The National Company Law Appellate Tribunal (NCLAT) has upheld the priority payment of provident fund (PF) and gratuity dues to former employees of Jet Airways, dismissing an appeal filed by the State Bank of India (SBI). The ruling offers significant relief to hundreds of ex-employees as the defunct airline continues to undergo liquidation.
With the decision, the appellate tribunal has reaffirmed an earlier order of the National Company Law Tribunal (NCLT), which held that statutory dues such as provident fund and gratuity are not part of the liquidation estate under the Insolvency and Bankruptcy Code (IBC). This means these payments must be settled before assets are distributed among creditors. A detailed order from the NCLAT is still awaited.
According to reports, former Jet Airways employees have claimed dues exceeding Rs 275 crore, including provident fund and gratuity benefits. The dispute arose after SBI challenged the NCLT’s February ruling, which had directed the airline’s liquidator to pay employees’ statutory retirement benefits in full.
The case originated from applications filed by 296 former Jet Airways workmen seeking exclusion of provident fund, gratuity and certain salary-related dues from the liquidation estate. The tribunals rejected objections raised by SBI and the liquidator, holding that employees’ entitlement to these statutory benefits remains valid even if the company had not maintained separate provident fund or gratuity accounts. The rulings also relied on existing judicial precedents, including those of the Supreme Court.
Jet Airways entered liquidation after the Supreme Court ordered the airline’s winding up in November 2024 following the failure of the Jalan-Kalrock Consortium to implement its approved revival plan and meet financial commitments, including employee dues.
The latest ruling reinforces statutory social-security protections for employees undergoing corporate insolvency and highlights that retirement benefits such as provident fund and gratuity enjoy priority over creditor claims during liquidation proceedings.
