REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 4324  OF 2008 ARISING OUT OF

SPECIAL LEAVE PETITION (CIVIL) NO. 12629/2007

SHIVANAND GAURISHANKAR BASWANTI … APPELLANT

VERSUS

LAXMI VISHNU TEXTILE  MILLS & ORS.    … RESPONDENTS

J U D G M E N T C.K. THAKKER, J. 1. Leave granted.

2. The present appeal is directed against

summary dismissal of writ petition No. 5664 of

2006 on February 12, 2007 by the High Court of

Judicature at Bombay observing that it was not

a  fit  case  to  entertain  the  petition  in

exercise  of  extraordinary  jurisdiction  under

Article 226 of the Constitution.

FACTUAL BACKGROUND 3. The case has a chequered history and

with  a  view  to  appreciate  the  contentions

raised  by  the  parties,  the  background  is

required  to  be  kept  in  view.  Laxmi  Vishnu

Textile Mills (‘Company’ for short)—respondent

No.1 herein was formerly known as Vishnu Cotton

Mills Ltd. It was registered on May 19, 1908

under the Indian Companies Act, 1873 (then in

force).  It  was  operating  through  two  cotton

textile mills, namely, (i) Laxmi Mill, and (ii)

Vishnu Mill. Somewhere in the year 1961, Laxmi

Mill was merged in Vishnu Mill and was given

the  present  name  i.e. Laxmi  Vishnu  Textile

Mills Ltd. There were large number of workers

in the mill and there was considerable profit

in  the  business.  By  the  passage  of  time,

however, the Company started incurring losses

and  things  turned  worse  in  later  eighties.

Proceedings under the Sick Industrial Companies

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(Special  Provisions)  Act,  1985  (hereinafter

referred  to  ‘SICA’)  had  been  initiated.  On

April 28, 1994, the Board of Industrial and

Financial Reconstruction, New Delhi (‘BIFR’ for

short) issued an order declaring the Company as

‘sick unit’ and in exercise of powers conferred

on  it  under  Section  22A  of  the  Act,  it

restrained  the  promoters/management  from

disposing or transferring its assets described

in the order without prior permission of the

Board. It was also stated that violation of the

order passed by the Board would be dealt with

under Section 33 of SICA.

4. It is also the case of the appellant

that  without  issuing  notice  and  without

obtaining  permission  from  the  Appropriate

Authority as required under Sections 25-O and

25-N of the Industrial Disputes Act, 1947, the

management of the Company resorted to illegal

closure and lockout of the Company. Thus, from

February  28,  1995,  the  Company  is  illegally

closed.

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5. According  to  the  appellant,  BIFR

considered the facts and circumstances of the

case in their entirety and on December 30, 1996

passed an order recording its satisfaction as

required by sub-section (1) of Section 20 of

the  Act  that  it  was  not  possible  for  the

Company to revive and it was just and equitable

that Company should be wound up. The opinion

was forwarded to the High Court of Judicature

at  Bombay  with  a  request  that  banks  and

financial  institutions  may  explore  the

possibility  of  sale  of  the  assets  of  the

Company. It was proposed to entrust the work of

sale of assets to State Bank of India (SBI),

the lead bank in the case. The Operative Agency

(OA), namely, IDBI was directed to hold a joint

meeting  of  all  participating  banks  and

financial  institutions  and  to  furnish  a

detailed  report  on  sale  of  assets  of  the

Company  through  SBI  latest  by  February  28,

1997.

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6. It may be stated at this stage that

SBI  was  one  of  the  major  creditors.  It

initiated  recovery  proceedings  against  the

Company by filing Original Application No. 2638

of 1999 and got a decree from Debt Recovery

Tribunal (DRT)-1, Mumbai for a sum of Rs.84.39

crores  with  interest.  Other  financial

institutions had also initiated proceedings for

recovery of their dues. Receiver was appointed

by DRT-1, Mumbai, who took possession of the

properties  of  the  Company.  Steps  were  also

taken to protect properties by employing police

force. The Receiver also met representatives of

Rashtriya Girni Kamgar Sangh, recognized Union—

respondent  No.8  herein.  The  Receiver  was  in

possession  of  the  property  except  those

properties which were occupied by the employees

who were in service of the Company and were

residing in the quarters provided to them while

they  were  in  employment.  Possession  of  the

machinery and other movable properties of the

Company was also taken over. Since the dues of

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workers were neither settled nor paid, several

workers approached Controlling Authority under

the Payment of Gratuity Act, 1972 for gratuity.

