SC rejects SBI appeal over Jet Airways ex-employees’ PF dues

The Supreme Court on Monday dismissed a plea by the State Bank of India against a National Company Law Appellate Tribunal (NCLAT) order directing the payment of provident fund and gratuity dues to former Jet Airways workmen and employees in full.

A bench comprising Chief Justice Surya Kant and Justices Joymalya Bagchi and V Mohana refused to interfere with the June 30 NCLAT order. “Even though there are arguable points raised in this appeal, which ordinarily would require this court to decide, and the peculiar factual circumstances of the case, we are not inclined to interfere with the impugned order. The questions of law are left open to be examined in the appropriate case,” the bench said.

The NCLAT upheld an earlier order passed by the National Company Law Tribunal (NCLT) directing the airline’s liquidator to pay provident fund and gratuity dues while dismissing appeals filed by the State Bank of India (SBI) and seven other financial creditors. The lenders had argued that provident fund, gratuity and pension fund dues should form part of the liquidation estate and be distributed among all the creditors under the Insolvency and Bankruptcy Code (IBC). They also contended that such dues could be excluded only if dedicated provident fund and gratuity funds existed at the commencement of liquidation.

The NCLAT said that employees’ statutory dues would remain outside the liquidation estate, protecting them from competing creditor claims.

The top court in November 2024 ordered the grounded airline’s liquidation, forfeiture of Rs 200 crore infused by successful bidder Jalan Kalrock Consortium and permitted the lenders led by the SBI to encash Rs 150 crore performance bank guarantee.

Invoking its extraordinary powers under Article 142 of the Constitution, the apex court put the curtains on the insolvency proceedings of the airline by setting aside the NCLAT order.