NCLAT New Delhi Upholds Jet Airways Aircraft Sale, Dismisses Ex-Employees' Challenge

On 21 August, the New Delhi Bench of the National Company Law Appellate Tribunal (NCLAT) dismissed an appeal filed by former employees of Jet Airways (India) Limited challenging the sale of the airline's aircraft assets during liquidation.

Judicial Member Justice Mohd Faiz Alam Khan and Technical Member Arun Baroka held that the former employees, whose dues would be paid under the waterfall mechanism under Section 53 of the Insolvency and Bankruptcy Code (IBC), had no basis to challenge the liquidator's completed sale process. The Tribunal observed:

“Appellants are also former employees of the corporate debtor, and certainly they will get their due under the waterfall mechanism as provided under Section 53 of the Code. Therefore, being the employees of the CD, the appellants should not have any concern with the process of sale conducted by the liquidator, which is stated to have been completed.”

Jet Airways was admitted into insolvency on 20 June 2019 under Section 7 of the IBC. During the Corporate Insolvency Resolution Process (CIRP), the airline's assets included five aircraft, including a Boeing 777. A resolution plan submitted by the Jalan Fritsch Consortium was approved in June 2021, following which a Monitoring Committee was constituted to oversee its implementation.

In October 2022, letters of intent were issued to entities of Ace Aviation Group for the sale of the Boeing 777 aircraft. The sale did not materialise as no sale deed was executed.

In October 2023, the National Company Law Tribunal (NCLT) directed that the sale process be resumed. The decision was upheld by the NCLAT in December 2023 and by the Supreme Court in March 2024. However, the successful bidder failed to deposit the balance sale consideration within the stipulated period.

On 7 November 2024, the Supreme Court ordered liquidation of Jet Airways under Section 33 of the IBC. The liquidator was appointed on 26 November 2024, and the airline's assets, including the aircraft, formed part of the liquidation estate under Section 36 of the IBC.

In February 2026, the aircraft were sold for approximately USD 12.5 million, USD 16 million and USD 17.5 million.

The former employees challenged the sale, arguing that the aircraft were sold at undervalued prices based on outdated valuations from 2022. They contended that no fresh valuation exercise had been undertaken during liquidation and alleged irregularities in assessing the aircraft's value.

They also alleged irregularities in the sale process, including the involvement of third-party entities such as VMAN Aviation Services and execution of agreements outside India. They submitted that the sale during liquidation was based on a decision taken at the CIRP stage.

The liquidator and successful bidders submitted that the sale process had been judicially supervised and approved at every stage. They pointed out that the Stakeholders' Consultation Committee (SCC) ratified the sale decision in December 2024 with a 79.81% voting share and decided to complete the negotiation and execution of the sale at the earliest to ensure value maximisation.

They further submitted that the appellants had waited for 16 months to challenge the sale and that the application and appeal would further delay realisation of the corporate debtor's assets. They also submitted that the NCLT had dismissed an earlier application seeking to restrain the sale, holding that the IBC did not bar the liquidator from continuing a sale process initiated by the interim professional before commencement of liquidation.

The Tribunal noted that the sale of the aircraft was contemplated in the approved resolution plan, directed by the NCLT in October 2023, upheld by the NCLAT in December 2023 and affirmed by the Supreme Court in March 2024.

It also noted that the decision to sell the aircraft was taken during the insolvency process and that the SCC had adopted the Committee of Creditors' (CoC) decision for the sale. It held:

“Therefore, we do not find any illegality so far as the decision of sale of aircraft is concerned.”

Further, the Bench held that the appellants had failed to demonstrate any material irregularity or illegality in the sale. It added:

“Moreover, they are ex-employees of the corporate debtor, and they should have concern for their due, which would be paid to them under Section 53 of the Code. The payment of all the employees of the CD has been ensured by the Ld. Adjudicating Authority as well as by the Appellate Tribunal by stating that the employees would get their due as provided under Section 53 of the Code.”

Accordingly, the NCLAT dismissed the appeal.

For Appellants: Advocates Sharmistha Choudhury and Shiv Prakash Pandey

For Respondents: Advocates Raghav Chadha, Dhiraj Kumar Totala, Nishant Upadhyay, Vasudha Jain and Mayank Jain for Liquidator; Senior Advocate Ritin Rai with Advocates Petruskha Dasgupta, Raghav Mittal for R-4 to 6; Advocates Brideepa Bhattacharya, Mehul Kumar, Anushka Chauhan, Ilina Peehu, Chaitley Sharma for R7