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TMI Blog2019 (5) TMI 236X X X X Extracts X X X X X X X X Extracts X X X X ..... itions in the High Court of Delhi, ultimately held that a trade union not being covered as an operational creditor, the petition would have to be dismissed. By the impugned order dated 12.09.2017, the National Company Law Appellate Tribunal ["NCLAT"] did likewise and dismissed the appeal filed by the appellant before us, stating that each worker may file an individual application before the NCLT. 2. Shri Gopal Jain, learned Senior Advocate appearing on behalf of the appellant took us through various provisions of the Code and the Trade Unions Act, 1926, ["Trade Unions Act"] and cited a Division Bench judgment of the Bombay High Court in Sanjay Sadanand Varrier v. Power Horse India Pvt. Ltd., (2017) 5 Mah LJ 876 ["Sanjay Sadanand Varrier"] to argue that even literally speaking, the provisions of the Code would lead to the result that a trade union would be an operational creditor within the meaning of the Code. Even otherwise, a purposive interpretation ought to be granted, as has been done in various recent judgments to the provisions of the Code, and that therefore, such an application by a registered trade union filed as an operational creditor would be maintainable. Shri Gaura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... note states: "Note: Where workmen/employees are operational creditors, the application may be made either in an individual capacity or in a joint capacity by one of them who is duly authorised for the purpose." An operational creditor refers to any "person". "Person" is defined under Section 3(23) of the Code to include the following: "3. Definitions.-In this Code, unless the context otherwise requires,- xxx xxx xxx (23) "person" includes- (a) an individual; (b) a Hindu Undivided Family; (c) a company; (d) a trust; (e) a partnership; (f) a limited liability partnership; and (g) any other entity established under a statute, and includes a person resident outside India; xxx xxx xxx" 5. When we come to the Trade Unions Act, Section 2(h) defines a trade union as follows: "2. Definitions.-In this Act, 'the appropriate Government' means, in relation to Trade Unions whose objects are not confined to one State, the Central Government, and in relation to other Trade Unions, the State Government, and, unless there is anything repugnant in the subject or context,- xxx xxx xxx (h) "Trade Union" means any combination, whether temporary or perman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relations of any member with his employer or with a person whom the member employs; (d) the conduct of trade disputes on behalf of the Trade Union or any member thereof; xxx xxx xxx" 6. On a reading of the aforesaid statutory provisions, what becomes clear is that a trade union is certainly an entity established under a statute - namely, the Trade Unions Act, and would therefore fall within the definition of "person" under Sections 3(23) of the Code. 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 dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a winding up Petition." 8. No doubt, this judgment was in the context of a winding up petition, but the rationale based upon Section 15(c) and (d) equally applies to a petition filed under the Code. 9. However, learned counsel appearing on behalf of respondent No. 1 have cited the judgment reported as Commissioner of Income Tax (TDS), Kanpur and Anr. v. Canara Bank, (2018) 9 SCC 322 ["Canara Bank"]. This judgment dealt with the expression "established by or under a Central, State or Provincial Act" contained in Section 194-A(3)(iii) of the Income Tax Act, 1961. After exhaustively reviewing the case law on the subject, this Court came to the conclusion that the NOIDA authority was established as an authority under the State Act. While dealing with several judgments of this Court, the Court, in paragraphs 20, 24, and 25, followed judgments stating that a company incorporated and registered under the Companies Act cannot be said to be "established" under the Companies Act. The context of Section 3(23) of the Code shows that this judgment has no application to the definition contained in Section 3(23). Here, a "person" includes a company in clause (c), and would include any other e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve the court helpless to meet extraordinary situations in the ends of justice. The observations made by Krishna Iyer, J. in Sushil Kumar Sen v. State of Bihar [(1975) 1 SCC 774] are pertinent: (SCC p. 777, paras 5-6) "The mortality of justice at the hands of law troubles a judge's conscience and points an angry interrogation at the law reformer. The processual law so dominates in certain systems as to overpower substantive rights and substantial justice. The humanist rule that procedure should be the handmaid, not the mistress, of legal justice compels consideration of vesting a residuary power in judges to act ex debito justitiae where the tragic sequel otherwise would be wholly inequitable. ... Justice is the goal of jurisprudence - processual, as much as substantive." 29. In State of Punjab v. Shamlal Murari [(1976) 1 SCC 719 : 1976 SCC (L&S) 118] the Court approved in no unmistakable terms the approach of moderating into wholesome directions what is regarded as mandatory on the principle that: (SCC p. 720) "Processual law is not to be a tyrant but a servant, not an obstruction but an aid to justice. Procedural prescriptions are the handmaid and not the mistress, a l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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