Gratuity With Interest falls within definition of Operational Debt u/s 5(21) of IBC: NCLAT

The National Company Law Appellate Tribunal (NCLAT) has clarified that gratuity payments due to employees, along with accrued interest, qualify as 'operational debt' under the Insolvency and Bankruptcy Code (IBC). This significant ruling prioritizes the claims of employees in insolvency proceedings, ensuring that their gratuity dues are treated as part of the operational liabilities of the corporate debtor. By explicitly including gratuity with interest as operational debt, the NCLAT strengthens employee rights and their position in the hierarchy of creditors during corporate insolvency resolution processes.