Orders were passed in their favour directing

the Company to pay full amount of gratuity with

interest thereon. The said amount was also not

paid.  Meanwhile,  Trans  Asia  Global  Company—

respondent  No.7  expressed  its  desire  to

purchase  the  property.  According  to  the

appellant,  respondent  No.8—Union  had  no

authority to represent the interests of workers

of respondent No.1—Company and yet on March 8,

2005, it purportedly entered into a tripartite

agreement  with  respondent  No.1—Company,

respondent No.8—Union and respondent No.7-M/s

Trans  Asia  Global  Company.  Respondent  No.1-

Company under the tripartite agreement sold the

property  to  respondent  No.7  for  Rs.46.65

crores. The claim of the workmen was settled at

Rs.22.21 crores whereas in fact, the claim of

the workmen was more than Rs.132 crores. The

purported agreement never brought to the notice

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of the workmen and they were kept in complete

dark. The property of the Company was worth

Rs.250 crores which could have satisfied claims

of SBI, legitimate dues of the workmen as also

of financial institutions and other creditors.

According to the appellant, the other agreement

was  also  entered  into  between  secured  and

unsecured  creditors,  labour  representatives,

the  Company  and  the  purchaser  on  April  20,

2005.  The  agreement  states  that  all  secured

creditors,  unsecured  creditors  and

representatives of the workmen had a meeting

and  they  all  agreed  on  One  Time  Settlement

(OTS) and accepted the scheme of selling the

entire  property  by  a  private  treaty  to

respondent  No.7 and  accordingly the  property

was  sold.  The  action,  however,  was  totally

illegal, uncalled for and in contravention of

various provisions of law.

PIL WRIT PETITION

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7. According to the appellant, as soon as

he came to know about the above agreements,

sale of property by private negotiations and

without  taking  workers  in  confidence,  he

submitted a representation to the Chief Justice

of High Court of Bombay pointing out several

illegalities  committed  by  respondent  No.1—

Company in not settling the dues of workmen.

The  representation was  converted into  Public

Interest Litigation (PIL) and was registered as

PIL  Writ  Petition  No.  126  of  2005.  The

appellant herein filed an affidavit in the said

petition on June 27, 2006. The writ petition

came up for hearing before a Division Bench of

the  High  Court  on  July  13,  2006  and  after

hearing learned counsel for the parties, the

writ  petition  was  disposed  of  by  the  Court

observing  that  the  grievance  of  the  workers

could be redressed before ‘appropriate forum’.

The  complaint  against  sale  of  property  by

private  treaty  also  could  be  adjudicated  in

‘proper  proceedings’ and  the controversy  did

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not  deserve  to  be  taken  into  PIL.  Liberty,

however,  was  granted  by  the  Court  to  all

aggrieved  parties  to  pursue  ‘appropriate

remedy’ for redressal of their grievances.

PRESENT WRIT PETITION 8. The  appellant,  thereafter,  filed

present Writ Petition No. 5664 of 2006 in the

High Court of Bombay under Article 226 of the

Constitution  and  prayed  for  a  writ  of

certiorari  or  any  other  appropriate  writ,

direction or order quashing all the actions in

the matter of recovery proceedings before the

Recovery Officer, Mumbai Debt Recovery Tribunal

No.1 and by examining the validity, propriety

and  correctness  of  such  proceedings  and  to

quash and set aside order of sale of properties

—movable  and  immovable—of  respondent  No.1—

Company in favour of respondent No.7. A writ of

mandamus was sought directing DRT-1, Mumbai not

to  disburse  any  amount  to  anyone  till  the

claims  of  the  workers  have  been  properly

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adjudicated and the amount paid. A prayer was

made to continue to employ all workers till

their services are legally terminated or till

lawful closure is effected. Interim relief was

also prayed.

ORDER OF HIGH COURT 9. The  High  Court,  as  observed  above,

dismissed the writ petition observing that it

was not a fit case to interfere with by an

order dated February 12, 2007 in exercise of

extraordinary jurisdiction under Article 226 of

the Constitution. The said order is challenged

by the appellant in this appeal.

10. Notice  was  issued  by  this  Court  on

September 7, 2007 and meanwhile order passed by

DRT  was  stayed.  Affidavits  and  further

affidavits  were  thereafter  filed  by  the

parties. The Registry was directed to place the

matter for final disposal and that is how the

matter is before us.

11. We have heard learned counsel for the

parties.

