On Wednesday the Supreme Court has initiated hearings on a series of petitions, including one filed by the Jet Aircraft Maintenance Engineers Welfare Association, challenging the October 21, 2022 order of the insolvency appellate tribunal NCLAT. The order directed the Jalan-Kalrock consortium, the new owners of the financially troubled Jet Airways, to pay the outstanding dues related to provident fund and gratuity to former employees.

During the proceedings, the bench, consisting of Chief Justice D Y Chandrachud and Justices J B Pardiwala and Manoj Misra, queried senior advocate Mukul Rohatgi, representing the consortium, about the amount paid towards the provident fund and gratuity dues of former Jet Airways employees. Rohatgi responded by stating that the consortium had not gained more than one percent control over the company but remained committed to the terms of the approved resolution plan.

The consortium, as per legal sources, is obligated to settle dues exceeding Rs 200 crore related to provident fund and gratuity for the former employees of Jet Airways. Rohatgi argued that all stakeholders, including the workforce, must accept "haircuts" to ensure the company's viability as a "going concern." He further emphasized that the former employees are operational creditors and should not be treated as financial creditors like banks.

Solicitor General Tushar Mehta, representing the SBI-led banks that had lent money to Jet Airways, informed the court that financial institutions need to recover a substantial amount of Rs 7,800 crore, highlighting additional expenses incurred for maintaining aircraft.

The focus of the hearing was on a petition filed by the Jet Aircraft Maintenance Engineers Welfare Association against the NCLAT's order. The NCLAT had directed the Jalan-Kalrock consortium to pay the pending provident fund and gratuity dues of Jet Airways employees and instructed the resolution professional to compute the payments within a month.

Lawyers representing 110 workmen of Jet Airways argued the case, questioning whether workmen are entitled to provident fund and gratuity during the corporate insolvency resolution process. They urged the Supreme Court to determine whether the resolution plan could transfer the liability to pay statutory PF and gratuity dues to another entity.

The resolution plan, approved on June 22, 2021, transferred salary, PF, and gratuity dues of 3,400 employees to a wholly owned subsidiary of Jet Airways, AGSL. The workmen claimed that, despite the passage of 30 months since the approval order, no payments had been made to them.

The NCLAT, in a previous order on January 30, 2023, upheld the payment of provident fund and gratuity dues to the airline's former employees, rejecting the plea of the consortium. The consortium had acquired Jet Airways through an insolvency resolution process after the airline ceased operations in early 2019 due to financial difficulties.

The NCLAT's order specifies that full gratuity and provident fund must be paid to all workmen and employees who resigned or retired, with calculations made until June 20, 2019, the date of admission to insolvency. The entire due amount of Rs 113 crore, as mentioned in Form H (draft plan), must also be paid to the workmen. The employees are entitled to gratuity and full provident fund, unpaid up to the date of insolvency commencement.

The Supreme Court will continue to hear the plea of the workmen against the NCLAT's decision and address the complex issue of resolving dues to Jet Airways employees during the ongoing corporate insolvency resolution process.