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Supreme Court Supports Order For Jet Airways To Clear Employee Dues

SimpleFlying 1/30/2023 Gaurav Joshi
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Jet Airways is staring at a payment of millions to its former employees after India’s Supreme Court declined to interfere with the National Company Law Appellate Tribunal’s (NCLAT) order regarding the same. The airline is in the middle of a clean-up drive of its financial mess to restart operations but has faced several setbacks along the way.

Supreme Court backs order

India’s Supreme Court has sided with the NCLAT, which has asked Jet Airways to take responsibility for clearing former employee dues running into tens of millions of dollars. The Economic Times reports that the court realized the need for a “finality” in this matter, quoting a bench led by Chief Justice as saying,

“Anyone stepping in would know that there are overriding labour dues. There has to be a finality. We will not interfere.”

This means the winning bidders of Jet Airways – the Jalan-Kalrock Consortium – will now have to account for additional funds towards this payment. But senior counsel Saurabh Kripal who appeared on behalf of the consortium, was not happy and argued that the resolution plan was already approved and no changes should be made to it now.

He also said that the consortium will have to provide an additional $24.5 million towards the payment, and this puts the entire plan of the carrier’s revival in jeopardy.

Tussle over employee compensation

While Jet Airways battles several issues as it tries to restart operations, a big one that has added to its woes is that of employee compensation. Since November last year, Jet’s creditors have been arguing over the issue of unpaid provident funds and gratuity dues of former Jet employees.

The Jalan-Kalrock Consortium had agreed to spend ₹13.7 billion ($168 million) as part of its resolution plan. Of this, $110 million were to be spent as cash infusion, and around $58 million were to be paid to the creditors. The current ex-employee liabilities, as estimated by the authorities, are far more than Jet had provisioned for.

Dispute over ownership

Earlier this month, the National Company Law Tribunal (NCLT) approved the ownership transfer of Jet Airways to the Jalan-Kalrock Consortium. This was in response to two petitions filed by the consortium – to approve the transfer of ownership and to extend the time for clearing the dues of the creditors. Jet missed the November 16th, 2022, deadline to clear its dues but received a six-month extension from that date to make the payments.

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But Jet’s lenders had filed an appeal with NCLAT, seeking a stay on that order, claiming that the consortium had not fulfilled all condition precedents, such as domestic flight slots and international traffic rights.

While Jet missed last year’s deadline to fly again, the start of this year hasn’t been particularly exciting as well. It seems there’s still time before one gets more clarity on the airline’s future.

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Source: The Economic Times

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