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APPELLANT’S SUBMISSIONS 12.    Learned  counsel  for  the  appellant

contended that all orders passed and actions

taken by the Authorities are unlawful, illegal

and contrary to law. It was submitted that the

first  respondent-Company  had  resorted  to

illegal  closure  and  unlawful  lockout  due  to

which workers had suffered a lot. It was also

submitted  that  when  proceedings  had  been

initiated under SICA and an order was passed by

BIFR  restraining  the  management  of  the  1st

respondent-Company  from  transferring,

alienating or disposing its property, no action

could have been taken for sale of the property.

Apart from the fact that such action is illegal

and in violation of the order passed by BIFR,

it is also contrary to law and is punishable

under Section 33 of SICA. A grievance was also

made that though there were several secured and

unsecured  creditors  and  more  than  4,000

workers, whose dues had not been paid, they

were  never  taken  in  confidence  and  private

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settlement  had  been  arrived  at.  Such  action

could not be said to be legal or in consonance

with  law.  Moreover,  the  property  of  the  1st

respondent-Company  which  is  worth  more  than

Rs.250 crores had been sold away by a ‘throw

away’ price of less than Rs.50 crores. It has

prejudicially affected the interest of families

of  thousands  of  workers  who  would  have

otherwise got their legitimate dues but for the

illegal  settlement  by  ‘interested’  persons.

According to the appellant, most of the workers

were not in favour of so called settlement of

acceptance  of  an  amount  of  Rs.22.21  crores

towards full and final settlement of their dues

when they were actually entitled to six times

more the said amount. Respondent No.7 could not

have represented all the workers and entered

into such settlement by accepting less than 20%

of their dues. According to the appellant, most

of  the  workers  have  objection  against  such

settlement  and  they  have  supported  the

appellant and several employees had expressed

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their opinion in writing to that effect. The

appellant had stated that when he came to know

about the decree passed by DRT and execution

proceedings in pursuance of the said decree and

sale of property, he drew the attention of the

Hon’ble Chief Justice of High Court of Bombay

by making a representation which was treated as

PIL Writ Petition. The High Court ought to have

granted  relief  in  that  proceeding.  The  High

Court, however, disposed of the writ-petition

by  granting  liberty  to  the  parties  to  take

appropriate proceedings in accordance with law.

The appellant, therefore, filed fresh petition

but  the  High  Court  by  a  ‘cryptic’  order,

dismissed the same without entering into the

merits  of  the  matter.  It  was,  therefore,

submitted by the appellant that the impugned

order passed by the High Court deserves to be

set aside quashing and setting aside the order

of sale in favour of respondent No.7 and by

directing the authorities to decide the matter

afresh in accordance with law.

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RESPONDENTS’ SUBMISSIONS 13. The  contesting  respondents,  on  the

other  hand,  strongly  urged  that  the  appeal

deserves to be dismissed and no interference by

this Court is called for. The appellant has no

locus standi to file a petition either in the

High  Court  or  to  prefer  an  appeal  in  this

Court. It was contended that respondent No.1—

Company was in continuous loss since several

years and in the year 1995, it was closed down.

Crores of rupees were required to be paid to

State  Bank  of  India,  other  financial

institutions  as also  to workers.  Proceedings

had  been  initiated  under  SICA  and  BIFR  was

satisfied that the Company could not be revived

and it favoured winding up of the Compny. A

decree was passed in favour of SBI by DRT-1,

Mumbai  for  substantial  amount  of  more  than

Rs.80 crores with interest. Over and above the

said  amount,  there  were  other  secured  and

unsecured creditors. Moreover, outstanding dues

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of  workers  were  also  there.  Movable  and

immovable  property  of  the  Company  was  not

enough  to  clear  up  all  the  dues.  It  was,

therefore, felt that a fair settlement could be

arrived at so that all the parties could get an

equitable  share  and  proper  and  reasonable

amount from the property owned and possessed by

respondent No.1-Company. It is in the light of

the  above  facts  that  the  parties  i.e.,  (i)

Company; (ii) Secured and unsecured creditors;

and  (iii)  Union  sat  together,  discussed  the

problem and settled the matter. SBI which was

having a decree for Rs.84 crores with interest

thereon, agreed to let go substantial part of

the  amount  so  that  workers  may  not  be

prejudicially  affected.  Other  creditors  also

adopted positive and constructive attitude. The

Union  considered  the  fate  of  families  of

several  workers  and  in  the  capacity  of

‘Representative  Union’  under  the  Bombay

Industrial  Relations Act,  1946 exercised  the

power and agreed to the settlement. In fact, it

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was  the  case  of  respondent  No.7-Union  that

