Trade unions are operational creditors under insolvency code

Trade unions are operational creditors under insolvency code

The Supreme Court, in the recent case of JK Jute Mill Mazdoor Morcha v Juggilal Kamlapat Jute Mills Company Ltd through Its Director & Ors, held that a trade union can file as an operational creditor for the purpose of the Insolvency and Bankruptcy Code, 2016 (IBC).

The court said that a trade union is certainly an entity established under the Trade Unions Act and would, therefore, fall within the definition of “person” under sections 3(23) of the IBC. Therefore, an operational debt, meaning a claim in respect of employment, could certainly be made by a person authorized to make such a claim on behalf of an employee.

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