NCLAT directs Jet Airways' new owner to clear unpaid provident fund, gratuity dues

Allowing a batch of petitions filed by the associations of workmen, Aircraft Maintenance Engineers, Officers and Staff Association and others, a two-member NCLAT bench had asked the new owner to make payment of provident fund dues as admitted by the resolution professional.

A Jalan-Kalrock consortium spokesperson declined to comment on NCLAT ruling. Pic: Reuters

Insolvency appellate tribunal NCLAT on Friday directed Jet Airways' new owner -- Jalan-Kalrock consortium -- to pay the unpaid provident fund and gratuity dues of employees of the carrier, which is preparing to restart operations.

It has directed the former resolution professional to "compute the payments to be made to workmen and employees within one month from today" and communicate the same to the Jalan-Kalrock consortium to take steps for the payment.

Allowing a batch of petitions filed by the associations of workmen, Aircraft Maintenance Engineers, Officers and Staff Association and others, a two-member NCLAT bench had asked the new owner to make payment of provident fund dues as admitted by the resolution professional.

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"Successful resolution applicant is directed to make payment of unpaid provident fund to the workmen till the date of insolvency commencement, after deducting the amount already paid towards the provident fund in the resolution plan to the workmen," NCLAT said.

The appellate tribunal also said the workmen are entitled to payment of their gratuity dues as on the insolvency commencement date, after adjusting any amount towards gratuity paid under the resolution plan.

Jalan-Kalrock won the bid through an insolvency resolution process for Jet Airways, which had stopped operations in early 2019 due to financial crisis. The airline is now preparing to restart services.

A Jalan-Kalrock consortium spokesperson declined to comment on NCLAT ruling.

"This is a major judgment in view of workmen dues qua a resolution plan especially gratuity and provident fund," Swarnendu Chatterjee, the lead counsel for the Association of Aggrieved Workmen of Jet Airways, said.

Further, he said the workmen and the employees who had superannuated and resigned from their respective long standing employments with Jet Airways, on its admission under the Insolvency and Bankruptcy Code by NCLT, Mumbai, have finally been able to smile on the eve of Diwali.

As per the order, full gratuity and provident fund have to be paid to all workmen and employees who have resigned or retired. The calculation should be done till 20.06.2019, the date of admission to insolvency, Chatterjee said.

Over and above the gratuity and provident fund, the entire dues of Rs 113 crore as mentioned in the Form H (draft plan) has to be paid to the workmen, he added.

"Employees shall also be entitled to the gratuity, which fell due up to insolvency commencement date," the National Company Law Appellate Tribunal (NCLAT) said.

However, it said the entitlement of those employees and workmen, who were demerged into AGSL (Airjet Ground Services Ltd), a subsidiary of Jet Airways shall not be there, since the demerger has not been treated as a termination of their services.

"The employees are also entitled to the payment of their full provident fund, unpaid up to the date of the insolvency commencement date," NCLAT said in its 143-page order.

Further, the appellate tribunal said, "It is made clear that full payment of provident fund would be of that unpaid part of provident fund, which has not been deposited by the corporate debtor in the EPFO".

However, the appellate tribunal rejected other prayers by the workmen and employees of Jet Airways.

NCLAT order came on a batch of petitions challenging the orders of the Mumbai bench of the National Company Law Tribunal, which had on June 22, 2021, approved the bids of the Jalan-Kalrock consortium.

Five appeals were filed by workmen and employees of Jet Airways and three by operational creditors.

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