during  the  intervening  period  of  about  one

decade after the closure of the Mills in 1995,

about 400 workers died. If settlement would not

have been arrived at, it would have resulted

into further agony to the remaining workers and

their families as also the families of those

workers  who  lost  their  lives  during  the

pendency  of  proceedings.  It  was  in  these

circumstances that the best solution had been

thought by way of settlement and no fault can

be  found  against  Representative  Union  in

agreeing to such settlement. 14. It was also submitted that under the

Act of 1946, it is the Representative Union

which alone has exclusive right in any industry

to represent the entire class of workmen in the

local  area.  The  appellant  had  no  locus or

standing to agitate grievance or raise dispute

on  behalf  of  workers/labourers.  But,  even

otherwise, a representation which was treated

as PIL Writ Petition was dismissed by the High

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Court and that order had never been challenged

by the appellant by approaching this Court and

the decision had become final. It was contended

that from the order of the Court it was very

clear  that  liberty  was  granted  to  aggrieved

parties  to  take  appropriate  remedy,  in

appropriate forum in appropriate proceedings.

The  appellant,  however,  neither  approached

Labour  Forum  nor  went  to  Debt  Recovery

Appellate  Tribunal  but  filed  a  fresh  writ-

petition. Obviously, the subsequent petition in

which the impugned order is passed was not PIL

as  it  was  registered  as  Writ  Petition

instituted  by  an  individual.  The  High  Court

was,  therefore,  wholly  right  and  fully

justified in dismissing the said petition  in

limine, particularly in the light of the order

passed in previous PIL Writ Petition.

15. It  was  submitted  that  the  situation

today  is  irreversible  inasmuch  as  after  the

settlement  had  been  arrived  at  between  the

parties,  the  purchaser-respondent  No.7  had

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deposited the entire purchase price with DRT.

The secured creditors as well as labourers were

paid their dues as per the said settlement and

their respective shares. Creditors had issued

‘discharge certificates’. The Assistant Labour

Commissioner had disbursed the amount to the

workers and their family members who are more

than four thousand. The appellant who was also

one  of  the  workers  was  paid  more  than

Rs.60,000/- and he issued a receipt in token of

acceptance of the said amount. The order of

sale in favour of respondent No.7 was confirmed

by  DRT  and  the  sale  became  final.  Sale

certificate was also issued in favour of the

purchaser.  It  had  also  paid  an  amount  of

Rs.2.25 crores towards stamp duty and got the

property  registered  in  its  name.  All  those

orders were never challenged by the appellant

by taking ‘appropriate proceedings’. If at this

stage, this Court interferes and sets aside the

orders passed by the authorities from time to

time,  irreparable  injury  and  loss  would  be

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caused  not  only  to  the  purchaser-respondent

No.7, but to other respondents as well. For

instance, it would be very difficult for the

workers who had received the amount to refund

or pay back the said amount which would be the

direct consequence. It would be difficult for

respondent No.7 also if it will not be able to

recover the amount which it has paid. Moreover,

no  secured  or  unsecured  creditor  has  come

forward and has made a complaint to this Court

that though he was entitled to a particular

amount,  he  had  not  been  paid  and  he  has

grievance against the settlement. The appellant

who is only one person and has received his

dues,  has  approached  the  High  Court  under

Article 226 of the Constitution after dismissal

of Public Interest Litigation and it is he who

contends that several creditors have not been

paid their dues and workers have also suffered

and the settlement should be set aside. It was

submitted that the High Court was right in not

entertaining such petition and this Court, in

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exercise  of  power  under  Article  136  of  the

Constitution, may not interfere with the said

order.

CONSIDERATION OF RIVAL CONTENTIONS 16. Having heard the learned counsel for

the parties and having gone through the records

and proceedings of the case, in our opinion,

this  is  not  a  fit  case  for  exercise  of

discretionary and equitable jurisdiction under

Article 136 of the Constitution.

17. It is clear that so far as the present

proceedings are concerned, they are not in the

nature  of  por  bono  publico.   The  appellant

herein had made representation to the Hon’ble

Chief Justice of High Court of Judicature at

Bombay  earlier  which  was  treated  as  Writ

Petition (PIL) and the petition was disposed of

by the Court granting liberty to the aggrieved

parties  to  approach  appropriate  forum  in

appropriate  proceeding  without  granting  any

relief.   Prima  facie,  therefore,  in  our

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opinion,  the  contention  of  the  contesting

respondents  is  well-founded  that  if  the

appellant  herein  was  aggrieved  by  certain

orders passed by Debt Recovery Tribunal (DRT)-

I, Mumbai, he ought to have approached Debt

Recovery  Appellate Tribunal  (DRAT) by  filing

appeals  against  those  orders.   If  he  had

grievance against the Company or inaction on

the part of the Authorities under Labour Laws

on the ground that they had not protected the

interests of workers of Laxmi Vishnu Textile

Mills,  he  ought  to  have  approached  Labour

Forum.  The appellant, however, did neither.

