Former Jet Airways staffers have welcomed the ruling on their gratuity payment by the nation’s highest corporate court. The National Company Law Appeal Tribunal (NCLAT), in a landmark ruling on Friday, said the Jalan-Kalrock Consortium’s resolution plan violated the Employees Provident Fund (EPF) Act 1952.
The NCLAT bench observed that the resolution plan initiated on June 22, 2019 did not provide for the payment of contingency funds and gratuity to airline staff. The plan was approved by a two-member Mumbai bench of the National Company Law Tribunal (NCLT), which ordered the Jalan-Kalrock consortium to obtain the necessary approvals and licenses to restart the airline in 90 days.
The NCLT order led to a slew of appeals filed by employee representatives challenging it. Subsequently, NCLAT began its appeals hearing in July this year.
“This is the best Diwali gift I could have expected since the airline ceased operations in April 2019,” said an employee with nearly 30 years of service with the carrier.
Welcoming the decision, All India Jet Airways Officers Association President Kiran Pawaskar told Business Today: “This is the first time in the aviation industry that terminal fees have been payable.” He referred to similar cases with companies engaged in ground handling. where workers have never received unpaid dues.
Expressing his satisfaction with the verdict, a former vice president of the carrier and one of the key figures in the fight for the clearance of all unpaid dues, Dr Narayan Hariharan said: “The principles and principles of the social security have been upheld by the court… Severance benefits are an employee’s last hope at the end of their service and the right to receive the same after a long fight gives the worker confidence when the employer goes into debt.
The NCLAT order also declared that failure to pay the full provident fund and gratuity was contrary to Section 30(2)(e) of the Insolvency and Bankruptcy Code ( IBC), 2016. Therefore, to save the resolution plan, the above payments had to be fabricated.
A large order
The judgment states that nearly Rs 247.8 crore of gratuity claims are payable by the Jalan-Kalrock consortium due to their admission by the resolution professional. The NCLAT ordered the chairman of the oversight committee, the former resolution professional, to calculate the payments to be made to workers and employees within one month of October 21 and then communicate them to the candidate for the resolution chosen to facilitate them.
Further, finding the amount of Rs 15,000 awarded as payment under the resolution plan as untenable, the court declared that an amount of Rs 24, 40, 65,594 for damages under Article 14B of the Employees Provident Funds and Miscellaneous Provisions Act 1952, as per order dated 10th October 2018 should be paid at the office of the Regional Provident Fund Commissioner, Mumbai.
The NCLAT also issued instructions to the successful resolution applicants to make a payment of Rs 113 crore to the laborers under the resolution scheme as 24 months salary which they were entitled to receive. under sections 30 and 53 of the IBC.
The New Delhi-based law firm’s senior partner, Anu Mehta, has called the NCLT order a landmark event in service and labor case law that would set a new benchmark for surpassing labor law standards. global labor well-being.
“NCLT ordered the Jalan-Kalrock Consortium to pay in full the Regional Provident Fund Commissioner’s claim to meet employee gratuity and PF claims. The so-called resolution trampling on the statutory claims of workers and employees who break the law was not acceptable to the bench,” Mehta observed.
“They have sent a clear message through this judgment that development and growth must be inclusive and certainly not at the expense of workers and employees. A clear precedent has been set for the international community to emulate India in its commitment to worker welfare,” she added.
The judgment ruled that all workers and employees whose gratuity was due before the start date of the insolvency were entitled to it. However, employees were not eligible to receive unpaid wages due to falling below the costs of the corporate insolvency resolution process (CIRP).
The NCLAT further clarified that gratuity claims arising after the insolvency commencement date for employees absorbed by Airjet Ground Services Ltd (AGSL) – formed to provide ground handling services to third parties – would not be not payable because the employment of these persons had continued.