IMPORTANT POINTS
(1) A registered trade union which is formed for the purpose of regulating relations between workmen and their employer can maintain a petition as an operational creditor on behalf of its members.
(2) Procedure is handmaid of justice and is meant to serve justice.

JUDGMENT

R.F. NARIMAN, J.

1. The present appeal raises an important question as to whether a trade union could be said to be an operational creditor for the purpose of the Insolvency and Bankruptcy Code, 2016 [“Code”]. The facts of the present case reveal a long-drawn saga of a jute mill being closed and reopened several times until finally, it has been closed for good on 07.03.2014. Proceedings were pending under the Sick Industrial Companies (Special Provisions) Act, 1985. On 14.03.2017, the appellant issued a demand notice on behalf of roughly 3000 workers under Section 8 of the Code for outstanding dues of workers. This was replied to by respondent No.1 on 31.03.2017. The National Company Law Tribunal [“NCLT”], on 28.04.2017, after describing all the antecedent facts including suits that have been filed by respondent No.1 and referring to pending writ petitions 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 Gaurav Kejriwal, learned Advocate appearing on behalf of respondent No.2 has supported the arguments advanced by Shri Gopal Jain.

3. On the other hand, Shri Navaniti Prasad Singh, Shri Jayant K. Sud, and Shri Anip Sachthey, learned Senior Advocates appearing on behalf of respondent No.1 supported the NCLAT judgment to argue that as no services are rendered by a trade union to the corporate debtor to claim any dues which can be termed as debts, trade unions will not come within the definition of operational creditors. That apart, each claim of each workman is a separate cause of action in law, and therefore, a separate claim for which there are separate dates of default of each debt. This being so, a collective application under the rubric of a registered trade union would not be maintainable.

4. Section 5(20) of the Code defines operational creditor as follows:

“5. Definitions.—In this Part, unless the context otherwise requires,—

xxx xxx xxx

(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;

xxx xxx xxx”

Section 5(21) defines operational debt as follows:

“5. Definitions.—In this Part, unless the context otherwise requires,—

xxx xxx xxx

(21) “operational debt” means a claim in respect of the provision of goods or services including employment or a debt in respect of the payment of dues arising under any law for the time being in force and payable to the Central Government, any State Government or any local authority;

xxx xxx xxx”

Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 states as follows:

“6. Application by operational creditor.—(1) An operational creditor, shall make an application for initiating the corporate insolvency resolution process against a corporate debtor under Section 9 of the Code in Form 5, accompanied with documents and records requi