly rendered a finding that “there is no dispute that
slots for which SRA applied were granted to them by the concerned
competent authority including the slots in Delhi and Mumbai on settling
the old dues and as such, it cannot be considered as non-allotment
of slots, as SRA has received the slots it requested for in compliance
with the plan approval order.” The ASG also referred to the email
dated 27.06.2022 issued by MAIL and the same reads as under: “We
are happy to consider your request for slots on parking bay during
the ongoing summer schedule. The same is subject to the closure
2098 [2024] 11 S.C.R.

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of ongoing discussions pertaining to settlement of outstanding dues
of jet airways towards MAIL.”
55. While the NCLT had correctly recorded a finding that the slot allotment
is subject to the payment of airport dues (which the Respondents
had not paid even today), the NCLAT vide para 50 and Para 55
erroneously concluded that “the adjudicating authority has rightly
observed that settling of old dues cannot be considered as non-
allotment of slots” and therefore condition 7.6.1(c) stands fulfilled.
This finding is contrary to the finding recorded by NCLT and the
Resolution Plan and as a consequence, the Respondents could be
said to have breached this condition precedent as well.
56. The ASG submitted that Clause 7.6.1(d) requires the SRA to obtain
the International Traffic Rights Clearance. The NCLT, vide Para
125, had righty held that “the international traffic rights clearance is
required to be obtained in compliance with the applicable laws which
stipulates that minimum 20 aircrafts are required to be deployed before
applying for such clearance”. However, after holding so, the NCLT
proceeded to conclude that this condition cannot be satisfied upfront
and can be fulfilled only when the operations have recommenced
successfully and that, therefore, this condition precedent stood
fulfilled. In simple terms, the NCLT could be said to have modified
a condition precedent to a condition subsequent and this view of
the NCLT has been upheld by the NCLAT in Paras 56 to 58. These
findings are in clear contradiction to the express stipulation in the
Resolution Plan and therefore, this condition too stands breached
by the respondents.
57. One more aspect that the learned ASG highlighted through his
submissions was that, the Circular F.No.AV.14027/17/2018-AT-1
issued by the Office of Director General of Civil Aviation provides
certain requirements for undertaking aerial work. Para 6 of the said
Circular deals with Security Clearance and the same requires the
Applicant or Company and its Board of Directors to obtain Security
Clearance from the Ministry of Home Affairs (MHA) if they are foreign
nationals. It was submitted that according to the communications
dated 09.07.2024 issued by the Ministry of Civil Aviation, it had
been confirmed that Security Clearance had not been conveyed in
respect of Mr. Florian Fritsch. Hence, the threshold requirement of
security clearance has not yet been obtained by one of the Resolution
[2024] 11 S.C.R. 2099

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

Applicants, who according to Clause 2.1.4 of the Resolution Plan, is
the other partner to the Consortium along with Mr. Murari Lal Jalan.
The ASG also placed reliance on news items which suggested
that Mr. Florian Fritsch is facing money laundering proceedings in
three different jurisdictions. The same had been dealt with by the
NCLAT summarily in its impugned order in Para 125. However, it
was wrongly concluded that this was yet another attempt by the
Appellants to create roadblocks in the process of implementation
of the Resolution Plan.
58. The counsel finally submitted that, since the Airport Dues and the
CIRP costs have substantially increased solely on account of the
delay, the Court should invoke its powers under Article 142 of the
Constitution of India and direct that the Corporate Debtor be sent
to liquidation.

C. SUBMISSIONS ON BEHALF OF THE RESPONDENTS
59. On the other hand, Mr. Mukul Rohatgi, learned senior counsel
appearing on behalf of Respondent No.1 submitted that Section 62
of the IBC, 2016 requires an appeal to the Supreme Court from an
order of the NCLAT to be on a “question of law”. He submitted that
the present appeal only seeks to challenge the concurrent findings of
fact recorded by the NCLT and the NCLAT, with regard to compliance
of the Conditions Precedent by the SRA and does not bring out
any question of law. To fortify this submission, the counsel placed
reliance on the decision of this Court in IFCI Ltd. v. Sutanu Sinha
and Others reported in 2023 SCC OnLine SC 1529.
60. The counsel submitted that the directions issued by this Court vide
order dated 18.01.2024 were interim and not final. The appeals which
were decided by this Court arose out of an interlocutory application
which was filed by the SRA seeking directions from the NCLAT on
the mode of satisfying the conditions in the Lender’s Affidavit dated
16.08.2023. It was submitted that the same is evident from a reading
of Para 19 which reads that “.. Observations in the present judgment
are confined to the arrangement which must operate during the
pendency of the appeal without the court expressing a final view
on merits of the appeal, which will fall for consideration before the
NCLAT”. Further, Para 21 of the same order stated that, “…The
impugned order of the NCLAT, on the other hand, allowed the plea
2100 [2024] 11 S.C.R.

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of the SRA for adjustment and consequential release of the PBG at
the interlocutory stage. This prima facie would not be in accordance
with the tenor of paragraph 8 of the affidavit…”. Therefore, it was
submitted that the directions issued by this Court only related to
a scenario were the SRA sought benefit of the offer made in the
Lender’s Affidavit.
61. The counsel submitted that the NCLAT in its impugned order dealt
with this Court’s order dated 18.01.2024 at length and concluded
that the direction issued by this Court to deposit the amount of Rs.
150 Crore peremptorily on or before 31.01.2024 was in reference to
the Lender’s Affidavit dated 16.08.2023. Meaning thereby, the order
of the NCLAT dated 28.08.2023 to adjust the PBG of Rs. 150 Crore
was substituted by the direction of the Supreme Court. Therefore,
the SRA would render itself disentitled to take benefit of the offer of
the Appellant that they would withdraw the Company Appeal and the
appeals before the Supreme Court. As such, the pending Company
Appeal was to be heard on merits and decided in accordance with
law by the NCLAT. In short, the entire issue before this Court was
confined to an interpretation as to how the condition of Rs. 150
Crore in the affidavit was to be interpreted and if the condition was
complied with, the Appeals would stand withdrawn, if not, they would
be decided on their own merits.
62. It was further submitted that the NCLAT rightly observed that, the
submission of the Appellant that the Corporate Debtor should be
directed to be liquidated on account of non-deposit of Rs. 150 Crore,
cannot be accepted since the Supreme Court neither considered nor
expressed any opinion on the question of liquidation. Liquidation was
never recorded as a consequence and this is evident from liquidation
not being mentioned in; (a) the arguments of the Appellants recorded
by the NCLAT in its order dated 28.08.2023, (b) the judgment of
the NCLAT dated 28.08.2023, (c) the arguments of the Appellants
recorded by this Court in its order dated 18.01.2024 and, the findings
or the directions of this Court in its order dated 18.01.2024.
63. The counsel also submitted that the adjustment of the PBG against
the first tranche payment was possible under the Resolution Plan,
specifically under Clause 6.4.4 which sets out the “Summary of
payments and security package”. It is evident through Clause 6.4.4
that a revolving package was agreed against each tranche of the
[2024] 11 S.C.R. 2101

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

payment under the Resolution Plan. For the first tranche of payment,
the security package comprises of the PBG and one of the Dubai
Properties and it is stated that the PBG will be adjusted against the
first tranche payment. For subsequent tranches of payment, the
security package does not include the PBG and instead includes
other types of security. It was submitted that the Lenders are relying
on the RFRP to claim that no adjustment of the PBG was possible.
However, the RFRP is only a wish list of the CoC which was informed
to the applicants at the time of inviting plans. Therefore, it cannot
override a negotiated and approved provision of the Resolution Plan.
This is precisely why the approved Resolution Plans often deviate
from the RFRP.
64. The counsel submitted that according to Clause 6.4.4 of the Resolution
Plan, the Balance Security is in the form of immovable properties
located in Dubai and since they are located outside India, the
approval of the RBI was necessary for the creation of security. The
security on the Dubai properties of the SRA was to be created on
the Effective Date, i.e., 20.05.2022. On 21.05.2022, a day after the
Effective Date, the SBI had applied for the approval and the same
was received on 22.07.2022.
65. It was submitted that, on 03.02.2023 the SRA had shared drafts of the
transaction documents required for the creation of security. However,
no comments were received from the Appellants. It is the case of
the SRA that the Appellants did not reply to the reminder emails
sent between the months of May and October 2023 and this issue
was also discussed during the 37th MC Meeting dated 09.10.2023.
However, after more than a year of sharing the transaction documents,
the Appellants sent their comments on the same on 08.04.2024 i.e.,
three days before the expiry of the 30-day timeline given under the
impugned order of the NCLAT.
66. It was further submitted that, only in the 42nd MC Meeting that took
place on 02.04.2024 the SRA was informed for the first time that,
as per the recent valuation, the valuation of the Balance Security
worked out at Rs. 236 Crore and that there was a shortfall of Rs.
14 Crores. In the same meeting, the SRA suggested that a property
in India valued at Rs. 250 Crore could be provided as an alternate
security. Vide email dated 10.04.2024, the SRA provided details of the
alternate security equivalent to Rs. 250 Crore in India. However, the
2102 [2024] 11 S.C.R.

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Appellants responded to the above vide their email dated 16.04.2024
stating that providing an alternate security would tantamount to
modification of the Resolution Plan.
67. The counsel submitted that the SRA, vide email dated 16.04.2024
conveyed that they had not received any invoice from Mashreq
Bank towards payment of their costs for acting as an agent for
security creation and that the payment of security related costs to
the extent of Rs. 76 Lakh could be done from the existing deposit
with the Appellants. For the balance amounts, they requested that
the invoices be shared with the SRA and that the same would be
processed immediately. On 20.04.2024 and 01.05.2024 respectively,
the SRA reminded the Appellants to share the invoices for the purpose
of security creation.
68. On the issue of security creation, the counsel summed up submitting
that the SRA had done everything within its control to enable the
Appellants to create security including agreeing to bear all costs and
expenses for creation and preservation of security, providing contracts
for such security creation, and providing title documents of all the
immovable properties to the Appellants. Therefore, the contention
that the SRA failed to create Balance Security is factually incorrect.
69. With respect to the payment of the Airport Dues, it was submitted that,
the Resolution Plan provides for the adjustment of CIRP dues from
the positive cash balance of the Corporate Debtor and then from the
share of the Lenders. The Appellants’ own case is that the Airport
Dues amount to Rs. 1000 Crore approximately. Therefore, as per the
Resolution Plan, Rs. 400 Crore approx. is payable towards the airport
dues, first, from the positive cash balance of the Corporate Debtor
and if that is insufficient, then from the Lenders’ share being CIRP
Dues. Finally, the remaining Rs. 600 Crore would be borne by the SRA
70. As regards the payment of Provident Fund and Gratuity to the
workmen and employees, it was submitted that the NCLAT did
not waive off the liability of the SRA towards the payment of PF
and Gratuity. On the contrary, for the implementation of the same,
the NCLAT had provided timelines for making such payments in
compliance with the applicable laws. It was further submitted that
in the 42nd MC meeting held on 02.04.2024, the SRA undertook to
make the payment towards the dues of PF and gratuity and the
Appellants are aware of the same.
[2024] 11 S.C.R. 2103

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

71. The counsel submitted that there are concurrent findings on the
fulfillment of Conditions Precedent vide the order of the NCLT dated
13.01.2023 and the impugned order of the NCLAT dated 12.03.2024.
Clause 7.6.1 of the Resolution Plan sets out five Conditions
Precedent. It was submitted that two of the five Conditions Precedent
were “admittedly complied” with. On the remaining three, both the
Tribunals have rendered concurrent findings, which ought not to
be interfered with in an appeal under Section 62 of the IBC, 2016,
which is effectively a Second Appeal.
72. The counsel submitted that the SRA cannot suo moto infuse funds
into the Corporate Debtor since such infusion necessarily requires
steps/actions to be taken by the Appellants and the Corporate Debtor
acting through the MC. These steps include the appointment of
directors on the board of the Corporate Debtor and seeking in-principal
approval from the relevant stock exchanges under the SEBI LODR
Regulations by the Corporate Debtor. However, despite constantly
following up with the Appellants, the same has not been received
yet and therefore, they have not allowed the SRA to undertake such
a funding.
73. The Counsel submitted that the first Condition Precedent is the
Validation of AOC by DGCA and MoCA as provided under Clause
7.6.1(a). The SRA had a valid AOC until 03.09.2023 and the lapse of
the AOC during the pendency of the appeals cannot mean that the
Condition Precedent was not met. It was submitted that the condition
was met on the date of the implementation application being filed
before the NCLT and that the AOC has not been renewed only due
to the fault of the Appellants.
74. It was submitted that the third Condition Precedent was the requirement
of Slot Allotment Approval as provided under Clause 7.6.1(c). The
counsel rejected the contention of the Appellants that the slots were
not provided because the airport charges were not paid and stated
that the airport charges are a part of the CIRP costs which could be
met as and when the Resolution Plan was operationalized. It was
further submitted that the SRA had obtained 48 slots on the Effective
Date when it was supposed to secure only 46 slots. The NCLT in its
order dated 21.06.2022 had also held that it was not possible for the
SRA to obtain the slots that were historically available to the Corporate
Debtor. Therefore, this Condition Precedent has also been met.
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Supreme Court Reports

75. The counsel submitted that the fourth Condition Precedent related
to obtaining the International Traffic Right Clearance as stated under
Clause 7.6.1(d) of the Resolution Plan. This Condition Precedent
had to be satisfied in accordance with the “applicable laws”. Upon
applying for the Clearance, the MoCA had informed the SRA that,
Clause 8(b) of the National Civil Aviation Policy, 2016 requires a
minimum of 20 aircrafts to be deployed for domestic operations
before applying for international clearance and that therefore, the
same can be granted when 20 aircrafts of the Corporate Debtor
are in operation. The Business Plan only envisages 6 aircrafts and
the SRA can operationalize 20 aircrafts once the operations of the
Corporate Debtor begin. This is evident from Clause 8.2.6(f) that
states that the restart of international operations can be envisaged
only after the completion of 12 months of operating the airline. Since
this condition requires operations to re-commence before it can be
satisfied, this Condition Precedent has also been complied with.
76. Mr. Gopal Sankaranarayanan, learned senior counsel also appearing
for the Respondents, concurred with all the aforesaid submissions
made on behalf of the SRA. In addition to bringing our attention to
Clause 6.4.4 on the issue of adjustment of the PBG, he also referred
to Clause 6.4.12 of the Resolution Plan which stated that the PBG
will bring financial flexibility for the SRA and help the SRA to advance
the committed payments and achieve its goal of re-commencing the
operations of the Corporate Debtor at the earliest.
77. It was submitted that the NCLAT order dated 28.08.2023 rightly
recognized that Regulation 36B(4A) of the 2016 Regulations only
provides for the PBG requirement for the purposes of the RFRP and
the same has been complied with by the SRA. Further, the counsel
pointed out that Clause 6.4.4 (a)(i) elaborates on the “Committed
Cash Payments” to be made to the Financial Creditors. In the table,
under the heading “Date of release of Security”, the PBG of Rs.
150 Crore was not mentioned while the other two forms of security
find a mention. Thus, the intention was that, the PBG be adjusted
in making the first tranche payment.
78. The counsel further submitted that there is no specific consequence
provided under the Resolution Plan for a default in the creation of
security. It was reiterated that the SRA had undertaken all possible
steps to further the execution of the mortgage of the Dubai properties
[2024] 11 S.C.R. 2105

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

as per the Resolution Plan and it is the Appellants who have not
cooperated in this regard.
79. The counsel submitted that the Appellants have taken contradictory
stances at different stages of the dispute before different forums.
Before the NCLAT in its pending Company Appeal, it was contended
by the Appellants that the NCLT had erroneously allowed the
Resolution Plan to be implemented without the complete compliance
of the Conditions Precedent by the SRA. However, before this Court,
they have argued that the SRA has claimed that the Conditions
Precedent were fulfilled on 20.05.2022 and has asserted that it would
be the Effective Date. As a consequence, the SRA should have met
with their first tranche payment obligations within 180 days from the
Effective Date.
80. The counsel submitted that the consequences of non-compliance with
the Conditions Precedent were that the SRA would not be able to
re-commence operations as an aviation company as stated in Clause
7.6.1 of the Resolution Plan. He also submitted that the Effective
Date for the purposes of the Resolution Plan would only kick in upon
the fulfillment of all the Conditions Precedents. The consequence
of non-compliance with the Conditions Precedent would be that the
Resolution Plan shall automatically stand withdrawn and upon, such
withdrawal, the members of the SRA in the MC shall resign and the
remaining members of the MC shall assume absolute control of the
Corporate Debtor.
81. Adding to the submissions as regards the Airport Dues, it was
submitted that as per the estimates made by the RP, the airport dues
i.e., the parking charges and airport space lease charges were Rs.
240 Crore and this was reflected in Clause 6.4.1(f) of the Resolution
Plan. It was submitted that the dues accrued during the period of
CIRP i.e., till the date of approval of the Resolution Plan, is a part
of the CIRP costs and such payments have to be made within 170
days from the Effective Date as per Clause 6.4.1 of the Resolution
Plan. As per Clause 6.4.1(h), a sum of Rs. 25 Crore was set aside for
CIRP costs. However, it must be noted that Clause 6.4.1(m) allows
the SRA to utilize the funds available with the Corporate Debtor for
making payments of any portion of the CIRP costs. It was submitted
that the Lenders rely on Clause 6.3.1(d) to state that the airport
dues have to be settled upfront and not in staggered payments.
2106 [2024] 11 S.C.R.

