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JK Jute Mill Mazdoor Morcha Versus Juggilal Kamlapat Jute Mills Co. Ltd.

2017 (10) TMI 463 - NATIONAL COMPANAY LAW APPELLATE TRIBUNAL, NEW DELHI

Insolvency procedure - application under Section 9 of the I&B Code is maintainable at the instance of Workmen Association? - Held that:- We hold that the application under Section 9 at the instance of Appellant-JK Jute Mill Mazdoor Morcha - is not maintainable. The Adjudicating Authority has rightly rejected the claim though for some other reason. - It does not mean that an application under Section 9 of I&B Code is not maintainable at the instance of an individual employee/workman who has r .....

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cy Resolution Professional once notice is published in the newspaper under Section 15 of the I&B Code and/or prior to completion of insolvency resolution process. This observation we are making so that in such case the 'corporate debtor' cannot take plea that earlier the application moved by workers' association/Trade Union in respect of such workmen/employee/legal heirs of deceased employees under Section 9 and the appeal under Section 61 have been rejected. - In absence of any merit the ap .....

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ha, Mr Titash Sen, Mr Atanu Mukherjee, Mr Arjun Aggarwal and Ms Vaishali, Advocates JUDGMENT SUDHANSU JYOTI MUKHOPADHAYA, J. This appeal has been preferred by Appellant- JK Jute Mill Mazdoor Morcha (hereinafter referred to as Trade Union) against order dated 28th April, 2017 passed by the Adjudicating Authority (National Company Law Tribunal (hereinafter referred to as Tribunal), Allahabad Bench, in Company Petition No. 36/ALD/2017 whereby and whereunder the application preferred by Appellant/Wo .....

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s not maintainable. 3. The only question arises for determination in this appeal is whether an application under Section 9 of the I&B Code is maintainable at the instance of Workmen Association? 4. Ld. Counsel for the Appellant while submitted that the Adjudicating Authority has accepted that the Respondent/'corporate debtor' cannot deny the liability for making payments of workmen's wages, contended that illegal acts and conduct of the 'corporate debtor' is glaring from .....

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order is passed by BIFR. 5. Referring to various acts on the part of the 'corporate debtor' it was contended that the default by 'corporate debtor' is admitted and borne out from audited balance sheet. 6. Ld. Counsel for the Appellant submitted that if the Appellant is a registered Trade union under sub-section (8) of Section 10 of the Trade Union Act, 1926 and under section 15 of the Trade Union Act, the General Fund can be used by the Appellant for prosecution or defence of any .....

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rom collective reading of Section 3(23)(g) of the Trade Union Act with Section 5(20) and (21) of the I&B Code, it is clear that the trade union being a 'person' the petition under Section 9 of the I&B Code is maintainable. Reliance was placed on decisions of High Courts which relates to Trade Union Act, however, according to us they are not applicable to the provisions of the I&B Code. 9. Ld. Counsel appearing on behalf of the Respondent/'corporate debtor' submitted t .....

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Bankruptcy (Application to Adjudicating Authority), 2016 (hereinafter referred to Adjudicating Authority Rules), it is clear that application can only be filed by 'operational creditor' i.e., an individual workman himself or person specifically authorized to act on behalf of the workman. As the Appellant is a Trade Union, it lacks authority to issue demand notice/file an insolvency application against the answering Respondent under the I&B Code. 10. According to Respondents, there is .....

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ate debtor' is in lockout and no dues are payable to the workmen/employees. 12. Ld. Counsel for the Respondent relied on decision of this Appellate Tribunal in "Kirusa Software Pvt. Ltd. v. Mobilox Innovations Pvt. Ltd" , and submitted that by judgement dated 24th May 2017, this Appellate Tribunal held that where there is a pre- existing dispute, the petition under Section 9 is not maintainable. It was also contended that the Appellant along with application under Section 9 has not .....

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ailed particulars of the workers, such as names, designation and the area of service, the period of service etc. and no default has taken place. Further, according to Respondents, the petition under Section 9 was filed before the expiry of prescribed period of 10 days from the date of receipt of demand notice. 14. 19 Interveners have intervened who claim to be the members of different Trade Unions of Respondent/'corporate debtor', this apart, some of them are widow, successor of the dece .....

