Jet Airways liquidator moves NCLAT for $92.13 million refund from Boeing over undelivered aircraft

Jet Airways’ liquidator has moved the National Company Law Appellate Tribunal (NCLAT) seeking a refund of $92.13 million paid to Boeing as advances for aircraft that were never delivered [Jet Airways Vs Boeing].

A bench of Justice Mohammad Faiz Alam Khan and Technical Member Naresh Salecha issued notice to Boeing after observing that the appeal required consideration.

Boeing’s counsel accepted notice and was granted two weeks to file a reply. The liquidator was given one week thereafter to file a rejoinder. The matter will be heard next in the first week of December.

The appeal challenged a September 11 order of the National Company Law Tribunal (NCLT) dismissing liquidator Satish Kumar Gupta’s application seeking recovery of $92,129,387 from Boeing.

During the hearing at NCLAT today, the counsel for the liquidator submitted that Boeing had forfeited Jet Airways’ advance payments and then lodged a claim for the unpaid balance during the airline’s corporate insolvency resolution process (CIRP).

The counsel clarified that the appeal concerned recovery of the advances. The liquidator sought notice without pressing for interim relief.

The dispute arose from two purchase agreements executed in 2013 for Boeing 737-8 and 787-9 aircraft. Jet Airways made advance and pre-delivery payments but subsequently failed to meet further payment obligations amid financial difficulties.

Boeing issued a suspension notice in May 2019 and a termination notice in December 2020. No aircraft were delivered under the agreements.

Before the NCLT, the liquidator argued that the advances formed part of Jet Airways’ liquidation estate and ought to be returned. He contended that Boeing had not established any contractual or legal entitlement to retain them.

Boeing maintained that the advances had already been deducted while calculating its outstanding claim against the airline. It argued that the liquidator could not recover amounts already credited against a larger claim admitted during insolvency and subsequently recognised in liquidation.

The aircraft manufacturer also invoked Regulation 29 of the liquidation regulations, which permits set-off of mutual dues.

The NCLT bench of Judicial Member Sushil Mahadeorao Kochey and Technical Member Prabhat Kumar held that the competing claims required examination of the purchase agreements and could not be adjudicated under Section 60(5) of the Insolvency and Bankruptcy Code.

It noted that neither party had produced the agreements, citing confidentiality.

“These questions require evaluation of Agreements between the Parties, leading of evidence by the Parties and a full-fledged Trial,” the NCLT observed.

It held that the contractual dispute was independent of the insolvency process. It consequently dismissed the refund application without deciding whether Boeing was entitled to forfeit or adjust the advance payments.

Jet Airways liquidator has now moved NCLAT against this order.