The National Company Law Appellate Tribunal (NCLAT) has upheld a key relief to former Jet Airways employees, ruling that their provident fund, pension and gratuity dues must be paid in full and kept outside the liquidation pool from which other creditors, including banks, will be paid. [State Bank of India and Ors. v. Manoj Kumar Das & Ors.]
The appellate tribunal also held that the 1,656 days spent in litigation during Jet’s extraordinarily prolonged corporate insolvency resolution process (CIRP) must be excluded when computing the 24 months preceding the liquidation commencement date.
“Workman dues for the period of 24 months preceding the liquidation commencement dated (26.11.2024) cannot be treated as nil,” NCLAT held in the appeal filed by the workmen.
It directed the liquidator to recompute workmen’s dues for the protected 24‑month window before November 26, 2024 (the liquidation commencement date), after excluding the 1,656 days.
In a judgment delivered on June 30, a bench of chairperson Justice Ashok Bhushan and technical member Barun Mitra dismissed appeals by State Bank of India (SBI) and other lenders and partly allowed appeals by Jet Airways workmen arising from an order of NCLT Mumbai passed in February 2026 in the airline’s liquidation proceedings.
SBI moved NCLAT arguing that the exclusion applies only if the airline had maintained separate, identifiable PF and gratuity funds, which it admittedly had not. Therefore, these dues should be paid only through the normal liquidation pool like the other workmen’s claims.
The NCLAT rejected the interpretation as contrary to the text and purpose of the Insolvency and Bankruptcy Code (IBC). It held that the provisions were ‘due-centric’ and not ’asset-centric’.
“Exclusion of all sums due to any workman and employee from provident fund, pension fund and gratuity fund from the liquidation estate is not contingent on existence of such provident fund, pension fund and gratuity fund on the liquidation commencement date,” the tribunal held.
The NCLAT also said that accepting SBI’s argument would deprive workmen of their right and entitlement.
“The interpretation (of SBI) does not carry out purpose and intent of the provision of the IBC and clearly negate the right and entitlement of the workmen and employees to their provident fund, gratuity fund and pension fund which they have earned due to their continuous service rendered to the Airways,” the appellate tribunal held.
It relied on its own 2022 ruling in the Jet Aircraft Maintenance Engineers Welfare Association case wherein it had already directed Jet’s successful resolution applicant to pay unpaid PF and gratuity in full.
It also cited the Supreme Court’s decision in Sunil Kumar Jain v. Sundaresh Bhatt to underline that PF, gratuity and pension dues are carved out of the liquidation estate and are not to be used for recovery in the liquidation.
NCLAT took note of the financial statements of Jet Airways as of March 31, 2019 which showed provisions for gratuity and contributions to provident fund which is recognised liabilities of the company before it entered insolvency.
Additional solicitor general N Venkatraman, senior advocate Abhijeet Sinha with advocates Dhananjay Kumar, Raunak Dhillon, Srideepa Bhattacharya, Isha Malik, Mehul Kumar, Anchit Jasuja, Mitali Jain and Ilina Rechu appeared for SBI.
Advocates Pawanshree Agrawal, Kriti Jain, Aakriti Goel and Divya Kamana Sree appeared for workmen.
Advocates Ronita Bhattacharya and A Reyna Shruti appeared for S Gopalkrishnan, the representative of workmen and employees.
Advocates Raghav Chadha, Dhiraj Kumar Totla, Nishant Upadhyay and Vasudha Jain appeared for the liquidator of Jet Airways.