NCLT Rejects Insolvency Plea Against SpiceJet Over Salary Dues, Cites Pre-Existing Dispute and IBC Threshold Failure

June 12, 2026 : The National Company Law Tribunal (NCLT), New Delhi Bench, has dismissed an insolvency petition filed against SpiceJet Limited by a former pilot, holding that the claimed salary dues did not meet the statutory threshold under the Insolvency and Bankruptcy Code (IBC), 2016 and were also subject to a pre-existing dispute between the parties. The ruling reinforces the principle that insolvency proceedings cannot be used as a substitute for resolving contested employment-related claims.

The petition was filed by Capt. Devesh Bbyan under Section 9 of the IBC, seeking initiation of the Corporate Insolvency Resolution Process (CIRP) against SpiceJet. The petitioner claimed that the airline had failed to pay employment dues amounting to ₹1.13 crore for services rendered between April 2020 and August 2022. Including interest at 24% per annum, the total claim was stated to be approximately ₹1.70 crore. According to the petitioner, he was appointed as a Trainee Captain in April 2019 with an annual compensation package of ₹77.40 lakh and was not paid his full contractual salary despite repeated demands.

SpiceJet opposed the petition, arguing that the claim was not maintainable under the IBC. The airline contended that several components of the compensation package were variable in nature and that revised employment terms were introduced during the COVID-19 pandemic. According to the company, the petitioner had accepted the revised compensation structure in June 2020 and continued working under the modified arrangement. SpiceJet further asserted that the employee’s full and final settlement had been calculated and communicated, and that only a limited amount remained payable subject to completion of procedural formalities.

A key issue before the Tribunal was whether employment-related dues could qualify as “operational debt” under the IBC. Referring to Section 5(21) of the Code, the NCLT clarified that claims arising from employment fall within the definition of operational debt. The Bench observed that employment dues are expressly included within the scope of operational debt and can therefore form the basis of a petition under Section 9 of the IBC.

However, the Tribunal found significant legal hurdles in the petitioner’s claim. It noted that a substantial portion of the alleged unpaid salary, amounting to approximately ₹47.52 lakh, related to the period between April 2020 and March 2021. This period falls within the protection granted under Section 10A of the IBC, which was introduced during the COVID-19 pandemic to suspend insolvency proceedings for defaults occurring between 25 March 2020 and 24 March 2021. Relying on the Supreme Court’s decision in Ramesh Kymal v. Siemens Gamesa Renewable Power Pvt. Ltd., the Tribunal held that defaults arising during the protected period cannot be used as a basis for initiating CIRP. Consequently, the amount attributable to that period could not be considered for determining the statutory threshold under the Code.

The NCLT also rejected the petitioner’s attempt to include interest amounting to ₹56.78 lakh in the calculation of operational debt. The Bench observed that there was no contractual agreement providing for payment of interest on delayed salary dues. Referring to recent rulings of the National Company Law Appellate Tribunal (NCLAT), the Tribunal held that interest cannot be added to the principal amount in the absence of a specific agreement, acknowledgment, or other legally enforceable basis. As a result, the interest claim was excluded from the computation of the debt.

After excluding the amount protected under Section 10A and the interest component, the Tribunal found that the remaining alleged default fell below the ₹1 crore threshold prescribed under Section 4 of the IBC for initiating insolvency proceedings. This alone rendered the petition unsustainable.

The Tribunal further held that a genuine pre-existing dispute existed regarding the quantum of salary dues payable to the petitioner. SpiceJet had consistently maintained that the employment contract had been modified during the pandemic and that salary payments had been made under the revised terms. The company’s response to the statutory demand notice, as well as email exchanges between the parties, demonstrated a continuing disagreement over the amount allegedly due. The Tribunal noted that emails relating to full and final settlement and revised employment terms showed that the parties were never in agreement regarding the claimed dues.

Relying on the Supreme Court’s recent judgment in GLS Films Industries Private Limited v. Chemical Suppliers India Private Limited, the NCLT reiterated that while examining a Section 9 application, the adjudicating authority is not required to determine the merits of the dispute. It only needs to ascertain whether a plausible dispute exists and whether it is not “spurious, hypothetical or illusory.” The Bench observed that the dispute between the parties was real and had arisen well before the issuance of the statutory demand notice under Section 8 of the IBC.

Summarising its findings, the Tribunal concluded that the petition suffered from two fundamental defects. First, the debt amount eligible for consideration under the IBC fell below the statutory threshold after excluding amounts barred by Section 10A and unsupported interest claims. Second, there was a clear pre-existing dispute regarding the alleged employment dues. Since both conditions independently barred admission of the petition, the application was dismissed.

The decision is significant for employers and employees alike, as it highlights the limitations of using insolvency proceedings as a recovery mechanism for disputed salary claims. The ruling reaffirms that while employment dues may qualify as operational debt under the IBC, insolvency proceedings cannot be invoked where the debt amount fails to meet statutory requirements or where genuine disputes regarding liability already exist.

Case Reference : Capt. Devesh Bbyan v. SpiceJet Limited