Pay provident fund and gratuity dues to employees in full, National Company Law Tribunal’s Mumbai bench directs liquidator of defunct Jet Airways

Mumbai: The National Company Law Tribunal (NCLT), Mumbai Bench-I, on Wednesday directed the liquidator of defunct Jet Airways to pay provident fund and gratuity dues to workmen and employees in full.

The tribunal stated that that such statutory dues do not form part of the liquidation estate under the Insolvency and Bankruptcy Code (IBC). "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 NCLT said.



Two interlocutory applications were filed by 296 former workmen of Jet Airways, who were also former members of JAMEWA.

These applications had sought exclusion of provident fund, gratuity and certain salary dues from the liquidation estate, contending that these statutory liabilities must be paid in full outside the waterfall mechanism under IBC Section 53.

The tribunal rejected objections raised by State Bank of India (SBI) and the liquidator, stating that employees' entitlement to provident fund and gratuity does not depend on whether the corporate debtor had maintained separate funds. Relying on binding precedents of the NCLT and Supreme Court, the tribunal ruled that such dues are payable in full even if no dedicated fund had been created.

Narayan Hariharan, former senior VP of Jet Airways, said: "This is a moment of deep relief for Jet Airways employees who endured over six 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 on an application filed by SBI on behalf of assenting financial creditors, the NCLT permitted the liquidator to proceed with distribution of liquidation proceeds from the sale of Jet Airways' assets, including the Bandra-Kurla Complex property, pending final adjudication of the employees' claims. The tribunal held that the mere pendency of the employees' applications cannot stall the liquidation process indefinitely.