Jet Airways employees get PF, gratuity relief as NCLAT rejects SBI’s plea against priority payout amid liquidation
According to a report by CNBC-TV18, the National Company Law Appellate Tribunal (NCLAT) has rejected SBI’s objection to priority payment of provident fund (PF) and gratuity dues to Jet Airways employees, giving major relief to the airline’s former staff while the company is in liquidation.
The appellate court upheld the NCLT’s earlier decision that employees’ statutory PF and gratuity dues should be paid on priority and should not form part of the liquidation estate under the Insolvency and Bankruptcy Code (IBC). Meanwhile, a detailed NCLAT order is awaited.
Employees’ total dues, including provident fund and gratuities ₹275 crore, CNBC-TV18 reported.
This development comes after the State Bank of India (SBI) challenged the NCLT order, which ruled in favor of Jet Airways employees, before the NCLAT.
According to media reports, in February, the Mumbai bench of the National Company Law Tribunal (NCLT) had directed the liquidator of the defunct airline to ensure full payment of provident fund and gratuity dues to laborers and employees.
What did NCLT rule before?
The court had earlier stated that such statutory dues do not form part of the liquidation estate under the IBC.
“The liquidator is liable to pay the provident fund and gratuity dues payable to the workers and employees under the provisions of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 and the Payment of Gratuity Act, 1972 and such dues do not form part of the liquidation estate,” the NCLT said.
How it all started: Workers want PF and tip exemption
Two interim applications were submitted by 296 former Jet Airways employees who were also former members of JAMEWA. In these applications, it was requested that the reserve fund, bonuses and some salary dues be excluded from the liquidation inheritance. india times.
They argued that these legal dues should be paid in full outside the Chapter 53 waterfall mechanism under the Insolvency and Bankruptcy Code (IBC).
The court dismissed the objections filed by SBI and the liquidator, stating that employees’ PF and bonus entitlements do not depend on whether the corporate debtor maintains separate funds.
The news release also stated that it relied on binding precedents of the NCLT and the Supreme Court to hold that these dues must be paid in full even if no special funds are provided.
Jet Airways liquidation process
Jet Airways has been put into liquidation after the Supreme Court ordered the airline to be closed in November 2024. According to CNBC-TV18, the decision came after a protracted impasse between lenders and the Jalan-Kalrock Consortium over the implementation of a revival plan.
The court ruled that the resolution plan was unworkable as the consortium failed to transfer the promised funds and clear the employees’ dues, leaving liquidation as the only viable option for creditors.
Following the order, monetization of assets became an important part of efforts to restore value to creditors, according to the report.