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However, Clause 6.3.1(d) is just a proposal and not a condition of
the Resolution Plan.
82. On workmen and employees’ dues, it was submitted that, as per
Clause 6.4.2 on the “Summary of Financial Proposal” the amount
demarcated for all the claims related to employees or workmen was
Rs. 52 Crore and as per the Implementation Schedule, these claims
were to be paid within 175 days from the Effective Date. However,
the NCLAT vide its order dated 21.10.2022 increased it to Rs. 113
Crore since it was the minimum liquidation value that they were
entitled to as per the estimates of the RP. The final directions issued
by the NCLAT in the aforesaid order conveyed that the workmen and
employees are entitled to the payment of unpaid PF and gratuity
till the Insolvency Commencement Date and the RP was directed
to compute such payment within 30 days. The RP had calculated
such amounts to be Rs. 14 Crore towards PF and Rs. 188.7 Crore
towards gratuity. It was submitted that neither the NCLAT order dated
21.10.2022 nor the order of this Court dated 30.01.2023 had provided
any specific timelines for fulfillment of these additional liabilities which
were cast upon the SRA. This is precisely why the SRA proposed
to pay Rs. 14 Crore towards PF upfront in compliance with Section
11 of the PF Act and pay the Gratuity dues of Rs. 188.2 Crore in a
staggered manner.
83. The counsel finally referred to the letter dated 16.08.2024 sent by
MoCA which provided Security Clearance in respect of a proposed
Director of the Corporate Debtor, Mr. Swapnil Jain. The validity period
of this Security Clearance was stated to be co-terminus with the
validity period of the AOC which was issued by the DGCA.

D. ISSUES FOR DETERMINATION
84. Having heard the learned counsel appearing for the parties and
having gone through the materials on record, the following questions
of law fall for our consideration: -
i. Whether the Performance Bank Guarantee (PBG) could have
been adjusted against the first tranche payment which was to
be made under the Resolution Plan, within 180 days from the
Effective Date, in contravention of the order of this Court dated
18.01.2024, the terms of the Resolution Plan and the provisions
of law? To put it in other words, whether the impugned order of
[2024] 11 S.C.R. 2107

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

the NCLAT allowing the adjustment of the Performance Bank
Guarantee (PBG) in lieu of payment of the first tranche could
be said to be perverse?
ii. Whether the non-implementation of the Resolution Plan by the
SRA necessarily leads to the consequence of liquidation as
provided under Section 33(3) of the IBC, 2016?
iii. Whether the timely implementation of the Resolution Plan is
also one of the objectives of the IBC, 2016?

E. ANALYSIS
85. Before we proceed to advert to the rival submissions canvassed
on either side and the issues outlined above, we must look into
the preliminary objection raised on behalf of the SRA i.e., that the
scope of an appeal under Section 62 of the IBC must be restricted
to a “question of law”. In this regard, reliance was placed on the
decision of this Court in IFCI Ltd. v. Sutanu Sinha and Others
reported in 2023 SCC OnLine SC 1529 which dealt with the
issue as to whether compulsorily convertible debentures could be
treated as a “debt” instead of an equity instrument, to submit that
the jurisdiction under Section 62 is restricted to a question of law
akin to a second appeal. The relevant observations are reproduced
hereinbelow:
“29. Last but not the least, we must also note that our
jurisdiction comes from section 62 of the Code. The said
section reads as under:
“62. (1) Any person aggrieved by an order of the
National Company Law Appellate Tribunal may file
an appeal to the Supreme Court on a question of
law arising out of such order under this Code within
forty-five days from the date of receipt of such order”.
30. The jurisdiction is restricted to a question of law akin
to a second appeal. The law does not envisage unlimited
tiers of scrutiny and every tier of scrutiny has its own
parameters. Thus, the lis inter se the parties has to be
analysed within the four corners of the ambit of the statutory
jurisdiction conferred on this court.
2108 [2024] 11 S.C.R.

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31. We are thus of the view that the appeal does not raise
any such question of law and that the findings of the courts
below are in accordance with settled principles.”
(emphasis supplied)

86. Section 100 of the Code of Civil Procedure, 1908 is the provision
related to a second appeal and it reads as thus:
“100. Second appeal – (1) Save as otherwise expressly
provided in the body of this Code or by any other law for
the time being in force, an appeal shall lie to the High
Court from every decree passed in appeal by any Court
subordinate to the High Court, if the High Court is satisfied
that the case involves a substantial question of law.
(2) An appeal may lie under this section from an appellate
decree passed ex parte. (3) In an appeal under this
section, the memorandum of appeal shall precisely state
the substantial question of law involved in the appeal.
(4)Where the High Court is satisfied that a substantial
question of law is involved in any case, it shall formulate
that question.
(5)The appeal shall be heard on the question so formulated
and the respondent shall, at the hearing of the appeal,
be allowed to argue that the case does not involve such
question:
Provided that nothing in this sub-section shall be deemed
to take away or abridge the power of the Court to hear, for
reasons to be recorded, the appeal on any other substantial
question of law, not formulated by it, if it is satisfied that
the case involves such question.”
(emphasis supplied)

87. This Court in Chandrabhan (Deceased) Through Lrs. And Others
v. Saraswati and Others reported in 2022 SCC OnLine SC 1273
explained as to what constitutes a “substantial question of law” under
Section 100 of the Code of Civil Procedure, 1908. The relevant
observations made are reproduced hereinbelow:
[2024] 11 S.C.R. 2109

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

“33. The principles relating to Section 100 of the CPC
relevant for this case may be summarised thus:
(i) An inference of fact from the recitals or contents of a
document is a question of fact. But the legal effect of the
terms of a document is a question of law. Construction
of a document involving the application of any principle
of law, is also a question of law. Therefore, when there is
misconstruction of a document or wrong application of a
principle of law in construing a document, it gives rise to
a question of law.
(ii) The High Court should be satisfied that the case involves
a substantial question of law, and not a mere question of law.
A question of law having a material bearing on the decision
of the case (that is, a question, answer to which affects the
rights of parties to the suit) will be a substantial question
of law, if it is not covered by any specific provisions of law
or settled legal principle emerging from binding precedents
and involves a debatable legal issue. A substantial question
of law will also arise in a contrary situation, where the legal
position is clear, either on account of express provisions of
law or binding precedents, but the court below has decided
the matter, either ignoring or acting contrary to such legal
principle. In the second type of cases, the substantial
question of law arises not because the law is still debatable,
but because the decision rendered on a material question,
violates the settled position of law.
(iii) The general rule is that the High Court will not interfere
with findings of facts arrived at by the courts below. But
it is not an absolute rule. Some of the well-recognised
exceptions are where (i) the courts below have ignored
material evidence or acted on no evidence; (ii) the courts
have drawn wrong inferences from proved facts by applying
the law erroneously; or (iii) the courts have wrongly cast
the burden of proof. When we refer to “decision based
on no evidence”, it not only refers to cases where there
is a total dearth of evidence, but also refers to any case,
where the evidence, taken as a whole, is not reasonably
capable of supporting the finding.”
(emphasis supplied)
2110 [2024] 11 S.C.R.

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This Court recapitulated that a substantial question of law would
also arise in a situation where the legal position is clear, either on
account of express provisions of law or binding precedents, but the
Court below has ignored or acted contrary to such legal principles
while deciding the matter. In such circumstance, the decision
rendered by the Court below would violate a settled position of law
and therefore, constitute a substantial question law. Furthermore, it
was observed therein that it is not an absolute rule that the Court
in a second appeal will not interfere with findings of fact. One of the
well-recognized exceptions is where the Courts below have drawn
wrong inferences from proved facts, by applying the law erroneously.
88. In Maria Colaco and Another v. Alba Flora Herminda D’souza
and Others reported in (2008) 5 SCC 268, it was held that in the
second appeal under Section 100 CPC, the High Court should not
interfere on the questions of fact. However, if on a scrutiny of the
evidence, it is found that the finding recorded by the first appellate
court is totally perverse then an interference is certainly possible in the
matter as it constitutes a question of law. The relevant observations
are reproduced hereinbelow:
“7. The learned Single Judge after considering the matter
found that these averments did not constitute the basis
on the part of the plaintiff that he was not in possession
of the suit property. On the contrary, the learned Single
Judge found in reply to Para 13 of the plaint that the
defendants in their written statement admitted that the
work was stopped by Defendant 1 for some time but they
restarted the work again. This, according to the learned
Single Judge was a proof of the fact that Defendants 1 and
2 and Defendant 3 were not sure about the possession
and right of Defendants 1 and 2 over the property. In fact,
what transpires from all these facts is that the trial court
reached the same conclusion as the learned Single Judge
in second appeal in the High Court. It is true normally that
in the second appeal the High Court should not interfere on
the questions of fact. But if on the scrutiny of the evidence
it is found that the finding recorded by the first appellate
court is totally perverse then certainly the High Court can
interfere in the matter as it constitutes the question of law.”
(emphasis supplied)
[2024] 11 S.C.R. 2111

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

89. In Abdul Raheem v. Karnataka Electricity Board and Others
reported in (2007) 14 SCC 138, the Court acknowledged that the
High Court’s jurisdiction in terms of Section 100 is limited. Having
said so, it was also observed that a consideration of irrelevant
facts, non-consideration of relevant facts and a finding of fact
arrived at by overlooking vital documents would also give rise to a
substantial question of law. The relevant observations are reproduced
hereinbelow:
“10. A substantial question of law ordinarily would not arise
from the finding of facts arrived at by the trial court and
the first appellate court. The High Court’s jurisdiction in
terms of Section 100 of the Code is undoubtedly limited.
11. The question as to whether the plaintiff was ready and
willing to perform its part of contract by itself may not give
rise to a substantial question of law. Substantial question
of law should admittedly be formulated relying on or on
the basis of findings of fact arrived at by the trial court
and the first appellate court.
12. However, there cannot be any doubt whatsoever that
consideration of irrelevant fact and non-consideration of
relevant fact would give rise to a substantial question of law.
Reversal of a finding of fact arrived at by the first appellate
court ignoring vital documents may also lead to a substantial
question of law. In Vidhyadhar v. Manikrao [(1999) 3 SCC
573] this Court held : (SCC p. 586, para 23)
“23. The findings of fact concurrently recorded by
the trial court as also by the lower appellate court
could not have been legally upset by the High Court
in a second appeal under Section 100 CPC unless
it was shown that the findings were perverse, being
based on no evidence or that on the evidence on
record, no reasonable person could have come to
that conclusion.”
(See also Iswar Bhai C. Patel v. Harihar Behera [(1999)
3 SCC 457] .)
14. We may, however, notice a few decisions in regard
to the jurisdiction of the High Court under Section 100
2112 [2024] 11 S.C.R.

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of the Code. In Commr. of Customs (Preventive) v. Vijay
Dasharath Patel [(2007) 4 SCC 118] this Court held : (SCC
p. 128, paras 22-26)
“22. We are not oblivious of the fact that the High
Court’s jurisdiction in this behalf is limited. What would
be substantial question of law, however, would vary
from case to case.
23. Moreover, although, a finding of fact can be
interfered with when it is perverse, but, it is also trite
that where the courts below have ignored the weight
of preponderating circumstances and allowed the
judgment to be influenced by inconsequential matters,
the High Court would be justified in considering
the matter and in coming to its own independent
conclusion. (See Madan Lal v. Gopi [(1980) 4 SCC
255] .)
24. The High Court shall also be entitled to opine
that a substantial question of law arises for its
consideration when material and relevant facts have
been ignored and legal principles have not been
applied in appreciating the evidence. Arriving at a
decision, upon taking into consideration irrelevant
factors, would also give rise to a substantial question
of law. It may, however, be different that only on the
same set of facts the higher court takes a different
view. (See Collector of Customs v. Swastic Woollens
(P) Ltd. [1988 Supp SCC 796 : 1989 SCC (Tax) 67]
and Metroark Ltd. v. CCE [(2004) 12 SCC 505] .)
25. Even in a case where evidence is misread,
the High Court would have power to interfere.
(See W.B. Electricity Regulatory Commission v. CESC
Ltd. [(2002) 8 SCC 715] and also Commr. of
Customs v. Bureau Veritas [(2005) 3 SCC 265] .)
26. In Dutta Cycle Stores v. Gita Devi Sultania [(1990)
1 SCC 586] this Court held : (SCC p. 587, para 4)
‘4. Whether or not rent for the two months in
question had been duly paid by the defendants
[2024] 11 S.C.R. 2113

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

is a question of fact, and with a finding of such
fact, this Court does not ordinarily interfere in
proceedings under Article 136 of the Constitution,
particularly when all the courts below reached
the same conclusion. But where the finding of
fact is based on no evidence or opposed to the
totality of evidence and contrary to the rational
conclusion to which the state of evidence must
reasonably lead, then this Court will in the
exercise of its discretion intervene to prevent
miscarriage of justice.’
(See also P. Chandrasekharan v. S. Kanakarajan [(2007)
5 SCC 669] .)”.
(emphasis supplied)

Therefore, what would constitute a substantial question of law would
differ in each case. When material and relevant facts have been
ignored and legal principles have not been applied while appreciating
the evidence, a substantial question of law can be said to have
arisen. Additionally, even in a case where evidence is misread, the
power to interfere under Section 100 would exist.
90. In our considered view the impugned order of the NCLAT directing
the SRA to adjust the PBG of Rs. 150 Crore against the first tranche
payment of Rs. 350 Crore was in flagrant disregard of the order of
this Court dated 18.01.2023, the terms of the Resolution Plan and
established law. Such an order was perverse for having not properly
considered several material and relevant facts and misreading
evidence as well. Furthermore, the non-infusion and payment of
funds in compliance with the applicable laws and the terms of the
Resolution Plan had led to circumstances causing a failure of the
Resolution Plan. We have no doubt in our mind that the NCLAT
acted contrary to the settled legal principles and went to the extent
of drawing wrong inferences from proved facts while deciding the
matter. This itself justifies the examination of various issues in exercise
of the jurisdiction afforded to us under Section 62 of the IBC, 2016.
i. Whether the Performance Bank Guarantee (PBG) could
have been adjusted against the first tranche payment which
was to be made under the Resolution Plan, within 180 days
2114 [2024] 11 S.C.R.

Supreme Court Reports

from the Effective Date, in contravention of the order of
this Court dated 18.01.2024, the terms of the Resolution
Plan and the provisions of law?

a. Whether the Conditions Precedent were fulfilled by
Respondent No.1/SRA and the Effective Date was fixed at
20.05.2022?
91. Clause 7.6.1 of the Resolution Plan details five Conditions Precedent
that have to be fulfilled by the SRA. They are: - (a) Validation of
AOC, (b) Approval of Business Plan, (c) Slot Allotment Approval, (d)
International Traffic Rights Clearance, and (e) Demerger of AGSL.
Of the five Conditions Precedent that find mention under Clause
7.6.1 of the Resolution Plan, the Appellants have only disputed
the fulfilment of three Conditions Precedent i.e., Validation of AOC,
Slots Allotment Approval and International Traffic Rights Clearance.
According to Clause 7.6.2 of the Resolution Plan, the date of fulfillment
of all the Conditions Precedent as stated in Clause 7.6.1 would be
the Effective Date for the purposes of the Resolution Plan. A failure
to fulfil the Conditions Precedent within a maximum of 270 days
from the date of approval of the Resolution Plan would lead to an
automatic withdrawal of the Resolution Plan as per Clause 7.6.4.
92. On 22.06.2021, the NCLT had given its imprimatur to the Resolution
Plan that was submitted by the SRA and this was the Approval Date
i.e., “Y” as per the Implementation Schedule set out under Clause
7.7 of the Resolution Plan. The SRA had to fulfil the five Conditions
Precedent within a period of 90 days, that was extendable to an
additional 180 days i.e., 270 days in total. This period expired on
22.03.2022. However, the same was extended vide order dated
11.04.2022 by the NCLT until 25.05.2022, by allowing an exclusion
of 65 days.
93. Upon receiving the AOC from the relevant authorities on 20.05.2022
i.e., within the extended time period as allowed by the NCLT, the
SRA asserted that the Effective Date had been achieved. The SRA
had approached the NCLT seeking a declaration from the Tribunal
that all the Conditions Precedent have been met and that the SRA
be allowed to begin the implementation of the Resolution Plan.
Vide order dated 13.01.2023, the NCLT held that all the Conditions
Precedent had indeed been met and that 20.05.2022 would be
[2024] 11 S.C.R. 2115

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

considered as the Effective Date for the purposes of implementation
of the Resolution Plan. The findings of the NCLT in the aforesaid
order are reproduced hereinbelow:
“Findings:
122. […] However, having considered the rival submissions
and on perusal of record with regards to satisfactory
compliance of conditions precedent (CPs) it is noted that
there is no dispute so far as satisfactory compliance of
CPs at serial no. (i) and (v) as per approved plan i.e.:- (i)
Validation of Air Operator Certificate by Directorate General
of Civil Aviation (DGCA) and Ministry of Civil Aviation
(MoCA) and (v) Approval of demerger of ground handling
business into all capital AGSL.
In this background we have thus considered if the remaining
three CPs are duly complied with by the applicant or
otherwise.
123. As regards to CP No. 2 i.e. Submission and approval
of business plan to DGCA and MoCA: The business plan
was submitted to above Authorities to fulfil compliance of
DGCA’s Show Cause Notice (SCN) to CD of April 2019.
SCN states that Air Operator Certificate will be issued after
MoCA approves the business plan. Thus, with issuance
of Air Operator Certificate, it is implied that the business
plan has been approved. Even otherwise, guidelines for
issuance of Air Operator Certificate being CAP 3100 clearly
states that the DGCA will review the detailed business
plan of the Applicant before issuance of Air Operator
Certificate and with issuance of Air Operator Certificate
there is implied approval of MoCA. In the background of
above we find that this CP is satisfactorily complied with
the issuance of AOC.
124. As regards to CP No. 3 i.e. Slots Allotment Approval:
It is noted that plan approval order of this Tribunal dated
22nd June, 2021 stipulates that no historic slots will be
granted to Corporate Debtor or SRA. Admittedly, there is
no challenge to this order thereby accepting the fact that
old slot cannot be reinstated. Accordingly, this CP needs to
2116 [2024] 11 S.C.R.

