Introduction

Introduction

The division bench of the Supreme Court of India (Supreme Court) comprising of Hon’ble Justice Mr R.F. Nariman and Hon’ble Justice Mr Vineet Saran, in its judgment dated 30 April 2019 in J.K. Jute Mill Mazdoor Morcha v Juggilal Kamlapat Jute Mills Company Ltd & Ors has held that a trade union  is an operational creditor for the purpose of initiating the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016 (IBC).

Brief Facts

In the event of a contractual counterparty going into liquidation, whether or not a trade counterparty may claim set-off against debts owed to the insolvent counterparty can dramatically affect the commercial position of the account debtor. This was recently highlighted in the decision of Hamersley Iron Pty Ltd v Forge Group Power Pty Ltd (In Liquidation) (Receivers and Managers appointed) [2017] WASC (2 June 2017).

What does this mean for you?