Jet Airways lenders raise concerns over investor’s fraud probe before SC

New Delhi: The lenders of bankrupt airline Jet Airways told the Supreme Court on Monday that they have asked the Jalan-Karlock Consortium to confirm through an affidavit that one of their investors, Florian Fritsch, is being investigated by authorities in Europe for fraud.

Senior Lawyer Harish Salve, representing the lenders, expressed concern over the funds being stuck and accused Florian Fritsch of using delaying tactics by depositing the consortium’s investment in the defunct airline in ₹100 crore instalments.

In response, senior counsel Mukul Rohatgi, representing the consortium, argued that the lenders have been demanding money at every stage, even though the consortium has already deposited ₹350 crore. The lenders sought to consolidate all pending matters related to the case in the Supreme Court for a joint hearing, while the consortium requested that this specific petition be heard separately.

The court, at the request of both parties, deferred the hearing to Thursday.

Jet Airways investor Florian Fritsch is currently being investigated for suspected fraud and money laundering by the authorities in Liechtenstein, a tiny principality situated between Austria and Switzerland. According to media reports, the Supreme Court of Liechtenstein has revealed that the authorities seized a collection of luxury cars and watches while investigating the alleged fraud linked to Florian Fritsch's investment in Jet Airways.

On 4 October, lenders had said during a National Company Law Appellate Tribunal (NCLAT) hearing that the money deposited by the consortium could have been laundered. The lenders said they have filed a new application with the Mumbai branch of the National Company Law Tribunal (NCLT) concerning the source of the money, claiming it came from “unknown sources” that the consortium did not disclose. The lenders said that under the resolution plan, the money should come from legitimate sources.

However, the consortium said on September 29 that it had fulfilled its commitment to infuse ₹350 crore in Jet Airways and said it was determined to have the airline up and running in 2024.

According to the payment schedules approved by the NCLAT on 28 August, the consortium was required to pay the lenders ₹200 crore. The tribunal instructed it to pay the ₹350 crore due to the lenders by September 30, with Rs150 crore to be encashed from the performance bank guarantee.

This is not the first time lenders have flagged an alleged flaw in the consortium’s proposal. On 5 July, the Committee of Creditors had told the Supreme Court that it may be more prudent to wind up the airline as they had not been repaid and no funds had been infused into the airline. The lenders have infused approximately ₹400 crore of public money into the airline, which includes airport dues.

According to the January order by the Mumbai bench of the tribunal, the effective date of the resolution plan was taken as 16 November. As a result, the consortium had six months from that date to pay the lenders.

On 22 June, 2021 the NCLT in an order approved Jalan-Karlock’s resolution plan for Jet Airways. The consortium comprises UAE-based non-resident Indian Murari Lal Jalan, who will hold shares in Jet Airways in a personal capacity, and Florian Fritsch, who will hold shares through his investment holding company Kalrock Capital Partners Ltd in the Cayman Islands.

Jet Airways halted operations in April 2019 after running into financial difficulties. However, the transfer of ownership has been hanging fire thanks to several differences between the lenders and the consortium.