# In the matter of JK Jute Mill Mazdoor Morcha Vs Juggilal Kamlapat Jute Mills Company Ltd through it Directors Civil Appeal No. 20978-2017

> SC judgment dated 2019-04-30. Citation: TCN-2019-SC-00072. The appeal concerns whether a trade union can be considered an operational creditor under the…

- **Court:** SC
- **Order date:** 30 Apr 2019
- **Citation:** TCN-2019-SC-00072
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/supreme-court-of-india/jk-jute-mill-mazdoor-morcha-vs-juggilal-kamlapat-jute-mills-company-ltd-through-488a110e

## Summary

### Background

The appeal concerns whether a trade union can be considered an operational creditor under the Insolvency and Bankruptcy Code, 2016. The case involves a jute mill that was repeatedly closed and reopened before permanently closing on 07.03.2014. Proceedings were pending under the Sick Industrial Companies (Special Provisions) Act, 1985. The appellant, JK Jute Mill Mazdoor Morcha, issued a demand notice on 14.03.2017 on behalf of approximately 3000 workers for outstanding dues under Section 8 of the Code.

## Facts

JK Jute Mill, the corporate debtor, faced repeated closures before permanently shutting down on 07.03.2014. Proceedings were initiated under the Sick Industrial Companies (Special Provisions) Act, 1985. The trade union, JK Jute Mill Mazdoor Morcha, representing approximately 3000 workers, issued a demand notice on 14.03.2017 for outstanding worker dues under Section 8 of the Insolvency and Bankruptcy Code (IBC). The NCLT and NCLAT dismissed the trade union's petition, arguing it couldn't be an operational creditor. The trade union appealed to the Supreme Court, contending it should be considered an operational creditor under the IBC, citing the Trade Unions Act, 1926. The respondent argued that trade unions don't provide services directly to the corporate debtor, and

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## Issues and analysis

### Issue 1: Whether a trade union can be considered an operational creditor under the Insolvency and Bankruptcy …

**Ratio:** A registered trade union formed for the purpose of regulating the relations between

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**Reasoning:** The Court reasoned that a trade union represents its members, who are workers to whom

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**Interpretation:** The term 'operational creditor' includes entities that have claims related to

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**Application:** The Court applied this principle to the specific facts, noting that the trade

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## Parties

- **Judges:** ROHINTON FALI…; Vineet…
- **Appellants:** JK Jute Mill…
- **Respondents:** Juggilal Kamlapat…
- **Advocates:** Gopal…; Gaurav Ke…; +3 more

## Timeline

- **2014-03-07 — Jute Mill C…**: The jute mill was…
- **2017-03-14 — Demand Notice…**: The appellant issued a demand notice on behalf of roughly 3000 workers under Section 8 of…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 8 — Insolvency resolution by operational creditor](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-8)

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