Supreme Court Reports

be read with plan approval order, where Corporate Debtor
shall be provided with such slots for which it applies. There
is no dispute that slots for which SRA applied were granted
to them by the concerned Competent Authority including the
slots in Delhi and Mumbai, on settling the old dues and as
such it cannot be considered as non-allotment of slots, as
SRA has received the slots it requested for in compliance
with plan approval order. The SRA cannot get all previous
slots as this condition needs to be read with plan approval
order of this Tribunal. In that view of the matter, above CPs
is also found to be Satisfactorily complied with.
125. As regards to CP no. 4: International Traffic Right
Clearance: On perusal of the plan approval order dated
22nd June, 2021, it is found that no blanket approval can
be granted upfront to the SRA as it has to approach the
concerned authorities for grant of such approval as per
applicable laws. As already stated above, the plan approval
order has reached its finality, thus, accepting the fact
that all the approval issued upfront cannot be reinstated.
Accordingly, this condition precedent needs to be read with
plan approval order. Even otherwise there is no dispute that
under the approved plan, SRA has to re-commence with
operation of six aircrafts. The International Traffic Rights
clearance is required to be obtained in compliance with
the applicable laws which stipulates that minimum twenty
aircrafts are required to be deployed before applying for
such clearance. In view of this, we find that this condition
cannot be satisfied upfront and needs to be satisfied in
compliance with applicable laws i.e., after the SRA has
twenty aircrafts in operation which can only be achieved
once the operation is re-commenced successfully.
Accordingly, this condition can only be fulfilled after the
SRA/Applicants re-commences its business and not prior
to its commencement.
It goes without saying that plan approved by this Tribunal
has to be implemented without any modification much less
than on satisfaction of any other undertaking and thus, the
effective date and completion date of condition precedent
under the plan shall have to be read as 20th May, 2022.
[2024] 11 S.C.R. 2117

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

126. In the background of above facts and for the reasons
stated above we hold that in addition to CPs (I) & (V) which
are admittedly complied, remaining CPs (II), (III), (IV) are
also duly complied.”
94. During the period when the aforesaid order of the NCLT was
passed, the SRA possessed a valid AOC and therefore, there was
no dispute pertaining to this Condition Precedent. With respect
to the Slot Allotment Approval, the NCLT observed that although
the historic slots which were available to the Corporate Debtor
could not be obtained by the SRA, yet the slots for which the SRA
had applied were granted to it by the concerned authorities upon
settling the old dues and as such, this could not be considered as
non-allotment of slots. Therefore, this Condition Precedent was
found to be satisfactorily complied with. As regards the Condition
Precedent on obtaining International Traffic Rights Clearance, the
applicable law required a minimum of 20 aircrafts to be deployed
before applying for such a clearance. However, under the approved
Plan, the SRA had to re-commence with the operations with only six
aircrafts. It was, therefore, held that this Condition Precedent could
not have been satisfied upfront and could only be satisfied once the
operations of the Corporate Debtor had commenced successfully.
With such observation, this Condition Precedent was also found to
be duly complied with. The NCLT noted that the plan which was
approved vide the Plan approval order dated 22.06.2021 had to be
implemented without any modification and thus the Effective Date
i.e., the date of completion of the Conditions Precedent under the
Resolution Plan should be read as 20.05.2022.
95. The Appellants filed a statutory appeal against the order of the NCLT
dated 13.01.2023 before the NCLAT and also sought a stay on the
same. However, the grant of stay was declined by the NCLAT on
03.03.2023. This should have closed the debate on the understanding
between the parties that the Effective Date was set in stone.
96. The NCLAT also vide its impugned order held that the SRA had
fulfilled all the required Conditions Precedent. On Slot Allotment
Approval, it was held that 48 slots have been obtained by the
SRA for the recommencement of operations. The contention of the
Appellants that airport charges are required to be paid upfront for
obtaining such slots was rejected since the NCLAT was of the opinion
2118 [2024] 11 S.C.R.

Supreme Court Reports

that the payment towards airport charges, which are a part of CIRP
costs, must be made as per the terms of the Resolution Plan when
its implementation had begun. Therefore, it was declared that the
Condition Precedent on Slot Allotment Approval was fulfilled despite
the non-payment of Airport Dues by the SRA. On International Traffic
Rights Clearance, the NCLAT echoed the opinion of the NCLT that
it could not have obtained this clearance without commencing and
amplifying the operations of the Corporate Debtor. It was observed
that this Condition Precedent should not come in the way of the
implementation of the Resolution Plan. As regards the AOC, it
was contended by the Appellants that the same had lapsed after
03.09.2023 and no extension was granted by the DGCA thereafter.
However, the NCLAT was of the view that the AOC was valid on
the date when the SRA had approached the NCLT for a declaration
that the Conditions Precedent were fulfilled and also when the order
dated 13.01.2023 of the NCLT was passed. The expiry of the validity
period of the AOC during the pendency of the Company Appeal
was not considered sufficient grounds to hold that the Condition
Precedent was not fulfilled. The NCLAT while reaffirming that all
the Conditions Precedent were satisfactorily fulfilled observed that
there was no infirmity in the order of the NCLT dated 13.01.2023.
The NCLAT further directed the SRA to make an application for the
re-issuance of the AOC within 90 days from the date of its order
i.e., by 12.06.2024.
97. The nature of the Conditions Precedent laid out under the Resolution
Plan were such that several of them could not be fulfilled before
the operationalization of the Corporate Debtor. The assertion that
the Effective Date would kick in only upon fulfilment of all the
Conditions Precedent and since the Appellants had challenged
the fulfilment of the Conditions Precedent, such a date could not
be said to have yet arrived, cannot be accepted. The order of
the NCLT dated 22.06.2021 approving the Resolution Plan had
fixed the Effective Date as the 90th day from the Approval date,
which was subject to a maximum extension of another 180 days.
It consciously removed the ambiguity that plagued Clauses 7.6.2
and 7.6.4 respectively for the precise reason & with the idea that
the Effective Date should not be endlessly postponed. Agreeing
to such an erroneous proposition would mean that the Effective
Date would never be achieved as long as the parties are litigating
[2024] 11 S.C.R. 2119

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

before the Courts and the SRA would be absolved of taking the
implementation under the Resolution Plan further. The NCLAT
had declined to stay the order of the NCLT dated 13.01.2023
which held that all the Conditions Precedent were fulfilled. Further,
on a perusal of the impugned order, it is evident that the NCLT
and NCLAT rendered concurrent findings of fact that the SRA
had fulfilled all the Conditions Precedent. In other words, it was
repeatedly declared by different fora that the Effective Date was
frozen on 20.05.2022 and the obligation of the SRA to implement
the Resolution Plan was absolute. All steps necessary should have
been undertaken by the SRA, at least post the impugned order of
the NCLAT dated 12.03.2024. To contend that its hands were tied
since the Conditions Precedent were still being challenged before
this Court is nothing but a reflection of the mala fide intention on
the part of the SRA to not fulfil its obligations in accordance with the
Resolution Plan under the garb of pendency of litigation. Such an
undue delay cannot be permitted, especially in light of the intention
of the IBC, 2016 to ensure a successful and time-bound revival of
the Corporate Debtor. This places a higher obligation on the SRA
to act in an expeditious manner.

b. Whether the NCLAT could have directed the Performance
Bank Guarantee (PBG) to be adjusted against the first
tranche payment which was to be made within 180 days
of the Effective Date?
98. There is no dispute to the fact that the Effective Date was frozen on
20.05.2022. Therefore, as per Clause 6.3.1(g) on the “Infusion of
Funds and Timelines”, and Serial No.11 under Clause 7.7, the first
tranche payment of Rs. 350 Crore had to be made by the SRA, upfront,
within a period of 180 days from the Effective Date i.e., 20.05.2022.
As per the Resolution Plan, this 180-day timeline otherwise would
have expired on 16.11.2022. Several extensions were granted to
the SRA to infuse this amount, at different stages of this litigation,
by the NCLT, the NCLAT and this Court as well - First, by the NCLT
vide order dated 13.01.2023, by which the timeline for infusion of
first tranche payment was extended till 15.05.2023; Secondly, by the
NCLAT vide order dated 26.05.2023, where the timeline of 180 days
was further extended up to 31.08.2023; Thirdly, again by the NCLAT
vide order dated 28.08.2023, where the timeline of 180 days was
2120 [2024] 11 S.C.R.

Supreme Court Reports

extended up to 30.09.2023; and Fourthly, by this Court vide order
dated 18.01.2024, whereby the time of 180 days for infusion was
extended up to 31.01.2024.

I. The adjustment of the PBG was impermissible under the
terms of the Resolution Plan read with Regulation 36B(4A)
of the 2016 Regulations.
99. It is the case of the SRA that as per Clause 6.4.4 on the “Treatment
of Financial Creditors” and the table adduced under the heading
“Summary of payment and security package”, the PBG of Rs. 150
Crore could have been adjusted against the payment of the first
tranche. It was submitted that in the last column of the table, the
“Date of Release of Security” is provided. In the very first head in the
column on date of release of security, the expression “PBG adjusted”
has been mentioned against the first tranche of cash payment to be
made to the Financial Creditors. Further, in the explanation given to
the said table under Clause 6.4.4(a)(i), against the heading “Date
of Release of Security”, there is no mention of the PBG while the
other two types of security find a mention. It was submitted that
the only good reason for this exclusion was the understanding that
the PBG was adjustable against the obligation of the SRA towards
payment of the first tranche. Further, it is the case of the SRA that
since a revolving security package was agreed to under Clause
6.4.4, other types of security were envisioned for the subsequent
tranches of payment and therefore, no issue could have been raised
in adjusting the PBG towards the first tranche. However, we find it
extremely difficult to agree with the stance of the SRA for multiple
reasons which are detailed below.
100. The RFRP under Clause 3.13 deals with the Performance Security
to be given by the SRA. Clause 3.13.1 provides that the SRA shall
furnish or cause to be furnished, an unconditional and irrevocable
PBG, of an amount of Rs. 150 Crore in favor of the SBI within 7 days
of being declared as the SRA. Clause 3.13.2 provides that the PBG
shall be valid, till the later of (a) a period of 180 days from the date
of the PBG; and (b) the date of completion of the implementation of
the Resolution Plan, as determined by the RP and the CoC. Clause
3.13.7 provides that the PBG can be invoked or appropriated at
any time by the SBI, without any reference to the SRA, upon the
occurrence of any of the following conditions;
[2024] 11 S.C.R. 2121

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

i. If any of the conditions under the Letter of Intent or the Resolution
Plan are breached;
ii. If the SRA fails to re-issue or extend the PBG in accordance
with the terms of the RFRP; or
iii. Failure of the SRA to implement the Resolution Plan to the
satisfaction of the CoC, and in accordance with the terms of
the Resolution Plan.
Clause 3.13.8 provides that the PBG shall be returned to the SRA
within a period of 7 days, upon 100% completion of the implementation
of the Resolution Plan by the SRA. Finally, Clause 3.13.9 states in
categorical terms that, the PBG shall not be set-off against or used
as part of the consideration that the SRA proposes to offer in relation
to the Corporate Debtor, even if expressly indicated as such by the
SRA in the Resolution Plan.
101. It is of vital importance that the aforementioned clauses of the RFRP
are read conjointly with Clauses 7.3 and 9.4 of the Resolution Plan.
Clause 7.3 of the Resolution Plan deals with the “Compliance with
respect to Regulation 36B(4A)” and states that the SRA undertakes
to provide the PBG as per the terms of the RFRP in favor of the
SBI within 7 days of it being declared as the SRA. Clause 9.4 of
the Resolution Plan is titled “Implementation” and states that “the
performance guarantee provided by the Resolution Applicant can
be invoked in accordance with the terms of the RFRP”. Therefore,
it is as clear as a noonday that the terms of the RFRP, particularly
in relation to the performance security i.e., PBG, stood incorporated
in the Resolution Plan by way of Clauses 7.3 and 9.4 respectively
of the Resolution Plan.
102. Furthermore, in the Covering Letter adduced with the Resolution
Plan, the SRA stated as thus:
“4. We hereby undertake that we, and our Representatives,
shall at all times, be in compliance with the provisions of
the RFRP, the Non-Disclosure Agreement, the IB Code
and the CIRP Regulations.
xxx xxx xxx
c. Acceptance
We hereby unconditionally and irrevocably agree and
accept the terms of the RFRP and that the decision made
2122 [2024] 11 S.C.R.

Supreme Court Reports

by the Resolution Professional, CoC and/or the Adjudicating
Authority in respect of any matter with respect to, or arising
out of, the RFRP and the Resolution Plan Submission
Process shall be binding on us…

xxx xxx xxx
10. We confirm that we have not taken any deviations so as
to be deemed non-responsive with respect to the provisions
of the RFRP, the IB Code and the CIRP Regulations.”
(emphasis supplied)

A bare reading of the above also strengthens the conclusion that
the SRA has to remain compliant with the terms of the RFRP, at all
times, in addition to being obedient to the terms of the Resolution
Plan. Therefore, to say that the RFRP was merely a wish list of the
CoC which was informed to the applicants at the time of inviting plans
is incorrect, to say the least. The provisions of the RFRP, especially
those provisions related to the Performance Security or PBG, were
binding on the SRA.
103. The learned counsel for the SRA tried to place reliance on one
another Clause of the Resolution Plan i.e., Clause 6.4.12 which
stated that the PBG would bring financial flexibility and help the
SRA to advance certain committed payments. This according to
the SRA is an affirmation of the fact that the PBG could have been
adjusted against the first tranche payment. However, it must be
pointed out that Clause 6.4.12 was amended vide an Addendum to
the Resolution Plan dated 02.10.2020. The erstwhile Clause 6.4.12
of the Resolution Plan reads thus:
“6.4.12. Request for the consideration of the CoC - The
Resolution Applicant shall provide a performance security
bank guarantee for a total sum of Rs. 47.5 Crores, which
will bring financial flexibility for the Resolution Applicant
and help the Resolution Applicant advance the committed
payments and achieve its goal of re-commencing the
operations of Jet Airways at the earliest.”
However, the aforesaid Clause 6.4.12 of the Resolution Plan was
deleted in its entirety and replaced with the following:
[2024] 11 S.C.R. 2123

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

“6.4.12. Request for the consideration of the CoC - As
required under the RFRP, the Resolution Applicant shall
provide the performance security bank guarantee (“PBG”)
for a total sum of Rs. 150 Crores. The PBG will be provided
in two parts, with the first PBG of Rs. 47.5 Crores provided
within 7 (seven) days from the date of receipt of LOI; and
PBG for the remaining sum of Rs. 102.5 Crores provided
on the Effective Date.”
A reading of the amended Clause 6.4.12 of the Resolution Plan
indicates that the parties had mutually agreed to do away with
the phrase “which will bring financial flexibility for the Resolution
Applicant and help the Resolution Applicant advance the committed
payments and achieve its goal of re-commencing the operations of
Jet Airways at the earliest”. What can be plainly deduced from such
a deletion is that the PBG cannot be used by the SRA to advance
any payments that are required to be paid under the scheme of the
Resolution Plan. This, additionally, cements the idea that the PBG
could not be adjusted towards any consideration or payment which
had to be made by the SRA. Such an amendment in Clause 6.4.12
only brought the Resolution Plan further in line with the terms of
the RFRP.
104. An adjustment of the PBG against the first tranche payment would
also be in violation of Regulation 36B(4A) of the 2016 Regulations
which was inserted by Notification No. IBBI/2019-20/GN/REG040
dated 24.01.2019. The same is reproduced hereinbelow:
“(4A) The request for resolution plans shall require
the resolution applicant, in case its resolution plan is
approved under sub-section (4) of section 30, to provide
a performance security within the time specified therein
and such performance security shall stand forfeited if the
resolution applicant of such plan, after its approval by the
Adjudicating Authority, fails to implement or contributes to
the failure of implementation of that plan in accordance
with the terms of the plan and its implementation schedule.
Explanation I. – For the purposes of this sub-regulation,
“performance security” shall mean security of such nature,
value, duration and source, as may be specified in the
request for resolution plans with the approval of the
2124 [2024] 11 S.C.R.

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committee, having regard to the nature of resolution plan
and business of the corporate debtor.
Explanation II. – A performance security may be specified
in absolute terms such as guarantee from a bank for
Rs. X for Y years or in relation to one or more variables
such as the term of the resolution plan, amount payable
to creditors under the resolution plan, etc.”
(emphasis supplied)

105. Regulation 36B(4A) states that the performance security shall stand
forfeited if the resolution applicant fails to implement or contributes to
the failure of implementation of the plan, in accordance with the terms
of the Resolution Plan and its implementation Schedule. Therefore,
the PBG had to be kept alive until the complete implementation of
the Resolution Plan as per Regulation 36B(4A) as well. This is also
what is provided under Clauses 3.13.2 and 3.13.8 of the RFRP
respectively wherein the PBG was required to be kept alive and
was to be returned to the SRA only upon 100% completion of the
implementation of the Resolution Plan. This binding nature of the
RFRP was transferred onto the Resolution Plan through Clauses
7.3 and 9.4 respectively of the Resolution Plan.
106. The NCLAT in one of its orders i.e., the order dated 26.05.2023, had
restrained the Appellants from invoking the PBG without the leave of
the NCLT. While saying so, the following observations were made;
“19. When the Resolution Plan of the Corporate Debtor
has received approval up to Hon’ble Supreme Court and
the Monitoring Committee is constituted under the Plan
to oversee implementation, the Monitoring Committee
has to act as a facilitator for implementation of the
Resolution Plan instead of finding fault and taking steps,
which does not facilitate the implementation, rather delay
the implementation. There is no doubt that Performance
Bank Guarantee can be invoked by the MC Lenders, but
the said invocation can only take place when SRA has
failed to implement the Plan. Present is a case where
directions have been issued to both MC Lenders and
SRA to implement the Plan and the event of failure of the
Plan has not yet arrived. When the Adjudicating Authority
[2024] 11 S.C.R. 2125

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

has directed on 13.01.2023 to take steps towards the
implementation of the Plan and which order was not been
stayed by this Tribunal on 03.03.2023, the steps ought
to have been taken by the MC Lenders in furtherance
of the implementation. The time has not arrived for
invoking the Performance Bank Guarantee. When the
SRA is ready to undertake to perform its obligations
under the Plan, we are of the view that Performance
Bank Guarantee given by the SRA cannot be permitted
to the invoked by the MC Lenders. MC Lenders instead
of threatening to invoke Performance Bank Guarantee,
should take steps, which may help implementation of the
Plan and to achieve the objective of Resolution Plan. The
Resolution Plan has been approved with the intent and
purpose to revive the Corporate Debtor, which revival
is in accordance with objective and purpose of the IBC.
We again reiterate that efforts by MC Lenders and SRA
should be coordinated for revival of the Corporate Debtor,
so as to start its operations at an early date, which is in
the interest of all stake holders as well as in the interest
of Corporate Debtor.
20. In view of the aforesaid, we direct that MC Lenders shall
not invoke the Performance Bank Guarantee in the facts
of the present case as on date, and for invocation, if any,
MC Lenders may take leave of the Adjudicating Authority.
The IA Nos.2159-2160 is disposed of accordingly.”
(emphasis supplied)

107. A careful reading of the aforesaid order of the NCLAT reflects that
the NCLAT had itself conceded to the position that the Appellants
have a right to invoke the PBG in a situation where the SRA had
failed to implement the Resolution Plan. This is again in line with
the intention under Regulation 36B(4A). Therefore, even in light of
the NCLAT’s own order dated 26.05.2023, it does not follow that the
PBG could have been adjusted by the SRA, mid-implementation,
against its payment obligation.
108. The NCLAT in its order dated 28.08.2023 dealt with the issue of
adjustment of PBG against the first tranche payment in light of the
2126 [2024] 11 S.C.R.

