NCLAT rejects SBI’s plea: Jet Airways employees to get full PF, gratuity, pension

The National Company Law Appellate Tribunal (NCLAT) has dismissed the State Bank of India's (SBI’s) appeal challenging the priority payment of provident fund and gratuity dues to Jet Airways employees. The tribunal upheld a key relief for the airline’s former staff as the company undergoes liquidation.

According to a report in Bar and Bench, the appellate tribunal ruled that provident fund, pension, and gratuity dues payable to workmen and employees must be paid in full and kept outside the liquidation estate, from which other creditors, including banks, are to be paid.

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In its judgment delivered on June 30, a bench comprising chairperson Justice Ashok Bhushan and technical member Barun Mitra held that the 1,656 days spent in litigation during Jet Airways’ prolonged corporate insolvency resolution process must be excluded while computing the 24 months preceding the liquidation commencement date of November 26, 2024. 

The tribunal directed the liquidator to recompute workmen’s dues for that protected 24-month period after excluding the 1,656 days and stated that workmen dues for this period cannot be treated as nil.

The ruling arose from appeals related to an order passed by the National Company Law Tribunal’s Mumbai bench in February 2026 during the airline’s liquidation proceedings. The NCLAT partly allowed the appeals filed by Jet Airways workmen and dismissed the appeals filed by SBI and other lenders.

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According to CNBC-TV18, employees have claimed that their total dues, including provident fund and gratuity, exceed ₹275 crore. In February, the NCLT’s Mumbai bench had directed the liquidator to pay provident fund and gratuity dues to workmen and employees in full, stating these statutory dues do not form part of the liquidation estate under the Insolvency and Bankruptcy Code.

SBI had argued before the NCLAT that the exclusion could apply only if Jet Airways had maintained separate and identifiable provident fund and gratuity funds, which the airline had not. The lender contended that these dues should be paid through the normal liquidation pool like other workmen’s claims.

The appellate tribunal rejected this view, holding it was contrary to the text and purpose of the IBC. It said the provisions were "due-centric" and not "asset-centric". The tribunal stated that 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 the existence of such funds on the liquidation commencement date.

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The tribunal added that accepting SBI’s argument would deprive workmen of their right and entitlement. It said SBI’s interpretation negates the right of workmen and employees to their provident fund, gratuity fund, and pension fund earned through continuous service to the airline.