STATE BANK OF INDIA & ORS. versus THE CONSORTIUM OF MR. MURARI LAL JALAN AND MR. FLORIAN FRITSCH & ANR.

Citation: [2024] 11 S.C.R. 2039 · Decided: 07-11-2024 · Supreme Court of India · Bench: D.Y. CHANDRACHUD · Disposal: Appeal(s) allowed
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Judgment (excerpt)

[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
2040
[2024] 11 S.C.R.
Supreme Court Reports
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 p
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