Supreme Court Reports

offer made in the Lender’s Affidavit dated 16.08.2023 and made
certain observations regarding Regulation 36B(4A) of the 2016
Regulations. The same are as follows:
“26. When we look to the Regulation 36B (4A) it is clear that
the provision provides that RFRP shall require Resolution
Applicant to provide Performance Bank Guarantee within the
time specified. Sub-Section 4A provides that if Resolution
Applicant after approval fails to implement Performance
Security it shall stand forfeited. Present is a case, where
Performance Security has already been provided in
compliance of sub- Regulation 4A and present is not a case
that any power to forfeit the Performance Bank Guarantee
to be exercised under sub-Regulation (4A). On Explanation
I, attention of the Court was drawn by Learned Counsel for
SRA, which indicates that the performance security which
is contemplated, can be of such nature, value, duration and
source as may be specified. Thus, Performance Security
can be of a particular duration and when the Resolution
Plan provides release of security at the time of first tranche
of payment of Rs. 350 Crores, no exception can be taken
to adjustment of the Performance Bank Guarantee. The
request of SRA to adjust Performance Bank Guarantee
of Rs. 150 Crores is thus according to Clause 6.4.4 of the
Resolution Plan on which no exception can be taken.
27. Submission was made by Learned Sr. Counsel for the
Appellant that performance Bank Guarantee has to be
maintained till the completion of the plan. The summary of
payment and security package as contained in the table
indicate that there are large numbers of other securities
which are to be continued. The securities in the last column
which are mortgaged over three Dubai Properties are to be
released on year 5 or on complete payment whichever is
earlier. The plan thus provides for adequate securities to
ensure the payment hence the adjustment of Performance
Bank Guarantee in the first tranche of payment cannot be
said to be against the Resolution Plan. We thus are of the
view that prayer made by the Applicant in the Application
in Prayer (a) is to be allowed.”
(emphasis supplied)
[2024] 11 S.C.R. 2127

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

109. A bare perusal of the above observations would indicate that the
NCLAT proceeded on an incorrect understanding of Regulation
36B(4A) and its First Explanation. Regulation 36B(4A) does not state
that if the Resolution Applicant, after approval, fails to implement
the PBG, then it shall stand forfeited. Instead, what the Regulation
actually states is that the performance security shall stand forfeited,
if the resolution applicant of such a plan, after its approval by the
Adjudicating Authority, “fails to implement or contributes to the
failure of implementation of that plan in accordance with the terms
of the plan and its implementation schedule”. It is not the failure to
implement the performance security i.e., the PBG, that is dealt with
in this Regulation but the consequence of the failure to implement
“the Plan” by the SRA.
110. Further the order dated 28.08.2023 proceeds to interpret Explanation I
to Regulation 36B(4A) and states that since according to Explanation
I, the performance security can be of a particular duration, the
Resolution Plan can provide for the release of security at the time of
the first tranche payment of Rs. 350 Crore and no exception can be
taken to the adjustment of the PBG. However, what the NCLAT failed
to take notice of is that under Explanation I to Regulation 36B(4A),
the performance security shall mean security of such nature, value,
duration and source, as may be specified “in the request for resolution
plans”. The duration of the performance security that has been
specified in the RFRP is given under Clauses 3.13.2 and 3.13.8 of
the RFRP which categorically states that the PBG shall be kept alive
until the Resolution Plan has been completely implemented. This is the
duration which is referred to in Explanation I to Regulation 36B(4A).
111. Now, if the intention under the RFRP, the Resolution Plan (under
Clauses 7.3 and 9.4) and Regulation 36B(4A) was that the PBG
had to be kept alive till the completion of implementation of the
Resolution Plan by the SRA and that it cannot be set-off against
any payment obligation, then how do we reconcile such an intention
with the expression “PBG adjusted” mentioned under Clause 6.4.4
of the Resolution Plan? As mentioned above, Clauses 7.3 and 9.4
respectively of the Resolution Plan incorporated the terms of the
RFRP into the Resolution Plan. Clause 3.13.9 of the RFRP states that
the PBG shall not be set off against any payment or consideration
which is to be made by the SRA, even if expressly provided so
under the Resolution Plan. Clause 6.4.4 is quite ambiguous in
2128 [2024] 11 S.C.R.

Supreme Court Reports

its construction regarding the question whether the PBG can be
specifically adjusted against the first tranche payment. Although in
the Summary of Payments and Security Package, under the column
titled “Date of release of security”, the expression “PBG adjusted”
exists, yet Clause 6.4.4(a)(i) which furnishes some additional clarity
on the Summary of Payments and Security Package provides no
mention of the PBG under the heading “Date of release of Security”,
while the other two forms of security i.e., the BKC property and Dubai
property No.1 are mentioned. The argument of the counsel for the
Respondent is that this omission indicates that the PBG would be
adjusted under the first tranche payment. However, in our considered
opinion irrespective of whether Clause 6.4.4 expressly or impliedly
provided for the PBG to be adjusted, such a provision would create
a dissonance with Clause 3.13.9 of the RFRP which has also been
made binding on the SRA through Clauses 7.3 and 9.4 respectively
of the Resolution Plan. Therefore, such an adjustment should not
be allowed in the facts of the present case.

II. The Lender’s Affidavit dated 16.08.2023 did not impose
conditions which were different from the terms of the
Resolution Plan.
112. It is the case of the Appellants that Serial No.11 under Clause 7.7.1
read with Clause 6.1.3(g) evidences that the SRA had to infuse Rs.
350 Crore “in cash” and it was for this reason alone that Para 8(a) of
the Lender’s Affidavit required the infusion of Rs. 350 Crore to be done
in cash by 31.08.2023. It was submitted that such a requirement for
cash payment flowed directly from the Resolution Plan under which
an adjustment of the PBG was impermissible and not just out of the
Lender’s Affidavit dated 16.08.2023. This is because the Lender’s
Affidavit has not and cannot impose any condition over and above
the one laid under the Resolution Plan.
113. On the other hand, the Respondents vehemently submitted that it
was only the Lender’s Affidavit dated 16.08.2023 which stipulated
the condition that Rs. 350 Crore had to be infused in cash by
31.08.2023, while the Resolution Plan, under Clause 6.4.4 allowed
for the payment of Rs. 200 Crore in cash and Rs. 150 Crore through
adjusting the PBG. In other words, they argued that the conditions
envisaged in the Lender’s Affidavit were different from those stipulated
in the Resolution Plan.
[2024] 11 S.C.R. 2129

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

114. However, the intent of the legislature is very clear on the aspect that
once a Resolution Plan is approved by the Adjudicating Authority
i.e., the NCLT, it becomes binding on all the stakeholders involved in
the Resolution Plan. Section 31(1) of the IBC, 2016 reads as thus:
“31. (1) If the Adjudicating Authority is satisfied that
the resolution plan as approved by the committee of
creditors under sub-section (4) of section 30 meets the
requirements as referred to in sub-section (2) of section
30, it shall by order approve the resolution plan which shall
be binding on the corporate debtor and its employees,
members, creditors,[including the Central Government,
any State Government or any local authority to whom
a debt in respect of the payment of dues arising under
any law for the time being in force, such as authorities
to whom statutory dues are owed,] guarantors and other
stakeholders involved in the resolution plan.”
(emphasis supplied)

115. This Court in Ebix Singapore Private Limited v. Committee Of
Creditors of Educomp Solutions Limited and Another reported
in (2022) 2 SCC 401 was faced with the issue whether withdrawals
or modifications by successful resolution applicants were permissible
under the IBC, 2016 i.e., whether a resolution applicant is entitled to
withdraw or modify its Resolution Plan, once it has been submitted
by the Resolution Professional to the Adjudicating Authority and
before it is approved by such authority under Section 31(1) of the
IBC, 2016. It was unequivocally held that, based on the plain terms
of the IBC, 2016, the Adjudicating Authority lacks the power to allow
the withdrawal or modification of the Resolution Plan by a successful
resolution applicant or to give effect to any such clauses in the
Resolution Plan. The relevant observations made are reproduced
hereinbelow:
“164. The approval of the adjudicating authority under
Section 31(1) IBC has the effect of making the resolution
plan binding on all stakeholders. These stakeholders
include the employees of the corporate debtor whose terms
of employment would be governed by the resolution plan,
the Central and State Governments who would receive
2130 [2024] 11 S.C.R.

Supreme Court Reports

their tax dues on the basis of the terms of the resolution
plan and local authorities to whom dues are owed. These
stakeholders are not direct participants in the CIRP but
are bound by its consequence by virtue of the approval
of the resolution plan, under Section 31(1) IBC. Section
31(1) ensures that the resolution plan becomes binding
on all stakeholders after it is approved by the adjudicating
authority. The language of Section 31(1) cannot be
construed to mean that a resolution plan is indeterminate
or open to withdrawal or modification until it is approved
by the adjudicating authority or that it is not binding
between the CoC and the successful resolution applicant.
Regulation 39(4) of the CIRP Regulations mandates that
the RP should endeavor to submit the plan at least fifteen
days before the statutory period of the CIRP under Section
12 is due to expire along with a receipt of a PBG and a
compliance certificate as Form H. It is pertinent to note
that sub-section (3) to Section 12 mandates that the CIRP
process, including legal proceedings, must be concluded
within 330 days. This three-hundred-and-thirty-day period
can be extended only in exceptional circumstances, if the
process is at near conclusion and serves the object of IBC,
as held by a three-Judge Bench of this Court in Essar
Steel [Essar Steel (India) Ltd. (CoC) v. Satish Kumar Gupta,
(2020) 8 SCC 531 : (2021) 2 SCC (Civ) 443]. Therefore,
after accounting for all statutorily envisaged delays which
the RP has to explain in its Form H and otherwise through
Regulation 40-B, the procedure envisages a fifteen-day
window between submission of resolution plan and its
approval or rejection by the adjudicating authority. This
clearly indicates that the statute envisages a certain level of
finality before the resolution plan is submitted for approval
to the adjudicating authority. Even the CoC is not permitted
to approve multiple resolution plans or solicit EoIs after
submission of a resolution plan to the adjudicating authority,
which would possibly be in contemplation if the resolution
applicant was permitted to withdraw from, or modify, the
plan after acceptance by the CoC. Regulation 36-B(4-A)
requires the furnishing of a performance security which
[2024] 11 S.C.R. 2131

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

will be forfeited if a resolution applicant fails to implement
the plan. This is collected before the adjudicating authority
approves the plan. Notably, the Regulations also direct
forfeiture of the performance security in case the resolution
applicant “contributes to the failure of implementation”,
which could potentially include any attempts at withdrawal
of the plan.
xxx xxx xxx
172. Based on the plain terms of the statute, the adjudicating
authority lacks the authority to allow the withdrawal
or modification of the resolution plan by a successful
resolution applicant or to give effect to any such clauses in
the resolution plan. Unlike Section 18(3)(b) of the erstwhile
SICA which vested the Board for Industrial and Financial
Reconstruction with the power to make modifications to a
draft scheme for sick industrial companies, the adjudicating
authority under Section 31(2) IBC can only examine the
validity of the plan on the anvil of the grounds stipulated
in Section 30(2) and either approve or reject the plan. The
adjudicating authority cannot compel a CoC to negotiate
further with a successful resolution applicant. A rejection
by the adjudicating authority is followed by a direction of
mandatory liquidation under Section 33. Section 30(2) does
not envisage setting aside of the resolution plan because
the resolution applicant is unwilling to execute it, based
on terms of its own resolution plan.
xxx xxx xxx
222. If the legislature in its wisdom, were to recognise the
concept of withdrawals or modifications to a resolution plan
after it has been submitted to the adjudicating authority, it
must specifically provide for a tether under IBC and/or the
Regulations. This tether must be coupled with directions
on narrowly defined grounds on which such actions are
permissible and procedural directions, which may include
the timelines in which they can be proposed, voting
requirements and threshold for approval by the CoC (as
the case may be). They must also contemplate at which
stage the corporate debtor may be sent into liquidation
2132 [2024] 11 S.C.R.

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by the adjudicating authority or otherwise, in the event
of a failed negotiation for modification and/or withdrawal.
These are matters for legislative policy.
223. In the present framework, even if an impermissible
understanding of equity is imported through the route
of residual powers or the terms of the resolution plan
are interpreted in a manner that enables the appellants›
desired course of action, it is wholly unclear on whether
a withdrawal of a CoC-approved resolution plan at a
later stage of the process would result in the adjudicating
authority directing mandatory liquidation of the corporate
debtor. Pertinently, this direction has been otherwise
provided in Section 33(1)(b) IBC when an adjudicating
authority rejects a resolution plan under Section 31. In this
context, we hold that the existing insolvency framework in
India provides no scope for effecting further modifications
or withdrawals of CoC-approved resolution plans, at the
behest of the successful resolution applicant, once the
plan has been submitted to the adjudicating authority. A
resolution applicant, after obtaining the financial information
of the corporate debtor through the informational utilities
and perusing the IM, is assumed to have analysed the
risks in the business of the corporate debtor and submitted
a considered proposal. A submitted resolution plan is
binding and irrevocable as between the CoC and the
successful resolution applicant in terms of the provisions
of IBC and the CIRP Regulations. In the case of Kundan
Care, since both, the resolution applicant and the CoC,
have requested for modification of the resolution plan
because of the uncertainty over the PPA, cleared by the
ruling of this Court in Gujarat Urja [Gujarat Urja Vikas
Nigam Ltd. v. Amit Gupta, (2021) 7 SCC 209 : (2021) 4
SCC (Civ) 1] , a one-time relief under Article 142 of the
Constitution is provided with the conditions prescribed in
Section K.2.”
(emphasis supplied)

116. In light of the aforesaid, it is clear that the existing insolvency
framework does not provide any scope for effecting further
[2024] 11 S.C.R. 2133

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

modifications or withdrawals of the Resolution Plan approved by the
CoC, at the behest of the successful resolution applicant, once the
plan has been submitted to the adjudicating authority. The submitted
Resolution Plan is binding and irrevocable as between the CoC and
the successful resolution applicant in terms of the provisions of the
IBC, 2016 and the 2016 Regulations as well. In other words, once
a CoC-approved resolution plan is submitted to the Adjudicating
Authority i.e., NCLT, it immediately becomes binding on the CoC
and the SRA, even if the Adjudicating Authority has not yet given
its stamp of approval on the same. While deciding so, this Court
re-emphasized the object under Section 31(1) of the IBC, 2016 and
observed that once the Adjudicating Authority has approved the
plan under Section 31(1) of the IBC, 2016, the Resolution Plan is
binding on all the stakeholders including those stakeholders who are
not direct participants of the CIRP. Therefore, there is absolutely no
scope for modification of the terms of a Resolution Plan which has
received the imprimatur of the Adjudicating Authority, be it by the
Adjudicating Authority itself, the CoC or the SRA.
117. When the aforesaid is the position of law, and the NCLT had
approved the present Resolution Plan vide order dated 22.06.2021,
the Resolution Plan was immune to any modification or alteration
whatsoever. Therefore, the Appellants could have only proposed an
offer under the Lender’s Affidavit dated 16.08.2023 which stood true
to the terms of the Resolution Plan approved by the NCLT. They could
not have created any deviations, alterations or modifications of the
terms of the Resolution Plan. It is in this context that the submission
of the SRA that, the Lender’s Affidavit required an infusion of Rs. 350
Crore in cash, while the Resolution Plan allowed for the payment
of Rs. 200 Crore in cash and Rs. 150 Crore through adjustment
of the PBG, must be rejected. Both the Resolution Plan and the
Lender’s Affidavit dated 16.08.2023 reflected the same terms i.e.,
infusion “in cash” of the first tranche payment of Rs. 350 Crore. In
fact, even the date within which the Lender’s Affidavit required Rs.
350 Crore to be infused in cash i.e., 31.08.2023 was in compliance
with the order dated 26.05.2023 passed by the NCLAT granting the
2nd Implementation Extension. Therefore, no new terms were cast
on the SRA.
118. The fact that the Lender’s Affidavit did not impose any condition
which was different from that contemplated under the Resolution
2134 [2024] 11 S.C.R.

