J K JUTE MILL MAZDOOR MORCHA versus JUGGILAL KAMLAPAT JUTE MILLS COMPANY LTD. THROUGH ITS DIRECTOR

Citation: [2019] 7 S.C.R. 1048 · Decided: 30-04-2019 · Supreme Court of India · Bench: R.F. NARIMAN · Disposal: Appeal(s) allowed

Judgment (excerpt)

A
B
C
D
E
F
G
H
1048
SUPREME COURT REPORTS
[2019] 7 S.C.R.
J K JUTE MILL MAZDOOR MORCHA
v.
JUGGILAL KAMLAPAT JUTE MILLS  COMPANY LTD.
THROUGH ITS DIRECTOR
(Civil Appeal No. 20978 of 2017)
APRIL 30, 2019
[R. F. NARIMAN AND VINEET SARAN, JJ.]
Insolvency and Bankruptcy Code, 2016– ss.3(23), 5(20),(21)
and 8– A trade union, whether an operational creditor for the
purpose of the 2016 Code – Respondent-Jute mill was being closed
and reopened several times until it was finally closed in 2014 –
Proceedings pending under the 1985 Act, the appellant-trade union
issued demand notice on behalf of around 3000 workers, u/s.8 of
the Code, for their outstanding dues – Replied by the respondent –
National Company Law Tribunal (NCLT) dismissed the petition
holding that a trade union is not an operational creditor – NCLAT
dismissed the appeal filed by the appellant stating that each worker
may file individual application before the NCLT– Held: Under s.5(20)
of the Code, an operational creditor refers to any “person”– s.3(23)
states that “person” inter alia includes “any other entity established
under a statute...”– A trade union is certainly an entity established
under a statute- the 1926 Act, and would therefore fall within the
definition of “person” u/s.3(23) – An “operational debt”, meaning
a claim in respect of employment, could certainly be made by a
person duly authorised to make such claim on behalf of a workman–
Rule 6, Form 5 of the 2016 Rules, also recognises the fact that
claims may be made not only in an individual capacity, but also
conjointly – Further, a registered trade union recognised by s.8 of
the 1926 Act, makes it clear that it can sue and be sued as a body
corporate u/s.13 of that Act– Instead of one consolidated petition
by a trade union representing number of workmen, filing individual
petitions would be burdensome as each workman would have to
pay insolvency resolution process costs, costs of the interim resolution
professional etc.– Thus, a registered trade union formed for the
purpose of regulating the relations between workmen and their
employer can maintain a petition as an operational creditor on
   [2019] 7 S.C.R. 1048
1048
A
B
C
D
E
F
G
H
1049
behalf of its members– A joint petition could be filed u/r. 6 r/w Form
5 of the 2016 Rules, with authority from several workmen to one of
them to file such petition on behalf of all – Judgment of the NCLAT
set aside – Matter remanded to the NCLAT to be decided on merits,
expeditiously –Trade Unions Act, 1926 – ss.2(g), (h), 8, 13, 15(c)
and (d) – Sick Industrial Companies (Special Provisions) Act, 1985
– Insolvency and Bankruptcy (Application to Adjudicating
Authority) Rules, 2016 – r.6 r/w Form 5 – Insolvency and
Bankruptcy Board of India (Insolvency Resolution Process for
Corporate Persons) Regulations, 2016 – Regulations 31 and 33.
Interpretation of Statutes – “noscitur a sociis” – Held: In
Section 3(23) of the Code, a “person” would include any other
entity established under a statute under Clause (g) – Clause (g) has
to be read noscitur a sociis with the previous clauses of s.3(23) –
Insolvency and Bankruptcy Code, 2016 – s.3(23)(g).
Words & Phrases –”established under a statute” – Discussed.
Allowing the appeal, the Court
HELD: 1.1 A trade union is certainly an entity established
under a statute – namely, the Trade Unions Act, 1926 and would
therefore fall within the definition of “person” under Sections
3(23) of the Insolvency and Bankruptcy Code, 2016. This being
so, it is clear that an “operational debt”, meaning a claim in respect
of employment, could certainly be made by a person duly
authorised to make such claim on behalf of a workman. Rule 6,
Form 5 of the Insolvency and Bankruptcy (Application to
Adjudicating Authority) Rules, 2016 also recognises the fact that
claims may be made not only in an individual capacity, but also
conjointly. Further, a registered trade union recognised by Section
8 of the Trade Unions Act, makes it clear that it can sue and be
sued as a body corporate under Section 13 of that Act. Equally,
the general fund of the trade union, which inter alia is from
collections from workmen who are its members, can certainly be
spent on the conduct of disputes involving a member or members
thereof or for the prosecution of a legal proceeding to which the
trade union is a party, and which is undertaken for the purpose of
protecting the rights arising out of the relation of its members
J K JUTE MILL MAZDOOR MORCHA v. JUGGILAL KAMLAPAT
JUTE 

Excerpt shown. Read the full judgment & AI analysis in Lexace.