Gratuity With Interest Qualifies As Operational Debt U/S 5(21) Of IBC: NCLAT

The National Company Law Appellate Tribunal (NCLAT) has issued a significant ruling clarifying that the dues related to employee gratuity, along with any applicable interest on such dues, qualify as operational debt under the Insolvency and Bankruptcy Code (IBC). This classification is important as it determines the priority of claims in the distribution of assets during the insolvency resolution or liquidation process. By categorizing gratuity as operational debt, the NCLAT has effectively prioritized the claims of employees for their gratuity entitlements, recognizing the importance of these benefits for the workforce in the context of corporate insolvency.