Supreme Court upholds NCLAT order on payment of dues to ex-employees of Jet Airways

Jet Airways: The Supreme Court on Monday dismissed the plea by the Jalan Kalrock Consortium and upheld the NCLAT order on payment of dues to ex-employees of Jet Airways.

In January, the consortium had filed an appeal before the apex court seeking a stay on the NCLAT’s 21 October 2022 order directing Jalan-Kalrock to clear the unpaid provident fund and gratuity dues of Rs. 250 crores to the former employees of the cash-strapped airline. The counsel appearing for the consortium said the PF and gratuity dues were not a part of the approved resolution plan and liability must be capped at Rs. 475 crores. The NCLAT order on payment of dues will create an additional burden of Rs. 200 crores.

Jalan-Fritsch won the bid through an insolvency resolution process for jet Airways, which had stopped operations in early 2019 due to a financial crisis. Jet Airways owes its operational and financial creditors more than 15,000 crores. The NCLAT on 13 January 2023 allowed the transfer of ownership of Jet to Jalan Kalrock Consortium. The airline is now preparing to restart its services.

According to the NCLAT order, full gratuity and provident fund have to e paid to all workmen and employees who have resigned or retired. The calculation should be done by 20 June 2019, the date of admission insolvency. The October order of the NCLAT stated that “The successful resolution applicant (Jalan Kalrock consortium) 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” adding that the workmen are also entitled to payment of their gratuity dues.

Supreme Court order

A bench of Chief Justice DY Chandrachud and justices PS Narasimha and JB Pardiwala said, “Anyone stepping in would know that there are overriding labor dues. Unpaid labor dues always take precedence. Somewhere, there has to be finality. Sorry, we will not interfere.”

“This order is not only a path-breaking one but also a ray of hope for all such workmen and employees who are entangled in these types of litigations,” Chatterjee told media after the hearing of the matter.

Amit Kelkar, vice president of Jet Aircraft Maintenance Engineers Welfare Association, and former lead aircraft engineer, Jet, said: “Our intervention was denied last year while the resolution plan was in the approval stage. If we were allowed to intervene, the issue of statutory dues of workmen would have been resolved two years back. Nevertheless, the SC verdict gives relief to workers and sets a good precedent.”

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