Home / Companies / News /  SC upholds order to clear Jet staff dues

The Supreme Court on Monday dismissed the plea by the Jalan Kalrock Consortium, the winning bidder for Jet Airways’ revival, challenging a National Company Law Appellate Tribunal order which directed them to pay provident fund and gratuity dues to the airline’s former employees.

A bench led by Chief Justice DY Chandrachud said the top court will not interfere with the tribunal’s order. A detailed order is, however, awaited.

In early January, the consortium had filed an appeal before the apex court seeking a stay on the NCLAT’s 21 October order directing Jalan-Kalrock to clear the unpaid provident fund and gratuity dues of 250 crore 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 475 crore. The NCLAT order on payment of dues will create an additional burden of 200 crore, he added.

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 an 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."

In a last-ditch effort to save the airlines, the National Company Law Tribunal approved the resolution plan of the Jalan Kalrock consortium, comprising UK’s Kalrock Capital, businessman Murarilal Jalan and Florian Fritsch of Kalrock Capital in June 2021. However, a legal battle between the debt ridden airline’s creditors and the consortium over the transfer of airline ownership is going on.

The consortium had filed an application the NCLT in October confirming that it had met the five conditions, including validation of air operator certificate, submission of a business plan, approval for slot allocation, clearance for international traffic rights, and separation of ground-handling.

While lenders said that the new owner of Jet did not comply with the conditions precedent required for implementing a resolution plan, the consortium claimed it has met all necessary conditions.

The NCLT on 13 January allowed the transfer of ownership of Jet to Jalan Kalrock Consortium. Lenders however had sought a stay on the order which was rejected by the court.

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 date of insolvency commencement, after deducting the amount already paid towards provident fund in the resolution plan to the workmen" Adding that the workmen are also entitled for payment of their gratuity dues.

The tribunal had asked the dues be paid within one month from the order. Aggrieved by the consortium’s inordinate delay in implementing the court’s order, various workmen associations separately then approached the top court over the non-payment of their provident fund and gratuity dues.

Jet Airways owes its operational and financial creditors more than 15,000 crore.

Priyanka Gawande
Priyanka Gawande is a senior legal correspondent at Mint. She has worked as legal reporter for four years with both television and digital mediums. Based in Mumbai, she reports on disputes across sectors including banking, corporates and finance. This also includes insolvency and bankruptcy cases and intellectual property rights (IPR) litigation. Her focus also comprises tracking capital markets and disputes relating to securities law. Previously, Priyanka worked with Informist Media for 2.5 years covering major insolvency and bankruptcy cases and corporate developments. She started her career in journalism with Business Television India (BTVi) where she reported on primary markets, banking, finance and insurance companies.
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