Supreme Court Reports

Plan, was also understood by all the parties involved, including
the SRA. This is evident from the arguments put forth by the SRA,
before the NCLAT and before this Court respectively, which dealt
with the issue of whether the adjustment of the PBG was possible
under the terms of the Lender’s Affidavit. The following were the
submissions made by the SRA in the order dated 28.08.2023 as
recorded by the NCLAT:
“20. Learned Sr. Counsel for the SRA has submitted
that approved Resolution Plan provides adjustment of
Performance Bank Guarantee towards first tranche of
payment whereas Learned Counsel for the Appellants has
referred to certain clauses of RFRP and also provisions
of Regulation 36B (4A) to support his submission that
performance bank guarantee cannot be permitted to be
invoked towards payment of first tranche.”
(emphasis supplied)

119. The submissions made by the SRA as recorded in the order of this
Court dated 18.01.2024 are as follows:
“18. The submission which has been urged on behalf of
the lenders has been opposed on behalf of the SRA by
Mr. Krishnendu Datta, senior counsel, on behalf of the
SRA, it has been submitted that:
(i) The Resolution Plan specifically contemplates the
adjustment of the PBG (originally of Rs. 47.5 crores,
subsequently enhanced to Rs. 150 crores). In support
of this submission, reliance has been placed on the
summary of payments and security package forming
a part of clause 6.4.4 of the Resolution Plan;
(ii) The SRA was in the first tranche required to pay an
amount of up to Rs. 185 crores against the creation
of securities, namely, (i) PBG of Rs. 47.5 crores;
(ii) BKC Property (if given); and (iii) Mortgage over
Dubai Property No 1 valued at over Rs. 100 crores.
In the last column of the table, it has been stipulated
that the securities would be released, as indicated;
(iii) The PBG was liable to be adjusted against the cash
payment of the first tranche of Rs. 185 crores;
[2024] 11 S.C.R. 2135

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

(iv) No specific date for the release of the security in
relation to the PBG has been mentioned;
(v) Moreover, in respect of the second tranche comprising
of Rs. 195 crores, there was no requirement to furnish
any security in the form of a PBG;
(vi) The securities, in other words, were of a revolving
nature, but significantly on the release of the PBG
against a cash payment of Rs. 185 crores, the PBG
is not required to be renewed as a fresh security for
the following tranches; and …”
(emphasis supplied)

120. A perusal of the abovementioned would indicate that both the
parties as well as the NCLAT were ad idem on the fact that the
terms imposed by the Lender’s Affidavit dated 16.08.2023 were
in pursuance of and similar to the terms of the Resolution Plan.
This is because, in order to take benefit of the offer made in the
Lender’s Affidavit, the SRA had repeatedly asserted that the PBG
should be allowed to be adjusted under the terms of the Resolution
Plan and as a consequence, such an adjustment must be allowed
under the Lender’s Affidavit as well. Even the NCLAT in its order
dated 28.08.2023 had held that the SRA could adjust the PBG of
Rs. 150 Crore to take benefit of the offer of the Lender’s Affidavit
by relying on Clause 6.4.4 of the Resolution Plan which provided
for the summary of payments and security package.
121. Therefore, in our view the conditions imposed on the SRA under the
Lender’s Affidavit and the Resolution Plan were one and the same,
the only difference being that the Appellants had offered not to press
issues relating to the compliance of the Conditions Precedent and
grant of extensions/exclusions along with offering to withdraw the
Company Appeal and the Appeals pending before this Court.
122. The order of this Court dated 18.01.2024 must be seen & understood
in the aforesaid background. While the appeal before us had resulted
from several interim orders of the NCLAT, the question before us
was whether the adjustment of the PBG of Rs. 150 Crore was
permissible under the Lender’s Affidavit as well as the terms of the
Resolution Plan, being one and the same. We interpreted the term
2136 [2024] 11 S.C.R.

Supreme Court Reports

“infuse” as mentioned in the affidavit and under the Resolution Plan,
and arrived at the conclusion that it demonstrably meant “payment
in cash”. Therefore, the directions that were issued by this Court,
especially the direction that - “the SRA shall peremptorily on or
before 31 January 2024, deposit an amount of Rs. 150 crores into
the designated account of SBI, failing which the consequences under
the Resolution Plan shall follow”, must have been necessarily seen
in the context of the Resolution Plan as well. The phrase “failing
which the consequences under the Resolution Plan shall follow” was
a mandatory direction that should have been taken into account by
the NCLAT in its impugned order dated 12.03.2024. There was no
escape for the NCLAT in this regard. There was no option which
was given to the SRA to deviate from this direction which purely
stemmed from the Resolution Plan. The fact that this direction was
binding was clearly understood by the SRA since it attempted to file
another Miscellaneous Application before this Court requesting for
an extension to comply with our order dated 18.01.2024 which was
dismissed as misconceived.
123. There were two other directions which were issued by us in our
order dated 18.01.2024 i.e., (ii) that the PBG of Rs. 150 Crore shall
continue to remain in operation and effect pending the final disposal
of the appeal before the NCLAT, and shall abide by the final outcome
of the appeal and the directions that may be issued by the NCLAT;
and (iii) whether or not the SRA has been compliant with all the
conditions of the Resolution Plan as well as of the conditions set out
in paragraph 8 of the affidavit dated 16 August 2023 shall be decided
by the NCLAT in the pending appeal. These two directions must
not be seen as giving any leeway to the NCLAT to act in complete
ignorance or defiance of the first direction that was issued by us. Such
a selective compliance with our order dated 18.01.2024 deserves
to be nipped in the bud more particularly when it was mandated
that our directions be considered and complied with in its entirety.
Therefore, the NCLAT, while finally deciding the pending Company
Appeal on merits which led to the impugned order dated 12.03.2024
has, either by design or unknowingly, ignored the directions issued
by this Court vide order dated 18.01.2024 that the remaining amount
of Rs. 150 Crore had to be necessarily deposited in cash only. This
has resulted in a perverse decision which stands contrary to law
and to the terms of the Resolution Plan itself.
[2024] 11 S.C.R. 2137

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

124. In view of our crystal clear order dated 18.01.2024, we are of the
opinion that the PBG of Rs. 150 Crore could not have been allowed
to be adjusted with the first tranche payment of Rs. 350 Crore.
Non-compliance of the SRA with the order of this Court has led to
a dereliction of its obligations to implement the Resolution Plan.

ii. Whether the non-implementation of the Resolution Plan by
the SRA necessarily leads to the consequence of liquidation
as under Section 33(3) of the IBC, 2016?
125. In the foregoing paragraphs, we have reached the conclusion that
the SRA failed to implement the Resolution Plan by not infusing
the first tranche payment of Rs. 350 Crore in cash, as required by
Clause 6.3.1(g) and the Implementation Schedule under Clause
7.7 of the Resolution Plan. It is now to be seen if this has resulted
in the contravention of other terms of the Resolution Plan as well.

a. Whether Respondent No.1/SRA had failed to implement
the Resolution Plan on non-payment of the Airport Dues
as per the terms of the Resolution Plan?
126. With respect to the Airport dues, the impugned order of the NCLAT
had taken into consideration Clauses 6.4.1(e), 6.4.1(h) and 6.4.1(m)
respectively. Specifically dealing with Clause 6.4.1(h), it said that this
provision dealt with the treatment of outstanding CIRP costs which
included parking charge i.e., Airport Charges. While considering so,
the following observations were made:
“54. The provisions of Resolution Plan as noted above
clearly indicates that CIRP costs includes Airport Charges.
SRA is also entitled to use funds available with the
Corporate Debtor as on effective date to meet any portion
of CIRP costs. The submission of the Appellants that the
entire Airport Charges have to be borne by the SRA upfront
cannot be accepted nor non-payment of Airport Charges by
SRA as on date makes the allotment of slot unavailable to
the SRA. Allotment of slot having been achieved by the SRA
as noted above, non-payment of airport charges upfront
by SRA cannot be said to be a reason to not accept the
fulfillment of condition of slot allotment. The payment of
Airport Charges has to be made as per the Resolution Plan
2138 [2024] 11 S.C.R.

Supreme Court Reports

when the implementation of the plans commences as per
the Resolution Plan. We thus do not find any substance in
the submission of Learned Counsel for the Appellant that
allotment of slot is not completed since airport charges
have not been paid by the SRA.
55. With regard to submission of the Appellant that old
dues of Airport Charges having not been settled, the
Adjudicating Authority has rightly observed that settling
old dues cannot be conceded as non-allotment of slots.
We thus fully concur with the finding of the Adjudicating
Authority that conditions precedent under Clause 7.6.1(c)
were fulfilled.”
(emphasis supplied).

127. The case of the Appellants is that upon consideration of Clause
6.4.1(h), the NCLAT erroneously concluded that the Airport Charges
would be a part of the CIRP costs. Clause 6.4.1(h) of the Resolution
Plan is reproduced hereinbelow:
“(h) Based on the information provided, the Resolution
Applicant have assumed that the amounts standing to
the credit of the bank account of the Corporate Debtor
(including amounts estimated to be received subsequently)
are sufficient to cover for the CIRP Costs of the Corporate
Debtor (excluding parking charges, rental charges,
employee dues, taxes etc). Accordingly, the Resolution
Applicant has set aside a sum of Rs. 25 Crores as CIRP
Costs towards payment of any such costs until the Approval
Date. Any expenses incurred by the Corporate Debtor from
the Approval Date until the Effective Date will be incurred
out of the positive bank balance of the Corporate Debtor.”
(emphasis supplied)

128. A plain reading of Clause 6.4.1(h) reveals that the amount standing
to the credit of the bank account of the Corporate Debtor would be
sufficient to cover the CIRP costs of the Corporate Debtor but that this
would exclude the parking charges, rental charges, employee dues,
taxes etc. Therefore, the clause does not expressly exclude Airport
Charges from the ambit of CIRP costs entirely but only states that
[2024] 11 S.C.R. 2139

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

the amount available in the bank account of the Corporate Debtor
would be insufficient to cover the parking charges, rental charges etc
which also form a part of the CIRP costs. Since such a bank balance
would not cover the parking charge, rental charges, employee dues,
taxes etc, the Resolution Plan had set apart a separate sum of Rs.
25 Crore for the payment of any such CIRP costs which might have
accrued till the Approval Date. Further, the other expenses including
parking charges, rental charges etc. which have been incurred post
the Approval Date but within the Effective Date i.e., the period during
which the Conditions Precedent would be fulfilled, would also be
incurred out of the positive bank balance of the Corporate Debtor.
This is what Clause 6.4.1(h) provides for. To hold that Clause 6.4.1(h)
excludes airport dues from the scope of CIRP costs altogether would
also question the placement of clauses such as Clauses 6.4.1(f)
(which provides for an estimate of Rs. 240 Crore towards parking
charges) under the larger umbrella of Clause 6.4.1 which deals with
the “Treatment of Outstanding CIRP Costs” in totality.
129. Therefore, what the Resolution Plan contemplates is that the Airport
Charges be subsumed within the CIRP Dues and since all of the
different CIRP dues cannot be satisfied through the bank balance
which stands to the credit of the Corporate Debtor, a separate
sum of Rs. 25 Crore was demarcated towards the remaining CIRP
payments. Hence, the NCLAT was right in arriving at the conclusion
that Airport Dues were indeed a part of the CIRP costs.
130. It must further be noted that, the impugned order of the NCLAT
nowhere caps the Airport Dues to a maximum of Rs. 25 Crore.
Moreover, such a mention of Rs. 25 Crore is plainly absent in its
observations regarding Airport Dues. All that is mentioned is that “The
payment of Airport Charges has to be made as per the Resolution
Plan when the implementation of the plan commences as per the
Resolution Plan”. It is in this regard that Clause 6.4.1(j) provides that
if the CIRP costs exceed the current estimates, then they will be paid
as per “actuals” in compliance with the provisions of the IBC and as
a consequence, the pay-outs towards the other creditors would be
reduced proportionately to account for such additional CIRP costs.
This would be subject to a minimum payment of liquidation value
to the Operational Creditors and Dissenting Financial Creditors of
the Corporate Debtor and subject to a maximum of Rs. 475 Crore.
Therefore, the Resolution Plan, too, does not contemplate the CIRP
2140 [2024] 11 S.C.R.

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costs to be strictly subject to a maximum of Rs. 25 Crore. To accept
such a contention of the Appellants would be to misinterpret the
observations made in the impugned order.
131. The Appellants rely on Clause 6.3.1(d), specifically under the heading
“BKC Property not part of Resolution” to assert that the Airport Dues
have to be settled upfront and in full in the first 180 days from the
Effective Date and that it cannot be in staggered payments spread
across a period of time. However, Clause 6.3.1(d) which is titled
“Proposal for Resolution of Outstanding Airport and Parking Dues
(Rs. 240 Crores as of August 31, 2020” is attached with the following
qualification:
“The Resolution Applicant states and confirms that this
“Proposal for Resolution of outstanding airport and parking
dues (approx. Rs. 240 Crores as of August 31,2020)” which
deals with the appropriation of the BKC Property is merely
a proposal and not a condition to the implementation of this
Resolution Plan and the CoC has the discretion to accept/
reject such a proposal. If the above-mentioned proposal
is acceptable to the CoC, then it is acceptable to the
Resolution Applicant in the manner stated hereinabove”.
(emphasis supplied)

The contention of the SRA is that the aforesaid qualification applies
equally to the part of Clause 6.3.1(d) under the heading “BKC Property
not part of resolution” and that the entire Clause 6.3.1(d) would remain
a proposal and not a binding condition on the SRA. Irrespective of a
determination on the same, even as per Clause 6.4.1, the payment
towards CIRP costs including Airport Charges had to be made in full,
in priority, within 180 days from the Effective Date. This is evident
from – (a) Clause 6.4.1(a) which states that the CIRP Costs are to
be paid in priority to any other creditor of the Corporate Debtor in
terms of Section 30(2)(a) of the IBC, 2016; (b) Clause 6.4.1(k) which
states that the outstanding CIRP costs shall be paid by the Resolution
Applicant out of the funds infused by the Resolution Applicant in
the Corporate Debtor and as per the Implementation Schedule set
out in Clause 7.7 below; (c) Clause 6.4.1(m) which states that the
CIRP cost shall be “fully paid and discharged after the Effective
Date” before payment is made to any of the creditors as per the
[2024] 11 S.C.R. 2141

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

Resolution Plan; (d) Clause 6.4.1(n) which states that the Resolution
Applicant has sufficient funds and that the CIRP costs shall be met
out of funds infused by the Resolution Applicant; and (e) S.No. 16
of the Implementation Schedule under Clause 7.7 which states that
the CIRP costs must be paid as per Clause 6.4.1 within Z+170 days.
132. Therefore, the SRA not having infused the first tranche payment of Rs.
350 Crore as per Clause 6.3.1(g) and S. No. 11 of the Implementation
Schedule under Clause 7.7 within a period of 180 days from the
Effective Date and within the multiple extensions granted therefrom,
has defaulted on its obligation towards the payment of CIRP costs
(which include airport dues) under Clause 6.4.1 as well.

b. Whether Respondent No.1/SRA could be said to have
failed to implement the Resolution Plan on account of the
non-payment of workmen and employees’ dues as per the
terms of the Resolution Plan and the order of the NCLT
dated 21.10.2022 which was confirmed by the order dated
31.01.2023 of this Court?
133. The Resolution Plan, under Clause 6.4.2 deals with the “Treatment
of Employees/Workmen dues, including dues of the Authorized
Representatives of Employees/Workmen”. Clause 6.4.2(a) provides
for a fixed sum of Rs. 52 Crore to be paid to the workmen and
employees towards settlement of all their claims. Clause 6.4.2(b)
states that this payment shall be made out of the funds infused by
the SRA in the Corporate Debtor, in priority to the payment to the
financial creditors and as per the Implementation Schedule set out
in Clause 7.7 i.e., within 175 days from the Effective Date. Clause
6.4.2(c) provides that if the Liquidation Value due to the workmen and
employees is not “nil”, then the SRA would pay such a Liquidation
Value. If this Liquidation Value is over and above the amount proposed
to be paid under the Resolution Plan, then such additional amounts
shall be first paid out of the positive bank balance of the Corporate
Debtor as on the Effective Date and the remaining amounts shall be
paid out of the amounts reserved for other creditors on a pro rata
basis, subject to a maximum of Rs. 475 Crore.
134. The order dated 21.10.2022 of the NCLAT dealt with the entitlements
of the workmen and employees to several payments and made the
following observations:
2142 [2024] 11 S.C.R.

Supreme Court Reports

“71. In view of the aforesaid discussion, we arrive at
following conclusions:
(i) The workmen and employees are entitled for payment
of full amount of provident fund and gratuity till the date of
commencement of the insolvency which amount is to be
paid by the Successful Resolution Applicant consequent
to approval of the Resolution Plan in addition to the 24
months workmen dues as the workmen is entitled to
under Section 53(1)(b) of the Code. It is made clear that
in addition to part amount of provident fund and gratuity
as proposed in Resolution Plan to workmen, Successful
Resolution Applicant is obliged to make payment of balance
unpaid amount of provident fund and gratuity to workmen
and employees.
72. Our answer to Question II and III is as follows:
(i) The workmen and employees are entitled to receive the
amount of provident fund and gratuity in full since they are
not part of the liquidation estate under Section 36(4)(b)(iii).
(ii) The workmen are entitled to receive their dues from the
Corporate Debtor for period of 24 months as per provision
of Section 53(1)(b) at least to minimum liquidation value
envisaged under Section 32(2)(b) read with Section 53(1).
80. As observed above, in admitted claim of workmen
provident fund, gratuity and leave encashment was
included, and payment proposed in plan partly satisfy
above dues also. The workmen are entitled to full payment
of provident fund and gratuity, hence, the balance of
above dues are to be paid by the Successful Resolution
Applicant, to satisfy statutory obligations. Non-payment
of full provident fund and gratuity shall lead to violation
of Section 30(2)(e), hence, to save the plan the above
payments have to be made.

xxx xxx xxx
128. In the forgoing discussions, we have noted that the
liquidation value of the workmen as has been referred to in
Form-H preferred by the Resolution Professional is Rs.113
[2024] 11 S.C.R. 2143

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

crores and workmen were entitled to receive at least Rs.113
crores as per Section 30(2)(b) read with Section 53(1)(b)
of the Code. Shri Krishnendu Datta, learned Counsel for
Successful Resolution Applicant during his submission,
submitted that Successful Resolution Applicant shall be
paying an amount of Rs.113 crores to the workmen as
per the Resolution Plan, since it was contemplated that, if
liquidation value is more than Rs.52 crores, the liquidation
value shall be payable to the workmen. To clear any doubt,
we deem it fit and proper to issue direction to Successful
Resolution Applicant to make payment to the workmen of
Rs.113 crores as per the Resolution Plan.

xxx xxx xxx
134. In result, the Appeal(s) are decided in following
manner:
(I) The Appeal(s) of workmen and employees being
Company Appeal (AT) (Insolvency) Nos. 643 of 2021, 752
of 2021, 801 of 2021, 915 of 2021, 771 of 2022 are partly
allowed with following directions:
(a) Successful Resolution Applicant is directed to make
payment of unpaid provident fund to the workmen till date
of insolvency commencement, after deducting the amount
already paid towards provident fund in the Resolution Plan
to the workmen.
(b) The workmen are also entitled for payment of their
gratuity dues as on insolvency commencement date,
after adjusting any amount towards gratuity paid under
the Resolution Plan.
It is made clear that entitlement of those employees and
workmen, who were demerged into AGSL shall not be
there, since demerger has not been treated as termination
of their services.
(c) The employees are also entitled for the payment of
their full provident fund, unpaid up to the date of insolvency
commencement date. It is made clear that full payment of
provident fund would be of that unpaid part of provident
2144 [2024] 11 S.C.R.

