Jalan-Kalrock Consortium has appealed an SC decision over the unpaid provident fund and gratuity obligations for former employees of Jet Airways.
According to a National Company Law Appellate Tribunal (NCLAT) judgement from October, the consortium was required to pay the projected $200–$250 billion in outstanding gratuity and provident fund obligations owed to Jet employees. Additionally, the NCLAT had rejected the consortium’s request to limit its payment liability under the adopted resolution plan to Rs. 475 crores.
According to the appeal submitted by attorney Avinash B. Amarnath, the appellate panel rejected the consortium’s request to limit its payment liability under the agreed resolution plan to Rs. 475 crores.
The resolution plan proposed by the group comprising UK-based Kalrock Capital, UAE-based businessman Murari Lal Jalan, and Florian Fritsch of Kalrock Capital was approved by the airline’s Committee of Creditors in October 2020.
The authorised resolution plan, which had only designated 52 crores out of a total of 475 crores maintained for settlements to all stakeholders towards payment of employees’ dues, did not include the PF and gratuity dues.
A dispute about overdue dues has been going on since November.
The main areas of disagreement between the lenders of Jet Airways and the Jalan-Kalrock Consortium have been the rental income of an Airbus A330 leased to Air Serbia and the payment of outstanding provident funds and gratuity dues to airline employees.
According to a person with knowledge of the situation, a protracted legal battle is anticipated over the two issues, who also noted that the PF and gratuity dues are a significant sum and were not included in the resolution plan that the National Company Law Tribunal (NCLT) approved on June 22, 2021, following the start of an insolvency process in June 2019.
“I think the consortium is seeking a cap on the dues which they need to pay as well as clarity on the scope of their role in any pending payments which were not discussed in the resolution plan.”–A person aware of the situation said
According to the October order, the appellate tribunal had approved numerous petitions submitted by the association of workers, aircraft maintenance engineers, officers and staff association, and others and had ordered the new owner to pay any unpaid provident fund dues as acknowledged by the resolution professional.
The court had also instructed the former resolution specialist to calculate the payments to be made to the workers and employees within one month starting on December 2 and to also inform the consortium of the same for the necessary payment of dues.
On January 13, the Mumbai bench of the National Company Law Tribunal (NCLT) approved the sale of the bankrupt Jet Airways (India) Ltd to the consortium Jalan-Kalrock, which had won the bidding.
The resolution plan will go into force on November 16th. The consortium will therefore have 180 days starting from the specified date to pay lenders.
It’s interesting to note that the NCLT referred to the NCLAT’s order from October in order to give the Jalan-Kalrock Consortium ownership of the airline. The NCLT noted that the NCLAT’s ruling from October had already stated that the consortium had satisfied the monitoring committee of all requirements for ownership transfer.