In a massive victory for thousands of former Jet Airways employees, the National Company Law Appellate Tribunal (NCLAT) ruled that their outstanding provident fund, pension, and gratuity dues must be cleared in full. Dismissing a series of appeals filed by the State Bank of India (SBI) and other major lenders, the tribunal declared that these retirement benefits are statutory rights. Consequently, these essential worker funds must be kept completely separate from the general liquidation pool, insulating employees from competing financial claims by corporate creditors.
The legal confrontation arose when SBI challenged an early 2026 directive from the National Company Law Tribunal (NCLT). The lenders argued that priority payouts should apply only if Jet Airways had maintained isolated, identifiable asset accounts for retirement benefits—which the defunct airline had failed to do. Rejecting this reasoning, the NCLAT clarified that the Insolvency and Bankruptcy Code (IBC) protects employee dues based on the absolute right to the money rather than the physical availability of an account, ensuring that corporate mismanagement does not penalize workers.
Beyond protecting the total ₹275 crore payout pool, the appellate tribunal delivered an additional blow to lenders by adjusting the timeline for calculating the workers’ priority claims. The bench ruled that the 1,656 days consumed by prolonged corporate litigation must be completely excluded from the 24-month lookback period under the IBC liquidation framework. By safeguarding this timeline, the court prevented employee financial windows from being legally erased, forcing financial institutions to wait behind the workforce for asset distributions.