Supreme Court Reports

fund, which has not been deposited by the Corporate
Debtor in the EPFO.
(d) Employees shall also be entitled for the gratuity, which
fell due up to insolvency commencement date.
(e) The rest of the prayers of the workmen and employees
are denied.
(f) The Chairman of the Monitoring Committee, erstwhile
Resolution Professional is directed to compute the
payments to be made to workmen and employees within
one month from today and communicate the same to the
Successful Resolution Applicant to take steps for payment.”
(emphasis supplied)

135. Thus, it was held in clear terms that the workmen and employees
are entitled to full payment of Provident Fund and Gratuity. The non-
payment of these amounts shall lead to a violation of Section 30(2)
(e) of the IBC, 2016 which requires that the Resolution Plan must
not contravene any of the provisions of the law for the time being
in force. Further, it was held that the workmen and employees are
entitled to a liquidation value of Rs. 113 Crore instead of Rs. 52
Crore as contemplated in the Resolution Plan. The NCLAT directed
the Chairman of the Monitoring Committee (the erstwhile Resolution
Professional) to compute the payments to be made to the workmen
and employees within one month and to communicate the same to
the SRA. The RP had arrived at a figure of Rs. 226.6 Crore which
comprised of Rs. 14 Crore towards Provident Fund dues, Rs. 188.2
Crore towards Gratuity dues and Rs. 24.4 Crore towards damages
for non-payment of Provident Fund.
136. The SRA sought a clarification of the aforesaid order before the
NCLAT and vide order dated 02.12.2022, it was made clear that
the cost of paying the unpaid amount towards the Provident Fund
and Gratuity to the workmen and employees has to be borne by
the SRA. The same cannot be paid out of the amounts reserved
for the other creditors of the Corporate Debtor on a pro-rata basis
subject to a maximum of Rs. 475 Crore as stated in Clause 6.4.2(e)
of the Resolution Plan since that was a contemplation pertaining to
the liquidation value only and not for the dues relating to Provident
[2024] 11 S.C.R. 2145

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

Fund and Gratuity. An appeal against the order dated 21.10.2022
was dismissed by this Court vide order dated 30.01.2023. Therefore,
there was no scope left for the SRA to avoid payment of the Provident
Fund and Gratuity dues to the workmen and employees. Such an
obligation was in addition to the payment of minimum liquidation
value that the workmen/employees were entitled to under the terms
of the Resolution Plan.
137. The SRA had filed IA Nos. 3789-3790 of 2023 in the Company Appeal
on 16.06.2023 praying that the Gratuity Claims be allowed to be
paid in three tranches i.e., within 3, 4 and 5 years from the Closing
Date. The SRA also sought leave from the NCLAT to approach
the EPFO Authorities under Section 14B to seek a reduction or
waiver of the damages of Rs. 24.4 crore imposed on the Corporate
Debtor and to also pursue an appeal against the order of the EPFO
Authorities directing the SRA to pay the damages. Subsequently,
on 18.08.2023, the SRA filed two other IAs 3801-3802 of 2023 in
the Company Appeal, praying that, in case the previous IA relating
to the Gratuity and Provident Fund Claims is not allowed, then the
Resolution Plan cannot be implemented under Section 30(2)(e) and
as a consequence, the Lenders be directed to refund all amounts
invested or infused into the Corporate Debtor by the SRA.
138. The NCLAT in its impugned order has taken note of its own order
dated 21.10.2022 but has, however, only allowed the upfront payment
of the Provident Fund dues of Rs. 12 Crore to the workmen and
employees along with the payments that they are entitled to under
the Resolution Plan. There is no specific direction as regard the
payment obligations related to Gratuity nor any decision rendered
on the two aforesaid IAs filed by the SRA in the Company Appeal.
The NCLAT committed a serious error in failing to consider these
IAs filed by the SRA and has given the impression that the SRA is
liable to pay only the Provident Fund dues upfront.
139. According to the SRA, the dues relating to the Provident Fund would
be paid upfront in compliance with Section 11 of the Employees’
Provident Fund and Miscellaneous Provisions Act, 1952. However,
the Gratuity Dues could be paid in tranches since neither the order
dated 21.10.2022 of the NCLAT nor the order dated 30.01.2023
of this Court had imposed any timelines for the payment of the
Gratuity Dues. Furthermore, it was submitted that the provisions of
2146 [2024] 11 S.C.R.

Supreme Court Reports

the Payment of Gratuity Act, 1972 were not so stringent. However,
such a proposal cannot be allowed especially in light of the fact
that the order dated 21.10.2022 of the NCLAT is unambiguous in
its declaration that both Provident Fund and Gratuity dues have to
be paid by the SRA in order to save the Resolution Plan from being
hit by Section 30(2)(e) of the IBC, 2016.
140. Therefore, by not infusing the first tranche payment of Rs. 350 Crore
as per the Implementation Schedule of the Resolution Plan, the SRA
has breached the terms of the Resolution Plan which required a
minimum liquidation value of Rs. 113 Crore to be paid towards the
Workmen and Employees’ Dues as well. Moreover, both the Provident
Fund and Gratuity Dues amounting to Rs. 226 Crore should also
have been paid by the SRA as per the order dated 21.10.2022 of
the NCLAT in fulfillment of its obligations, which it failed to do.

c. Whether there were sufficient grounds before the NCLAT to
hold that Respondent No.1/SRA had contravened the terms
of the approved Resolution Plan and that the Corporate
Debtor must be directed to be liquidated under Section
33(3) of the IBC, 2016?
141. The NCLAT in its impugned order held that the non-deposit of Rs.
150 Crore in cash towards the first tranche payment of Rs. 350 Crore
cannot lead to the conclusion that the Resolution Plan had failed.
The relevant observations are reproduced hereinbelow:
“79. The submission of the Appellant that on account of
non-deposit INR 150 crores as directed by the Hon’ble
Supreme Court, should lead to liquidation of the Corporate
Debtor, cannot be accepted. The Hon’ble Supreme Court
in its judgment dated 18.01.2024 has clearly held that its
order modifying the direction of the Tribunal is confined only
to the permission granted to the SRA to adjust INR 150
crores PBG. Thus, modification of the order by the Hon’ble
Supreme Court also has to confine to the adjustment of
the PBG. It was held by the Hon’ble Supreme Court that
Appellant have asked for infusion of INR 350 crores and
infusion does not include adjustment of PBG. The Hon’ble
Supreme Court neither considered nor expressed any
opinion on the question of liquidation of the Corporate Debtor,
[2024] 11 S.C.R. 2147

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

nor the order dated 18.01.2024 can be read to mean that
non-compliance of the direction to deposit INR 150 crores
by the SRA by 31.01.2024 should lead to liquidation of the
Corporate Debtor. The submission of the Appellant that non-
deposit of INR 150 crores leads to failure of Resolution Plan,
cannot be accepted. As observed above, consequence of
non-deposit of INR 150 crores is that these Appeals have
to be heard on merits and the question, which has arisen
in the Appeal has to be decided regarding compliance of
conditions precedent by the SRA by 20.05.2022.
Further submission of the Appellant that this Tribunal may
exercise jurisdiction under Section 33, sub-section (3) in
directing liquidation of the Corporate Debtor due to non-
compliance of deposit on INR 150 crores also cannot be
accepted. For passing an order under Section 33, sub-
section (3), there has to be adjudication that Resolution
Plan approved by the Adjudicating Authority has been
contravened by the Successful Resolution Applicant. We
do not accept the submission of the Appellant that by
non-deposit of INR 150 crores by 31.01.2024, the SRA
has contravened the Resolution Plan and order be passed
under Section 33, sub-section (3).
In view of our above observations and conclusions, we
answer Question Nos. v, vi, and vii in following manner:

Question No. v: Direction of Hon’ble Supreme Court
permitting the Successful Resolution
Applicant to infuse INR 150 crores by
31.01.2024 was in reference to offer
made by Appellant in affidavit dated
16.08.2023

Question No. iv: The Successful Resolution Applicant
having not been able to infuse funds
by 31.01.2024 as directed by Hon’ble
Supreme Court vide its judgment dated
18.01.2024, it cannot be held that
Resolution Plan has failed and cannot
be implemented by the SRA.
2148 [2024] 11 S.C.R.

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Question No. vii: No grounds have been made out to
direct the liquidation of the Corporate
Debtor under Section 33, sub-section
(3) in these Appeals.”

(emphasis supplied)

142. The NCLAT declined to accept the submission of the Appellant that
on account of non-deposit of Rs. 150 Crore as directed by this Court,
the Corporate Debtor should be liquidated. However, this was based
on the incorrect assumption that the direction of this Court to infuse to
Rs. 150 Crore in cash was only confined to the terms of the Lenders
Affidavit dated 16.08.2023. Previous segments of the judgment
have elaborated in sufficient detail that the Lender’s Affidavit could
not have provided for conditions which were incompatible with the
terms of the Resolution Plan. Such an affidavit would have been in
direct contravention with Section 31(1) of the IBC, 2016 which does
not permit any modifications to be made in the Resolution Plan duly
approved by the Adjudicating Authority. Therefore, the direction of
this Court in its order dated 18.01.2024 was with respect to both the
Lenders Affidavit and the underlying terms of the Resolution Plan.
The same was so understood by all the parties involved.
143. The Lender’s Affidavit in precise terms stated that “Failing to comply
with the conditions mentioned in Para 8(a) to (c) above, the Corporate
Debtor should be directed to go into liquidation”. It was in this context
that this Court stated that, “the SRA shall peremptorily on or before
31 January 2024, deposit an amount of Rs. 150 crores into the
designated account of SBI, failing which the consequences under
the Resolution Plan will follow”. Therefore, it is incorrect to contend
that this Court neither considered nor expressed any opinion on the
question of liquidation of the Corporate Debtor. The consequence
of non-implementation of the Resolution Plan by the SRA must
necessarily be liquidation of the Corporate Debtor in accordance
with Section 33(3) of the IBC, 2016. Section 33(3) of the IBC, 2016
reads as thus:
“(3) Where the resolution plan approved by the Adjudicating
Authority is contravened by the concerned corporate
debtor, any person other than the corporate debtor, whose
interests are prejudicially affected by such contravention,
[2024] 11 S.C.R. 2149

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

may make an application to the Adjudicating Authority for
a liquidation order as referred to in sub-clauses (i), (ii) and
(iii) of clause (b) of sub-section (1).”
(emphasis supplied)

144. The non-deposit of Rs. 150 Crore had in fact lead to a failure of
the Resolution Plan on several counts as elaborated herein. In
addition to the breach of Clauses 6.3.1(g), 6.4.4 and S. No. 11 of
the Implementation Schedule under Clause 7.7, the non-infusion
of the first tranche payment in accordance with the terms of the
Resolution Plan has also led to an infraction as regards Clause 6.4.1
on the payment of CIRP costs and Clause 6.4.2 on the payment of
workmen/employees’ dues. Further, the payment of the Provident
Fund and Gratuity dues of the workmen/Employees as mandated
by the order dated 21.10.2022 of the NCLAT which was confirmed
by this Court on 31.01.2023, has also not been made by the SRA.
145. The SRA was given multiple extensions, post the Effective Date
i.e., 20.05.2022 in order to implement the Resolution Plan and
infuse the first tranche payment of Rs. 350 Crore into the Corporate
Debtor. This includes the extensions granted by (a) the NCLT vide
order dated 13.01.2023, by which the timeline for infusion of the
first tranche payment was extended till 15.05.2023; (b) the NCLAT
vide order dated 26.05.2023, where the timeline of 180 days was
further extended up to 31.08.2023; (c) the NCLAT vide order dated
28.08.2023, where the timeline of 180 days was extended up to
30.09.2023; and (d) this Court vide order dated 18.01.2024, whereby
the time of 180 days for infusion was extended up to 31.01.2024.
However, indisputably, there has been a failure on the part of the
SRA to abide by all these extended timelines as well. No further
extensions or accommodations can be given to the SRA in light
of the multiple opportunities already granted as aforesaid. Further,
if such a request for further extension is entertained, it would only
serve to bring us to the position that the parties were at when the
order of this Court dated 18.01.2024 was passed.
146. In Kridhan Infrastructure Private Limited v. Venkatesan
Sankaranarayan and Others reported in (2021) 6 SCC 94 the
appellant had failed to fulfil its obligations under the Resolution Plan,
including that of equity infusion, despite numerous opportunities
2150 [2024] 11 S.C.R.

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granted over a period of 6 months. Therefore, the CoC voted by
a majority to liquidate the corporate debtor as a result of failure
to implement the resolution plan. The NCLT had allowed the
liquidation to proceed and the NCLAT had upheld the same. On an
appeal before this Court, a statement was made by the successful
resolution applicant therein that an amount of Rs. 50 Crore would be
deposited on or before 10.01.2021. Bearing in mind that liquidation
under the IBC is a matter of last resort, such an opportunity was
granted. The time for making the said deposit was further extended
until 25.02.2021. However, no payment was made. By underscoring
that time is a crucial facet of the scheme under the IBC, this Court
held that there was a failure on part of the resolution applicant to
implement the resolution plan and it was ordered that the liquidation
proceedings against the corporate debtor be revived. The relevant
observations are reproduced hereinbelow:
“11. The appellant has been unable to raise the funds. The
fact of the matter, as it emerges from Mr Viswanathan’s
submissions, is that the appellant will be unable to raise
funds from the term lenders who are insisting that the
status of the Company should change from a company
under liquidation to an active status. The order of liquidation
has not been set aside. Ultimately, what the request of the
appellant reduces itself to, is that it would raise funds on
a mortgage of the assets of the Company and unless the
Company is brought out of liquidation, it would not be in
a position to raise the funds. This is unacceptable. At this
stage, the order of liquidation has only been stayed, but a
final view was, thus, to be taken by this Court. Sufficient
opportunities were granted to the appellant earlier during
the pendency of the proceedings both before the NCLT
and NCLAT. The orders of the NCLT and Nclat make it
abundantly clear that despite the grant of sufficient time,
the appellant has not been able to comply with the terms of
the resolution plan. Since 9-10-2020, despite the passage
of almost five months, the appellant has not been able
to deposit an amount of Rs 50 crores. Time is a crucial
facet of the scheme under IBC [Innoventive Industries
Ltd. v. ICICI Bank, (2018) 1 SCC 407, paras 12-16 :
(2018) 1 SCC (Civ) 356] . To allow such proceedings to
[2024] 11 S.C.R. 2151

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

lapse into an indefinite delay will plainly defeat the object
of the statute. A good faith effort to resolve a corporate
insolvency is a preferred course. However, a resolution
applicant must be fair in its dealings as well. The appellant
has failed to abide by its obligations. In that view of the
matter, we see no reason or justification to entertain the
civil appeal any further. The consequence envisaged
under the order of this Court shall accordingly ensue in
terms of the forfeiture of the amount of Rs 20 crores. As
a consequence of this order, the management shall revert
to the liquidator for taking steps in accordance with law.
The civil appeal is accordingly dismissed.”
(emphasis supplied).

147. The SRA herein has failed to infuse the first tranche payment of Rs.
350 Crore as envisaged in the Resolution Plan despite the Effective
Date being fixed on 20.05.2022. As a consequence, the payment
of CIRP costs, workmen and employees’ dues etc. which must be
made in priority over the dues of the other creditors have also not
been made. More than 5 years have passed and the implementation
of the Resolution Plan still seems to be a dim light at the far end
of a long tunnel. Over this period of 5 years, several dues such as
the Airport dues to be paid by the Corporate Debtor have increased
multi-fold due to the fault of the SRA and this Court must ensure
that such debts stop running at some point in time.
148. Although one of the key objectives of the IBC, 2016 is to ensure the
survival of the corporate debtor as a going concern, yet the same
must not come at the cost of efficiency. In scenarios such as the
present, “timely liquidation” is indeed preferred over an “endless
resolution process”. Such a view will prevent the likelihood of adversely
affecting the interests of all the creditors who have been suffering
due to no fault of their own and also securing the maximization of
value of the remaining assets.
149. At this stage of the implementation of the Resolution Plan, it is no longer
viable for the SRA to submit that the Resolution Plan shall automatically
stand withdrawn according to Clause 7.6.4 of the Resolution Plan
and upon, such withdrawal, the members of the SRA in the MC shall
resign, the remaining members of the MC shall assume absolute
2152 [2024] 11 S.C.R.

