The Supreme Court has dismissed a plea filed by the State Bank of India (SBI) against an order of the National Company Law Appellate Tribunal (NCLAT) regarding the provident fund (PF) and gratuity dues of former Jet Airways employees.
What Is the Issue?
The main issue is about the PF and gratuity money owed to former Jet Airways employees. After Jet Airways went into liquidation, a dispute started over whether the employees’ PF and gratuity dues should be paid separately or should be included with the other claims of creditors.
SBI and seven other financial creditors argued that these dues should be treated as part of the liquidation estate. They wanted these amounts to be considered along with other claims under the Insolvency and Bankruptcy Code (IBC).
The lenders also argued that PF and gratuity amounts should remain outside the liquidation estate only if separate funds were available when the liquidation process started.
NCLAT Orders Payment of PF and Gratuity
The NCLAT rejected the lenders’ argument. In its order dated June 30, the NCLAT directed the liquidator of Jet Airways to pay the PF and gratuity dues of former employees in full.
It also dismissed the appeals filed by SBI and seven other financial creditors.
The NCLAT said that statutory dues payable to employees would remain outside the liquidation estate. Therefore, these dues would not be affected by the claims of other creditors.
SBI Approached the Supreme Court
SBI challenged the NCLAT order in the Supreme Court. The case was heard by a bench headed by Chief Justice Surya Kant along with Justices Joymalya Bagchi and V. Mohana.
Supreme Court Dismisses SBI Plea
The Supreme Court refused to interfere with the NCLAT order and dismissed SBI’s plea. The court noted that the SBI appeal raised some legal questions that could normally require consideration. However, the court decided not to interfere with the NCLAT order in this case.
The Supreme Court also said that the legal questions raised in the case would remain open. This means these questions can be considered in another appropriate case in the future.
Former Employees’ PF and Gratuity Dues
With the Supreme Court refusing to interfere, the NCLAT order directing payment of PF and gratuity dues remains in place. The liquidator will have to follow the NCLAT direction regarding the eligible dues of former Jet Airways employees.
Supreme Court Had Earlier Ordered Jet Airways’ Liquidation
The Supreme Court had earlier ordered the liquidation of Jet Airways in November 2024. The court also ordered the forfeiture of ₹200 crore infused by the Jalan Kalrock Consortium. It further allowed the lenders led by SBI to encash a ₹150 crore performance bank guarantee.
Using its special powers under Article 142 of the Constitution, the Supreme Court had set aside the earlier NCLAT order and brought the airline’s insolvency process to an end by ordering its liquidation.
