In a significant relief for former employees, the Mumbai bench of the National Company Law Tribunal has directed the liquidator of the defunct Jet Airways to pay provident fund and gratuity dues to workmen and employees in full.
The Mumbai Bench-I ruled that these statutory dues do not form part of the liquidation estate under the Insolvency and Bankruptcy Code (IBC). The tribunal stated, “The liquidator is liable to pay the provident fund and gratuity dues to the workmen and employees as are payable to them in terms of provisions of Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 and Payment of Gratuity Act, 1972 and such dues shall not form part of the liquidation estate.”
The order followed 2 interlocutory applications. One was filed by former workmen through the Jet Aircraft Maintenance Engineers’ Welfare Association. The second was filed by S Gopalkrishnan, a senior Jet executive nominated as workers’ representative and a member of the Stakeholders’ Consultation Committee. Both applications sought exclusion of provident fund, gratuity, and certain salary dues from the liquidation estate, arguing that these statutory liabilities must be paid in full outside the waterfall mechanism under IBC Section 53.
The tribunal rejected objections raised by the State Bank of India and the liquidator. It clarified that employees’ entitlement to provident fund and gratuity does not depend on whether the corporate debtor maintained separate funds. Citing binding precedents of the NCLT and the Supreme Court, the bench held that such dues are payable in full even if no dedicated fund was created.
Reacting to the ruling, Narayan Hariharan, former Senior VP of Jet Airways, said: “This is a moment of deep relief for Jet Airways employees who endured over 6 years of uncertainty, hardship and hope. The legal battle was long and emotionally draining, but the courts stood by the workers at every stage. The NCLT’s ruling that gratuity and provident fund are outside the liquidation estate is not just a legal victory, it is a recognition of the dignity, sacrifice and rights of employees who never gave up.”
In a separate but connected order passed on Tuesday, the NCLT allowed the liquidator to proceed with distribution of liquidation proceeds from the sale of Jet Airways’ assets, including the Bandra-Kurla Complex property. The tribunal noted that the pending employee applications cannot stall the liquidation process indefinitely.
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