The National Company Law Appellate Tribunal (NCLAT) has delivered a significant judgment favoring the former employees of Jet Airways. The tribunal mandated that the employees’ provident fund, pension, and gratuity dues must be fully paid and excluded from the liquidation pool, which is allocated for other creditors, such as banks. This decision came in the case of State Bank of India and Ors. v. Manoj Kumar Das & Ors.
Moreover, NCLAT clarified that the 1,656 days spent in litigation during Jet Airways’ lengthy corporate insolvency resolution process (CIRP) should not be included when calculating the 24-month period preceding the liquidation commencement date. The tribunal’s ruling emphasizes that workman dues for the protected 24 months before November 26, 2024, the liquidation commencement date, cannot be treated as zero.
The tribunal instructed the liquidator to reassess the workmen’s dues for the 24-month period before the liquidation commencement date, excluding the aforementioned litigation period. This judgment, delivered on June 30, was penned by a bench comprising Chairperson Justice Ashok Bhushan and Technical Member Barun Mitra. It involved dismissing appeals from State Bank of India (SBI) and other lenders while partially allowing appeals from Jet Airways’ workmen, which stemmed from an NCLT Mumbai order issued in February 2026.
SBI contended before the NCLAT that such exclusions should apply only if the airline maintained distinct provident and gratuity funds, which Jet Airways did not. Consequently, SBI argued that these dues should be settled through the standard liquidation pool alongside other claims. However, NCLAT rejected this interpretation, deeming it inconsistent with the Insolvency and Bankruptcy Code (IBC). The tribunal highlighted that the provisions are focused on dues, not assets, and emphasized that all dues related to provident fund, pension fund, and gratuity fund should be excluded from the liquidation estate regardless of their existence on the liquidation commencement date.
The tribunal further asserted that aligning with SBI’s argument would unjustly strip workmen of their rightful entitlements. Citing its 2022 ruling in the Jet Aircraft Maintenance Engineers Welfare Association case and the Supreme Court’s decision in Sunil Kumar Jain v. Sundaresh Bhatt, NCLAT reiterated that provident fund, gratuity, and pension dues are distinct from the liquidation estate and not meant for creditor recovery.
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NCLAT also reviewed Jet Airways’ financial statements as of March 31, 2019, which indicated provisions for gratuity and contributions to the provident fund, acknowledging these as recognized liabilities prior to insolvency. Representing SBI were Additional Solicitor General N Venkatraman, Senior Advocate Abhijeet Sinha, and advocates Dhananjay Kumar, Raunak Dhillon, Srideepa Bhattacharya, Isha Malik, Mehul Kumar, Anchit Jasuja, Mitali Jain, and Ilina Rechu. Advocates Pawanshree Agrawal, Kriti Jain, Aakriti Goel, and Divya Kamana Sree represented the workmen, while Advocates Ronita Bhattacharya and A Reyna Shruti represented S Gopalkrishnan, the workmen and employees’ representative. The liquidator’s legal team included Advocates Raghav Chadha, Dhiraj Kumar Totla, Nishant Upadhyay, and Vasudha Jain.