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control of the Corporate Debtor and all the amounts infused by the
SRA would be refunded. This is especially so, since the Conditions
Precedent were declared to be fulfilled and the Effective Date was
achieved on 20.05.2022. The consequence of the failure to implement
the Resolution Plan in terms of Clause 9.4 of the Resolution Plan
and Clause 3.13.7(iii) of the RFRP is that the Appellants are entitled
to invoke the PBG automatically without any reference to the SRA.
Therefore, it is directed that the PBG may be invoked by the Appellants
in accordance with the terms of the Resolution Plan.

iii. Whether the timely implementation of the Resolution Plan
is also one of the objectives of the IBC, 2016?
150. The Preamble to the Insolvency and Bankruptcy Code, 2016 reads
as thus:
“An Act to consolidate and amend the laws relating to
reorganisation and insolvency resolution of corporate
persons, partnership firms and individuals in a time
bound manner for maximisation of value of assets of
such persons, to promote entrepreneurship, availability
of credit and balance the interests of all the stakeholders
including alteration in the order of priority of payment of
Government dues and to establish an Insolvency and
Bankruptcy Board of India, and for matters connected
therewith or incidental thereto.”
(emphasis supplied)

151. The Report of the Bankruptcy Law Reforms Committee, 2015
(hereinafter, the “2015 Report”) also serves to provide valuable
insight into the several purposes for which the Code was enacted.
Upon highlighting the various benefits of a consolidated insolvency
regime, the Report also emphasizes on the time-bound working of
the Code. The relevant observations are reproduced hereinbelow:
“Speed is of essence
Speed is of essence for the working of the bankruptcy
code, for two reasons. First, while the “calm period” can
help keep an organisation afloat, without the full clarity
of ownership and control, significant decisions cannot
[2024] 11 S.C.R. 2153

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

be made. Without effective leadership, the firm will tend
to atrophy and fail. The longer the delay, the more likely
it is that liquidation will be the only answer. Second, the
liquidation value tends to go down with time as many
assets suffer from a high economic rate of depreciation.
From the viewpoint of creditors, a good realisation can
generally be obtained if the firm is sold as a going concern.
Hence, when delays induce liquidation, there is value
destruction. Further, even in liquidation, the realisation is
lower when there are delays. Hence, delays cause value
destruction. Thus, achieving a high recovery rate is primarily
about identifying and combating the sources of delay.”
(emphasis supplied)

The Report acknowledged that time and speed are of the essence
for the working of the Code. It conceded that significant decisions
cannot be made for the company without full clarity as to ownership
and control. Therefore, the longer it takes for installing effective
leadership, the quicker will be the rate of atrophy of the company.
Over a period of time, this delay in taking control of the company
will lead to liquidation being the only viable answer. In this context,
if there is additional delay during the process of liquidation, the
liquidation value might also reduce significantly since the company’s
assets might suffer a high economic rate of depreciation.
152. We hasten to add that any delay in arriving at the conclusion that
the company is to be liquidated is also detrimental to a Company,
especially when the Company has long awaited timely and positive
action from the successful resolution applicant as regards the
implementation of the approved resolution plan. Therefore, although
liquidation should be the last resort, yet one should also ensure that
further delay in arriving at this decision does not have the effect of
hampering the realizations that can be made through liquidation.
153. The decision in Innoventive Industries Limited v. ICICI Bank and
Another reported in (2018) 1 SCC 407 held that the Maharashtra
Relief Undertakings (Special Provisions) Act, 1959 was repugnant
to the IBC, 2016 and elaborated on the scheme of the IBC, 2016 by
placing reliance on the 2015 Report as aforementioned. The relevant
observations are reproduced hereinbelow:
2154 [2024] 11 S.C.R.

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“13. One of the important objectives of the Code is to
bring the insolvency law in India under a single unified
umbrella with the object of speeding up of the insolvency
process. As per the data available with the World Bank
in 2016, insolvency resolution in India took 4.3 years on
an average, which was much higher when compared with
the United Kingdom (1 year), USA (1.5 years) and South
Africa (2 years). The World Bank’s Ease of Doing Business
Index, 2015, ranked India as country number 135 out of
190 countries on the ease of resolving insolvency based
on various indicia.

xxx xxx xxx
16. At this stage, it is important to set out the important
paragraphs contained in the Report of the Bankruptcy Law
Reforms Committee of November 2015, as these excerpts
give us a good insight into why the Code was enacted
and the purpose for which it was enacted:

xxx xxx xxx
Speed is of essence
Speed is of essence for the working of the bankruptcy
code, for two reasons. First, while the “calm period” can
help keep an organisation afloat, without the full clarity
of ownership and control, significant decisions cannot
be made. Without effective leadership, the firm will tend
to atrophy and fail. The longer the delay, the more likely
it is that liquidation will be the only answer. Second, the
liquidation value tends to go down with time as many
assets suffer from a high economic rate of depreciation.
From the viewpoint of creditors, a good realisation can
generally be obtained if the firm is sold as a going concern.
Hence, when delays induce liquidation, there is value
destruction. Further, even in liquidation, the realisation is
lower when there are delays. Hence, delays cause value
destruction. Thus, achieving a high recovery rate is primarily
about identifying and combating the sources of delay.

xxx xxx xxx
[2024] 11 S.C.R. 2155

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

Objectives
The Committee set the following as objectives desired
from implementing a new Code to resolve insolvency and
bankruptcy:
(1) Low time to resolution.
(2) Low loss in recovery.
(3) Higher levels of debt financing across a wide variety
of debt instruments.”
(emphasis supplied)

154. Several decisions of this Court have highlighted the importance of
a speedy resolution process under the IBC, 2016 in the context of
either completing the CIRP process in a time-bound manner as per
Section 12 of the IBC, 2016 or ensuring that the Liquidator does not
cause unnecessary delay or inefficiency in the Liquidation process.
A primary and predominant consideration behind minimizing delay is
to ensure that the assets of the Corporate Debtor do not get frittered
away or depreciated due to the time lag caused either during the
CIRP or during the liquidation process overseen by the Liquidator.
Such a time bound action is also equally important and imperative
while the Resolution Plan is being implemented by the successful
resolution applicant. Unnecessary delay caused in implementation
of the Resolution Plan would also lead to similar consequences of
the assets of the corporate debtor diminishing in value. Therefore,
there is no doubt that the timely implementation of the Resolution
Plan is also one of the underlying objectives of the IBC, 2016.
155. It is in the above context that the Rules regarding the power of the
NCLT and NCLAT to extend time, have to be discussed. Rule 15 of
the NCLT Rules, 2016 reads as thus:
“15. Power to extend time.- The Tribunal may extend the
time appointed by these rules or fixed by any order, for
doing any act or taking any proceeding, upon such terms,
if any, as the justice of the case may require, and any
enlargement may be ordered, although the application
therefore is not made until after the expiration of the time
appointed or allowed.”
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156. Rule 15 of the NCLAT Rules, 2016 reads as thus:
“15. Power to extend time.- The Appellate Tribunal may
extend the time appointed by these rules or fixed by any
order, for doing any act or taking any proceeding, upon such
terms, if any, as the justice of the case may require, and
any enlargement may be ordered, although the application
therefore is not made until after the expiration of the time
appointed or allowed.
157. Rule 15 of the NCLT and NCLAT Rules, 2016 grants power to the
NCLT and NCLAT respectively, to extend the time limits for doing
any act which have been fixed, either by the rules or by an order,
as the justice of the case may require. However, such power must
not be exercised mechanically without any application of mind. An
extension on the strict timelines fixed under the resolution plan must
be done by adequately weighing the period of extension sought with
the consequences of such extension on the continued implementation
of the Resolution Plan. After all, such a discretion cannot be exercised
to the detriment of the resolution plan and its implementation itself.
While one of the reasons supporting the grant of extension would
be to ensure the successful revival of the corporate debtor, multiple
extensions may seriously hamper the economic feasibility of the
Resolution Plan and also lead to an increase in the debts of the
corporate debtor. Not to mention, during the extended period, there
are several costs incurred towards maintaining the corporate debtor as
well. The feasibility and practicability of the resolution plan adjudged
by the “commercial wisdom” of the CoC might no longer remain in
cases where incessant extensions are granted by the NCLT and
NCLAT under their discretionary powers.
158. The discretion in extending the time limits fixed under the Resolution
Plan must be exercised in a much more circumspect manner,
especially in cases such as the present, which pertains to the aviation
sector, wherein timely resolution and revival of the Corporate Debtor
is all the more crucial since the sector operates in such a way that
a continuous flow of cash is required to maintain the company in a
position of status quo.
159. We are now left to finally consider whether in view of the gross facts
on record, we should, in exercise of our plenary jurisdiction under
Article 142 of the Constitution, direct that the Corporate Debtor be
taken in liquidation.
[2024] 11 S.C.R. 2157

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

160. This Court in Ebix (supra) had opined that the exercise of powers,
even under Article 142, must be broadly compliant with the insolvency
framework and its underlying objective. It was highlighted therein
that the Court must remain cautious in granting reliefs that may run
counter to the timeliness and predictability that is central to the IBC,
2016. The relevant observations made are reproduced hereinbelow:
“101. Any claim seeking an exercise of the adjudicating
authority’s residuary powers under Section 60(5)(c) IBC,
NCLT’s inherent powers under Rule 11 of the NCLT
Rules, 2016 or even the powers of this Court under Article
142 of the Constitution must be closely scrutinised for
broader compliance with the insolvency framework and
its underlying objective. The adjudicating mechanisms
which have been specifically created by the statute,
have a narrowly defined role in the process and must be
circumspect in granting reliefs that may run counter to
the timeliness and predictability that is central to IBC. Any
judicial creation of a procedural or substantive remedy that
is not envisaged by the statute would not only violate the
principle of separation of powers, but also run the risk of
altering the delicate coordination that is designed by IBC
framework and have grave implications on the outcome
of the CIRP, the economy of the country and the lives of
the workers and other allied parties who are statutorily
bound by the impact of a resolution or liquidation of a
corporate debtor.”
(emphasis supplied)

161. We are conscious of our recent decision Glas Trust Company
LLC v. Byju Raveendran and Others reported in 2024 SCC OnLine
SC 3032, taking the view that the Court must be circumspect in
deviating from the prescribed procedure, especially in the context of
the IBC, 2016. However, if such a deviation is made, then the Court
must justify as to why the deviation was necessary to prevent the
abuse of the process of the Court. The relevant observations are
reproduced hereinbelow:
“70. When a procedure has been prescribed for a
particular purpose exhaustively, no power shall be
2158 [2024] 11 S.C.R.

Supreme Court Reports

exercised otherwise than in the manner prescribed by
the said provisions. In such cases, the court must be
circumspect in invoking its ‘inherent powers’ to deviate
from the prescribed procedure. If such deviation is made,
the court must justify why this was necessary to “prevent
the abuse of the process of the Court”.
71. The need to be circumspect while invoking “inherent
powers”, when there is an exhaustive legal framework
is amplified in the context of a legislation like the IBC.
In Ebix Singapore (P) Ltd. v. Educomp Solutions Ltd.
(CoC), a two-judge bench of this Court, speaking through
one of us (DY Chandrachud, J), affirmed this position and
observed as follows:
“Any claim seeking an exercise of the adjudicating
authority’s residuary powers under Section 60(5)(c) IBC,
NCLT’s inherent powers under Rule 11 of the NCLT Rules
or even the powers of this Court under Article 142 of
the Constitution must be closely scrutinized for broader
compliance with the insolvency framework and its
underlying objective. The adjudicating mechanisms
which have been specifically created by the statute,
have a narrowly defined role in the process and must be
circumspect in granting reliefs that may run counter to the
timeliness and predictability that is central to the IBC. Any
judicial creation of a procedural or substantive remedy that
is not envisaged by the statute would not only violate the
principle of separation of powers, but also run the risk of
altering the delicate coordination that is designed by the
IBC framework and have grave implications on the outcome
of the CIRP, the economy of the country and the lives of
the workers and other allied parties who are statutorily
bound by the impact of a resolution or liquidation of a
Corporate Debtor.”
(emphasis supplied)

162. However, the aforementioned decision should in no manner be read
so as to restrict the exercise of plenary powers under Article 142 of the
Constitution even while in deviating from the statutory procedure and
[2024] 11 S.C.R. 2159

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

framework of the IBC, 2016 or the rules and regulations thereunder,
if such deviation is very much necessary. This Court in Glas Trust
(supra) only went so far as to say that, where there is a prescribed
procedure in place for a particular purpose, then that particular thing
must be done only in the manner prescribed. It no way lays a dictum
that even where cogent reasons exist warranting such deviation, the
court would be powerless to exercise such inherent powers. In other
words, Glas Trust (supra) only went to the extent of saying that in the
absence of any exceptional circumstances or extraordinary reasons
necessitating a deviation from the procedure laid down, the court
should refrain from invoking its inherent jurisdiction to do something
which otherwise could have been validly done in accordance with
the procedure.
163. We are of the considered view that where there exists extraordinary
circumstances warranting the exercise of such powers in order to
ensure that the very salutary purpose of the Code, 2016 is not
frustrated, then the Court would be well-within its prerogative to
exercise them to secure the object of the IBC, 2016. If the proposition
that there ought to be no exercise of the inherent powers where a
procedure is laid down were to be blanketly accepted then it may have
a very chilling effect whereby the very purpose of vesting this Court
with inherent powers under Article 142 and Tribunals with Rule 11
of the NCLT Rules would be rendered otiose and meaningless.
164. On account of the inordinate delay in due implementation of the
Resolution Plan, several dues including the CIRP costs of the
Corporate Debtor have continuously multiplied. The Appellants
are incurring huge expenditure and costs each month towards
maintenance of the Corporate Debtor. The fundamental concern of
this Court must not only be of doing substantial and complete justice
but also to ensure expeditious resolution of the issues in the interests
of the underlying objective of the IBC, 2016 and all the stakeholders
involved. We must obviate the possibility of the Corporate Debtor
being stuck, embroiled and its resolution being further delayed,
especially in light of the delay that has already ensued.
165. Having due regard to the materials on record, a determination that the
terms of the Resolution Plan have been contravened and that there
has been a failure to implement on part of the SRA, has already been
made on a consideration of the issues before us. As such, since the
2160 [2024] 11 S.C.R.

Supreme Court Reports

Resolution Plan is no longer capable of being implemented, we must
ensure that at least liquidation remains as a “viable” last resort for the
Corporate Debtor and its creditors. Being mindful of the underlying
objective that “Time and Speed are of the essence under the Code”
and to prevent the frustration of this objective, we have thought fit
and necessary to exercise our plenary powers under Article 142 and
direct the Corporate Debtor into liquidation in the manner as laid
down in the IBC, 2016. Granting this relief to the Appellants would
not run counter to the timelines and predictability that is central to
IBC. On the contrary, it would be in furtherance of it. Ensuring that
liquidation commences as soon as possible would also be in the
best interests of the Corporate Debtor and the creditors including the
workmen/employees who are yet to receive their rightful dues. To be
precise, it would not be necessary for the parties to again approach
the Adjudicating Authority for a determination under Section 33(3)
of the IBC, 2016 on the ground that the provisions of the approved
Resolution Plan have been contravened.

F. SHORTCOMINGS AND SUGGESTIONS TO THE IBC, 2016.
166. This litigation is an eye opener for one and all and therefore, before
we close this matter, we deem it absolutely necessary to bring to
light certain deficiencies in the IBC, 2016 which require immediate
attention. We would also like to definitely say something as regards
the functioning of the NCLTs and NCLAT.
167. Given the importance of the IBC, 2016 for the betterment of the
economy at large, it is imperative that the insolvency ecosystem
be continuously strengthened through a regular identification of its
shortcomings and a quick redressal of its practical deficiencies. This
would significantly improve its implementation and yield better results
for all the stakeholders involved. While the receptiveness of the
regime to the incorporation of novel and relevant recommendations
is important, it is paramount that there also be strict adherence to
the existing provisions of the Code, both in letter and spirit.
168. Scrupulous following of the provisions of the Code along with
behavioural and ethical discipline is especially required from the
key participants of the IBC who are central to its design i.e., the
Adjudicating Authorities, Corporate Debtor, Resolution Professionals,
Committee of Creditors, potential and Successful Resolution
Applicants, Approved Valuers and Liquidators.
[2024] 11 S.C.R. 2161

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

169. A Resolution Plan evolves through these players referred to above.
However, it is the “commercial wisdom of the CoC” that assumes a
position of superiority and becomes binding on all the stakeholders.
The NCLT, which is the adjudicating authority and who has to approve
the Resolution Plan under Section 31 of the IBC, 2016 also cannot
trespass into the commercial wisdom exercised by the CoC. This
decision to restrict the scope of interference on the commercial wisdom
of the CoC was conscious and possibly taken bearing in mind the
time delays that may arise out of a subsequent adjudication of the
resolution plans approved by the CoC. Therefore, the commercial
wisdom of the CoC has achieved paramount status, immune from
any judicial intervention, to ensure the completion of the respective
processes under the IBC, 2016 within the timelines prescribed therein.
170. The position that the “commercial wisdom” of the CoC is non-
justiciable and only a limited judicial review is available in this regard
is well-settled through several decisions of this Court. This Court
in the case of K Shashidhar v. Indian Overseas Bank and Ors.
reported in (2019) 12 SCC 150, held that:
“52. As aforesaid, upon receipt of a “rejected” resolution
plan the adjudicating authority (NCLT) is not expected to do
anything more; but is obligated to initiate liquidation process
under Section 33(1) of the I&B Code. The legislature
has not endowed the adjudicating authority (NCLT) with
the jurisdiction or authority to analyse or evaluate the
commercial decision of CoC much less to enquire into
the justness of the rejection of the resolution plan by the
dissenting financial creditors. From the legislative history
and the background in which the I&B Code has been
enacted, it is noticed that a completely new approach has
been adopted for speeding up the recovery of the debt due
from the defaulting companies. In the new approach, there
is a calm period followed by a swift resolution process to
be completed within 270 days (outer limit) failing which,
initiation of liquidation process has been made inevitable
and mandatory. In the earlier regime, the corporate
debtor could indefinitely continue to enjoy the protection
given under Section 22 of the Sick Industrial Companies
Act, 1985 or under other such enactments which has
now been forsaken. Besides, the commercial wisdom
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of CoC has been given paramount status without any
judicial intervention, for ensuring completion of the stated
processes within the timelines prescribed by the I&B Code.
There is an intrinsic assumption that financial creditors are
fully informed about the viability of the corporate debtor and
feasibility of the proposed resolution plan. They act on the
basis of thorough examination of the proposed resolution
plan and assessment made by their team of experts. The
opinion on the subject-matter expressed by them after due
deliberations in CoC meetings through voting, as per voting
shares, is a collective business decision. The legislature,
consciously, has not provided any ground to challenge the
“commercial wisdom” of the individual financial creditors or
their collective decision before the adjudicating authority.
That is made non-justiciable.”
(emphasis supplied)

171. Thus, there is no doubt that the commercial wisdom of the CoC cannot
be subjected to judicial review. However, in order to foster a much
more effective and time-bound decision making by the members of
the CoC, in the interests of maximization of value of the assets of
the Corporate Debtor, certain self-regulating guidelines were issued
by the IBBI on 06.08.2024 with immediate effect. The Guidelines for
Committee of Creditors are reproduced hereinbelow:
“6. Guidelines
A member of the CoC shall: -

Objectivity and Integrity
(a) follow relevant provisions of the Code and regulations,
in letter and spirit, while performing their roles and
functions.
(b) maintain integrity in discharging their roles and
functions as envisioned under the Code.
(c) maintain objectivity during the decision-making
process.
(d) foster informed decision making and share with the
CoC/ Insolvency Professional any relevant information
[2024] 11 S.C.R. 2163

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

relating to transactions, guarantees, recoveries,
claims, etc. relating to the corporate debtor

Independence and Impartiality
(e) disclose to the CoC/ Insolvency Professional the
details of any existing or potential conflict of interest
arising due to pecuniary, personal or professional
relationship with any stakeholder, immediately on
becoming aware of it.