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s of the Intervenors are more than ₹ 113.8 lacs. The details of period of lockout etc., has been shown. 15. Another Intervening Application has been filed by Ghanshyam Sarda who claim to be the co-promoter. According to him due to multiple litigations by the 'corporate debtor' under management of Govind Sarda, the Hon'ble Supreme Court earlier directed the BIFR to decide the issue of correct net-worth position and to finalise the DRS. Further according to them, the MoU with the .....

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and object of the Act and Rules thereof and 'purposive construction' should be made applicable in the present case. Request has been made to set aside the impugned order and remit the matter to the Adjudicating Authority to admit the application. 16. In this appeal it is not necessary to decide whether the Appellant/Trade Union come within the meaning of 'person' as defined in sub-section (23) of Section 3 of the I&B Code which reads as follows:- 3. In this Code, unless the c .....

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- section (20) of Section 5, which reads as below:- 5. In this Part, unless the context otherwise requires, - (20) operational creditor means a person to whom an operational debt is owed and includes any person to whom such debt has been legally assigned or transferred; 18. 'Operational Debt' as defined in sub-section (21) of Section 5 reads as follows:- (21) operational debt means a claim in respect of the provision of goods or services including employment or a debt in respect of the r .....

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ii) Central Government, State Government and Local Authorities, who are entitled to claim debt in respect of dues arising under any Law for time being in force. 20. In view of definition aforesaid, while we hold that a workman or employee who has rendered services to the corporate debtor individually come within the meaning of 'operational creditor'. The Trade Union or Association of Workmen/employee, do not come within the meaning of 'operational creditor' as no services is rend .....

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Workmen Association/Trade Union from a 'corporate debtor' and as they do not provide any service to the 'corporate debtor', the question of default of debt does not arise and therefore they cannot claim to be 'operational creditor' for preferring any application under Section 9 of the I&B Code. 22. This apart, members of a Trade Union/Workmen Association, who are workman or employee of a 'corporate debtor', some amount may be due to such individual workman/emp .....

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tirement benefits or other dues for different period. In majority of the cases, the date of default of debt will also be different. Without ascertaining any such amount no application under Section 9 in Form 5 will be complete nor the Adjudicating Authority can give any finding with regard to the individual claim nor it will be in possible for the Interim Resolution Professional to collect the details. 24. There may be workmen/employees who are also member of the Workmen Association/Trade Union .....

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Code, an 'Operational Creditor' on occurrence of a default, is required to deliver the notice of payment of unpaid debt or get copy of the invoice payment of the defaulted amount served on the Corporate Debtor. This is the condition, precedent under Section 8 & 9 of the I&B Code, unlike Section 7 before making an application to the adjudicating authority under Section 9 of the I&B Code. Under sub-Section (1) of Section 9 of the Code, the right to file an application accrues a .....

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accompanied by such fee, as may be prescribed. The Operational Creditor along with the application is required to furnish documents as mentioned in clause (a), (b), (c) and (d) of sub-Section (3) of Section 9 of I&B Code, and quoted below:- 9. Application for initiation of corporate insolvency resolution process by operational creditor - (1) After the expiry of the period often days from the date of delivery of the notice or invoice demanding payment under sub-section (1) of section 8, if th .....

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invoice demanding payment or demand notice delivered by the operational creditor to the corporate debtor;, (b) an affidavit to the effect that there is no notice given by the corporate debtor relating to a dispute of the unpaid operational debt; (c) a copy of the certificate from the financial institutions maintaining accounts of the operational creditor confirming that there is no payment of an unpaid operation debt by the corporate debtor; and (d) such other information as may be specified. (4 .....

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e than one 'operational creditor' to file a joint petition. Individual 'Operational Creditors' will have to issue their individual claim notice under Section 8 of the I&B Code. The claim will vary which will be different. Date of notice under Section 8 of the I&B Code in different cases will be different. It will have to be issued in format(s). Separate Form -3 or Form-4 will have to be filled. Petition under Section 9 in the format will contain separate individual data. .....

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