NCLAT Upholds Full PF, Gratuity Dues For Jet Airways Staff, Rejects SBI Plea

Published 1 July 2026 · india

NCLAT Upholds Full PF, Gratuity Dues For Jet Airways Staff, Rejects SBI Plea Published By, Last Updated: July 01, 2026, 07:54 IST NCLAT upheld the

NCLAT Upholds Full PF, Gratuity Dues For Jet Airways Staff, Rejects SBI Plea Published By, Last Updated: July 01, 2026, 07:54 IST NCLAT upheld the rights of hundreds of former Jet Airways employees to receive these statutory benefits outside the airline's liquidation estate. Jet Airways Employees Get Major Relief as NCLAT Orders Full PF, Gratuity Payout The Company Law Appellate Tribunal (NCLAT) on Tuesday held that employees are entitled to receive their full provident fund (PF) and gratuity dues even if their employer had not maintained separate provident fund and gratuity accounts. The appellate tribunal upheld the rights of hundreds of former Jet Airways employees to receive these statutory benefits outside the airline’s liquidation estate. It also dismissed appeals filed by the State Bank of India (SBI) and other financial creditors challenging the decision. Dispute after Jet Airways entered liquidation The case stemmed from the liquidation of Jet Airways after the resolution plan submitted by the Jalan-Fritsch consortium collapsed in November 2024. employees argued that their provident fund and gratuity dues should remain outside the liquidation estate under Section 36(4)(a)(iii) of the Insolvency and Bankruptcy Code (IBC).

The lenders, however, contended that such protection would apply only if separate provident fund or gratuity funds physically existed on the date when liquidation commenced. NCLAT rejects lenders’ argument Rejecting the financial creditors’ stand, the NCLAT ruled that statutory provident fund and gratuity dues must be paid in full even if no separate fund had been created by the employer. The tribunal upheld the Company Law Tribunal’s February order directing the liquidator to pay these dues outside the liquidation estate. “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 NCLAT said in its order. According to the ruling, provident fund and gratuity benefits payable under the relevant laws cannot be treated as assets available for distribution among creditors during liquidation. Salary dues to follow IBC waterfall mechanism While granting relief on provident fund and gratuity claims, the tribunal did not accept the employees’ plea regarding unpaid salaries.

The former employees had requested that a recovery certificate issued by the Deputy Labour Commissioner for salary dues from January to March 2019 should also remain outside the liquidation estate. The NCLAT rejected this request and ruled that these salary claims would have to be dealt with under the Insolvency and Bankruptcy Code’s waterfall mechanism applicable to workmen’s dues. Relief on look-back period The tribunal also considered the long duration of the insolvency proceedings. It noted that 1,656 days of the corporate insolvency resolution process had been consumed because of litigation. The NCLAT ruled that this period should be excluded while calculating the 24-month look-back period applicable to workmen’s dues under the Insolvency and Bankruptcy Code. The decision is expected to have implications beyond the Jet Airways case by clarifying that statutory provident fund and gratuity payments remain protected during liquidation, irrespective of whether separate funds had been maintained by the employer, while salary claims will continue to be governed by the distribution mechanism prescribed under the Insolvency and Bankruptcy Code.