Professional Competence and Participation
(f) keep themselves updated with the provisions of
the Code, rules and regulations and the role and
responsibilities assigned thereunder.
(g) nominate representative with proper authorisation
and sufficient mandate to effectively participate
in meetings. The nominated representative may
endeavour to obtain approval of the competent
authority, if required, at the earliest.
(h) participate actively, constructively and effectively in
deliberations and decision making of the CoC.

Co-operation, supervision and timeliness
(i) supervise and facilitate the Insolvency Professional
in discharging his duties under the Code.
(j) facilitate expeditious appointment of various
professionals within the timelines prescribed under
the Code and regulations.
(k) endeavour to resolve any inter-se disputes between
the members, particularly in relation to claims,
preferably, through dialogue, or other non-adversarial
means, with a view to avoid litigation to the extent
possible.

Confidentiality
(l) ensure at all times complete adherence to the
undertaking regarding confidentiality of information.
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Costs
(m) take necessary measures to ensure that the
insolvency resolution process cost is reasonable.
(n) expeditiously decide on all the expenses to be
incurred by the Insolvency Professional including
the going concern expenses of the corporate debtor
and his fee.
(o) prudently fix the fee payable to the liquidator while
deciding to liquidate the corporate debtor.

Meeting of the CoC
(p) regularly monitor the activities of the Insolvency
Professional and seek rationale of decisions/actions
taken by him.
(q) diligently recommend for the inclusion or otherwise
of the belated claims collated by the Insolvency
Professional and categorised as acceptable, in the
list of creditors and its treatment in the resolution
plan, if any.
(r) actively participate in the presentation of valuation
methodologies made by the Registered Valuers.
(s) ensure the conduct of the meeting at regular intervals
as specified in the regulations.

Sharing of information
(t) proactively share the latest financial statements,
relevant extract from the audits of the corporate
debtor, conducted by the creditors such as stock audit,
transaction audit, forensic audit, etc. and other relevant
information available, with the Insolvency Professional
to enable efficient conduct of the process.
(u) seek details of all litigation filed against or by the
corporate debtor from Insolvency Professional
and recommend necessary actions to Insolvency
Professional to safeguard the interest of the corporate
debtor.
[2024] 11 S.C.R. 2165

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

Feasibility and viability of corporate debtor
(v) carefully review and assess the information
memorandum prepared by Insolvency Professional
and offer additional insights.
(w) duly contribute to the preparation of the marketing
strategy by the Insolvency Professional and may
also take measures for marketing of the assets of
the corporate debtor, if necessary.
(x) ensure that all resolution plans as received by
Insolvency Professional are placed before CoC.
(y) suitably consider the requirement of a monitoring
committee for the implementation of the resolution
plan.”
172. The aforesaid guidelines may go a long way in streamlining the
functions of the CoC. Adding to the aforesaid guidelines, we suggest
that the CoC exercise their commercial wisdom and approve/reject
the Resolution Plans placed before them exhibiting fairness and with
good reasons. Such a reasoned decision making on their part will
only serve to further enable the other key players like the Adjudicating
Authorities to understand the rationale behind their decision and to
uphold the correctness of the same. Furthermore, it is also suggested
that the Central Government or the IBBI explore the possibilities of
better enforcement of the standards and practices enumerated in the
guidelines through an independent mechanism under the auspices
of an oversight committee instead of making them self-regulatory.
This will enable the guidelines to achieve some level of practical
and operational relevance and also prevent any significant lapse in
decision making on the part of the CoC.
173. This litigation is an eye-opener also as regards the manner in which
the implementation of plans are handled by the Successful Resolution
Applicant and the Lenders involved in the process. Once a resolution
plan is approved under the IBC, 2016 the Successful Resolution
Applicant undertakes a profound responsibility to implement the
plan in both letter and spirit. This obligation is not merely an empty
formality but an enduring commitment to restore the corporate
debtor to viability and ensure a meaningful turnaround. The role of a
Successful Resolution Applicant is thus far more than a transactional
2166 [2024] 11 S.C.R.

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duty towards the creditors or stakeholders; it embodies a pivotal
responsibility to the distressed entity itself, which must be approached
with utmost dedication and an earnest sense of duty. Regardless of
the challenges that may arise, the Successful Resolution Applicant
cannot treat its obligations as optional or conditional, nor can it
abdicate its responsibility in the face of unforeseen obstacles. Its
efforts must reflect a determination to implement the plan fully and to
rejuvenate the debtor company, as this is integral to the success of
the IBC framework and the spirit of economic revival it seeks to foster.
The approach, therefore, must not be frugal or narrowly profit-driven,
limited to viewing the transaction through a purely commercial lens.
Instead, it must recognize that rescuing a distressed company is a
responsibility of significant social and economic value, demanding a
holistic and responsible strategy. This involves a dedication to long-
term outcomes, where the Successful Resolution Applicant adopts
measures that genuinely support the debtor’s rehabilitation, rather
than making minimal or half-hearted attempts at implementation.
Courts and tribunals have consistently underscored that the
Successful Resolution Applicant’s role transcends commercial interest
and embodies a commitment to the larger purpose of corporate
revival. Consequently, it must make thoughtful and sustained efforts,
demonstrating adaptability and resilience even when faced with
obstacles or operational impediments. Simply put, the Successful
Resolution Applicant cannot step back or dismiss its obligations by
attributing delays or setbacks to the conduct of other stakeholders,
as this would undermine the very purpose of insolvency resolution.
174. In this collaborative effort, the duty to implement the plan does
not fall on the Successful Resolution Applicant alone; lenders and
creditors are equally obligated to support the process by offering
constructive and continuous cooperation. They must not impede the
implementation process through unnecessary demands beyond the
pale of the resolution plan or with delays in implementation plan but
rather should facilitate the Successful Resolution Applicant’s efforts
to revive the corporate debtor. Given their vested interest in the
corporate debtor’s successful revival, lenders have a fundamental
duty to act in good faith and with transparency, recognizing that
their cooperative stance is essential for overcoming the inevitable
challenges of the resolution process. The lender’s role is not merely
passive; it requires active support that aligns with the ultimate goal
[2024] 11 S.C.R. 2167

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

of the IBC, 2016 — to provide a fair and equitable resolution that
maximizes asset value while enabling the debtor’s recovery.
175. Therefore, the lenders must balance their financial interests with
the broader objective of rehabilitation. They should not take an
obstructive approach or seek to leverage the resolution process solely
for individual benefit, as such actions would risk destabilizing the
corporate debtor’s recovery trajectory. Instead, they must be prepared
to collaborate fully, sharing the responsibility to make the resolution
process work in practice. Through a spirit of cooperation and shared
purpose, the Successful Resolution Applicant and lenders together
can ensure that the corporate debtor is given the best chance for
revival and sustained growth, reflecting the Code’s intent to rescue
viable companies and protect broader economic interests.
176. The IBC, 2016 is silent as regards the phase of implementation of
the Resolution Plan by the Successful Resolution Applicant. This is
mostly due to the fact that each Resolution Plan might be unique
and customized to the specific needs of the Corporate Debtor and
an excessive amount of statutory control over the implementation
of the Plan may prove to be counterproductive to the cause of
the Corporate Debtor. However, this has unfortunately led to
the consequence of giving excessive leeway to the Successful
Resolution Applicants to act in flagrant violation of the terms of the
Resolution Plan in a lackadaisical manner. The SRAs repeatedly
approach the Adjudicating Authority or the NCLAT for the grant of
reliefs in relation to relaxation of the strict compliance to the terms
of the Plan, including the timelines imposed therein. The NCLT and
NCLAT more often than not, accede to such requests in exercise of
their inherent powers under Rule 11 or their power to extend time
under Rule 15 of the NCLT and NCLAT Rules, 2016 respectively.
It is reiterated that the NCLT and NCLAT must not entertain such
repeated attempts at violating the integrity of a CoC approved
Resolution Plan by accommodating the incessant requests of the
Successful Resolution Applicants. The exercise of discretion as
regards altering the binding terms of the Resolution Plan, including
the timelines imposed, must be kept at a minimum, at best. The
NCLTs/ NCLATs need to be sensitised of not exercising their judicial
discretion in extending the timelines fixed under IBC, 2016 or the
Resolution Plan, in such a way that it may make the Code lose its
effectiveness thereby rendering it obsolete.
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177. Section 30(2)(d) of the IBC, 2016 states that the resolution professional
shall mandatorily examine each resolution plan that is received to
confirm that it provides for the implementation and supervision of
the resolution plan. Regulation 38 of the 2016 Regulations provides
for the mandatory contents of a Resolution Plan. Regulation 38(2)
specifically states that the Resolution Plan shall provide for the term
of the plan and its implementation schedule, along with adequate
means for supervising its implementation. Further, under Regulation
38(3), a resolution plan must demonstrate that it addresses the
cause of default, is feasible and viable, has provisions for its
effective implementation, has provisions for approvals required and
the timelines for the same and, that the resolution applicant has the
capability to implement the resolution plan. Therefore, in light of these
provisions of the IBC, 2016 and the 2016 Regulations, it can be seen
that the resolution plan must be impermeable to any shortcuts that
prevent its implementation, including timely implementation, by the
successful resolution applicant. A consideration of these provisions
reinforces the idea that timely implementation and strict adherence
to the terms of the resolution plan is crucial.
178. Furthermore, Section 74(3) of the IBC, 2016 provides for the
punishment for contravention of the resolution plan and reads as
follows:
“(3) Where the corporate debtor, any of its officers or
creditors or any person on whom the approved resolution
plan is binding under section 31, knowingly and wilfully
contravenes any of the terms of such resolution plan or
abets such contravention, such corporate debtor, officer,
creditor or person shall be punishable with imprisonment
of not less than one year, but may extend to five years,
or with fine which shall not be less than one lakh rupees,
but may extend to one crore rupees, or with both.”
(emphasis supplied)

179. The Code comes down heavily on any knowing and willful
contravention of the terms of the Resolution Plan, committed by
any person, on whom the approved Resolution Plan has been
made binding under Section 31 of the IBC, 2016. A punishment of
minimum one year which may extend up to five years or minimum
[2024] 11 S.C.R. 2169

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

fine of one Lakh which may be up to one Crore rupees, or both,
has been prescribed for such a contravention. In light of such strict
consequence provided for the contravention of the resolution plan
envisaged under the scheme of the Code itself, there is good reason
for us to ensure that the successful resolution applicants abide by
their commitments made under the Resolution Plan. Therefore, it is
suggested that the authorities including the NCLT and NCLAT must
not aid the Successful Resolution Applicants in circumventing the
strict mandates of the law by acceding to their requests to relax the
terms of the plan itself.
180. One another suggestion at our end that may aid in a coordinated
and non-adversarial implementation of the Resolution Plan by all
the stakeholders is that the Adjudicating Authority while approving
a Resolution Plan under Section 31 of the IBC, 2016, should record
the next steps which are to be taken by the respective parties for
commencement of implementation of the approved Resolution
Plan. This will ensure that the parties are ad idem about the next
round of their obligations that each of them is required to discharge
under the approved Resolution Plan and that they do not delay the
implementation by initiating any further litigation on this aspect. If
such an approach is adopted, the parties would be able to put forth
any difficulty that they might face in performing those next steps
before the NCLT itself and seek necessary relief in that regard.
Recording the next steps that are to be undertaken in the order of
the Adjudicating Authority, will keep the parties more vigilant since
a non-performance of the obligation may lead to a violation of the
terms of the approved Resolution Plan and also violation of the order
approving the Resolution Plan as well.
181. As regards the implementation of the approved Resolution Plan, it is
suggested that the IBC, 2016 statutorily provide for the constitution
of a Monitoring Committee, once the plan has been approved,
for a smooth handover of the Corporate Debtor to the Successful
Resolution Applicant. Presently, such a provision is absent in the Code
and it is the Adjudicating Authority that orders for the constitution of a
Monitoring Committee to ensure smooth implementation of the Plan.
The CoC must be empowered to constitute the Monitoring Committee
which may, by default, include the Resolution Professional and also
include other nominees from the CoC and the Resolution Applicant
2170 [2024] 11 S.C.R.

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respectively. Such a Monitoring Committee would be entrusted with
the powers of monitoring and supervising the resolution plan till the
expiry of the term of the Resolution Plan. The Committee shall also be
required to ensure all statutory compliances during the implementation
of the plan along with updating the Adjudicating Authorities, Financial
and other Creditors about the status of implementation of the
Resolution Plan, on a quarterly basis.
182. Moving on to certain efficiency issues within the NCLTs and NCLAT, it
has been noticed over a period of time that there is a serious lack of
timely admission and disposal of the applications filed as regards the
initiation of CIRP, approval of the resolution plan and liquidation. This
only adds to the uncertainty of the process and prolongs the dispute
thereby jeopardizing the interest of all the stakeholders involved.
Adjudication in a time-bound manner would help prevent any further
deterioration of the value of the corporate entity. The integrity of the
original timelines laid down by the Code and the Resolution Plan
must not be allowed to be violated since it would dilute the objective
of the Code in its entirety, erode investor confidence and hinder all
corporate restructuring efforts.
183. The Members often lack the domain knowledge required to appreciate
the nuanced complexities involved in high-stake insolvency matters
in order to properly adjudicate such matters. It has been noticed
that the benches of NCLT(s) and NCLAT don’t have the practice
of sitting for the full working hours. They are particularly lacking in
the capacity to manage the growing number of cases and giving
undivided attention required in such matters. There are serious issues
in the manner in which the insolvency matters are listed. There is
no effective system in place before the NCLTs for urgent listings.
The staff of the Registry is given wide power to list or not to list a
particular matter. One of the salutary objects of the Code, 2016 is
to protect the assets of the corporate entity in a timely manner and
take prompt decisions, however, it has become a practice of the
NCLT(s) and NCLAT to ignore the urgent mentionings and listings
of time-sensitive matters and show no deference to long-pending
matters resulting in value erosion of the assets of the Corporate
Debtor and rendering their insolvency resolution process a foregone
conclusion. Over a period of time, this Court has noticed the growing
[2024] 11 S.C.R. 2171

State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan
and Mr. Florian Fritsch & Anr.

tendency amongst Members of the NCLT(s) and NCLAT to ignore
the orders of this Court or act in its defiance. We put the NCLT(s)
and the NCLAT to notice, that any act of contravention of this Court’s
order and the larger rubric of judicial propriety will not be tolerated.
The NCLT(s) and the NCLAT must seriously rethink their approach
towards admission and disposal of insolvency matters, they should
not act as a mere rubberstamping authority and must take their
roles seriously in ensuring time-bound hearings and resolutions.
Proper and effective hearings, both virtually and in-court, must be
given to insolvency matters of public importance, and the NCLT(s)
and NCLAT(s) must earnestly work towards ensuring that the IBC,
2016 achieves its avowed object.
184. One another serious issue pertaining to the functioning of the NCLTs
and NCLAT is that there is often a shortage of members in the
Tribunals and inadequate infrastructure to support their functioning.
These vacancies heavily impact the insolvency reform initiative
undertaken by the government since they lead to operational
inefficiencies. A shortfall of members and the lack of requisite strength
has led to Tribunals only sitting for a few days of the week or a few
hours in a day. Even in Tribunals where there is no vacancy, the
absence of requisite infrastructure has forced the benches to share
courtrooms or halls on a rotation basis. As a consequence, the strict
timelines provided in Section 12 of the IBC, 2016 are not complied
with. Filling such vacancies with experts having adequate domain
knowledge in the field must be prioritized along with addressing the
infrastructure needs of the Tribunals to prevent any adverse effect
on the resolution process. There must be strict mandates regarding
the functioning of the Tribunals within its normal working hours. The
appointment of new members must be done in a manner such that
it coincides with the date of retirement of the sitting members in a
seamless manner to avoid such operational inefficiencies. Persons
with high ideals & impeccable integrity should be appointed as
Members in the NCLT as well as NCLAT. There should not be any
political appointment.
185. It is now for the Parliament to look into our suggestions in consultation
with the Insolvency Bankruptcy Board of India and the Ministry of
Finance.
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G. CONCLUSION
186. For all the foregoing reasons, we have reached the conclusion
that the impugned order passed by the NCLAT is perverse and
unsustainable in law. It has led to further complications. As a result,
the appeals succeed and are allowed. The impugned order passed
by the NCLAT is set aside.
187. In the peculiar and alarming circumstances as discussed in this
judgment and also keeping in mind the fact that almost five years
have elapsed since the Resolution Plan was duly approved by the
NCLAT and there being no progress worth the name, we are left
with no other option but to invoke our jurisdiction under Article 142
of the Constitution and direct that the Corporate Debtor be taken
in liquidation. The NCLT, Mumbai shall now take appropriate steps
for appointment of liquidator and all other necessary formalities for
commencement of liquidation of the Corporate Debtor.
188. The amount of Rs 200 Crore already infused by the SRA stands
forfeited. The Lenders/ Creditors are further permitted to encash the
Performance Bank Guarantee of Rs. 150 Crore furnished by the
SRA. We accordingly order so.
189. These appeals are disposed of in the aforesaid terms.
190. The Registry shall forward one copy each of this judgment to the
Principal Secretary, Ministry of Finance, Government of India and the
Chairperson, Insolvency Bankruptcy Board of India with a request
to look into this judgment more particularly the suggestions made
by this Court.

Result of the case: Appeals allowed.

†
Headnotes prepared by: Divya Pandey