As soon as the PIL Writ Petition was disposed

of,  within  few  days,  he  filed  another  writ

petition in his individual capacity.  The High

Court, in our opinion, therefore, was right in

dismissing it in limine by passing the impugned

order that it was not a fit case to exercise

extraordinary jurisdiction under Article 226 of

the Constitution.

MERITS OF THE MATTER

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18. On merits also, we find no substance

in the contention raised by the learned counsel

for  the  appellant.   From  the  record,  it  is

clear that from eighties the respondent No. 1-

Company was in financial doldrums. Day-by-day,

the position deteriorated and it had incurred

heavy  losses.  So  much  so  that  the  Mill  was

required to be closed down somewhere in 1995.

Admittedly, after February, 1995, the Company

has never revived. It is also clear from the

record  that  substantial  amount  was  due  and

payable by the Company to State Bank of India,

several other financial institutions, secured

and  unsecured  creditors  and  to  workers.

Proceedings had been initiated under SICA. BIFR

had passed orders from time to time and finally

it recommended winding up of the Company on

being  satisfied  that  rehabilitation  of  the

Company was not possible. A recommendation was,

therefore, made and papers were forwarded to

the High Court concerned, i.e. the High Court

of Judicature at Bombay.  It is further clear

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that in favour of one major creditors, i.e.

State Bank of India a decree was passed by DRT-

I,  Mumbai  for  Rs.84.39  crores  with  interest

thereon. It has been brought on record that

several  other  financial  institutions  had

approached DRT and either orders were passed in

their favour or proceedings were pending.  It

is brought to our notice that many workers had

gone to Controlling Authority under the Payment

of Gratuity Act, 1972 and obtained orders in

their  favour  directing  the  first  respondent

Company to pay gratuity with interest thereon.

The Company was not in a position to pay entire

dues.   In  the  circumstances,  DRT-I,  Mumbai

ordered to take appropriate steps so that joint

meeting  of  all  financial  institutions  and

representatives  of  workers  be  held  and  the

matter could be settled.  Meanwhile, respondent

No.  7-Trans  Asia  Global  Trade  expressed  its

desire to purchase the property. On March 8,

2005, a tripartite agreement had been arrived

at  between  respondent  No.  1-Company,

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representatives  of  respondent  No.8-Union  of

workers and Trans Asia Global Trade-intending

purchaser. In the agreement it was stated that

the Company had huge liability and there were

several secured creditors. The property owned

by the Company was not enough to meet with all

liabilities. The representatives of respondent

No.8  Union  were  aware  of  the  said  fact  and

agreed  to  accept  amount  of  Rs.22.21  crores

towards full and final settlement of dues of

workers. Respondent No. 7 decided to purchase

the  property  for  Rs.46.65  crores.   The

agreement was executed on March 8, 2005 and

signed  by  all  the  three  parties  to  the

agreement,  i.e.  by  the  Mill-Company,  by  the

purchaser  of  property  and  also  by

representatives  of  respondent  No.8  Union.  A

joint  meeting  of  secured  and  unsecured

creditors  was  also  held  on  April  20,  2005

wherein secured and unsecured creditors of the

first respondent-Company agreed to share sale

proceeds of Rs.46.65 crores by accepting and

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finalizing  One  Time  Settlement  (OTS).  Final

decision  was  taken  on  the  basis  of  the

agreement arrived at earlier on March 8, 2005.

It  was  decided  to  sell  the  property  to

respondent No.7 for Rs.46.65 crores. The amount

which was to be paid as per the final agreement

came as under; Institutions/B anks/ Labour

Principa l O/S On 31.3.199 9

Rs.  (in Crore) Proposed share

SBI 28.05 14.02 IDBI 4.08 2.04 ICICI 1.24 0.61

IFCI 1.28 0.63 IIBI 1.54 0.76 Labour 22.21 Bank  of Maharashtra

1.50 0.50

MSEB 5.37 4.00

Sales Tax 0.99 Solapur Municipal Corporation and  Octroi

0.89

                    GRAND TOTAL       46.65   

19. On  October  6,  2005,  an  order  was

passed by Recovery Officer, DRT-I, Mumbai in

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which all the above facts had been stated. The

Recovery  Officer  referred  to  tripartite

agreement and payment of amount to creditors

and workers. The order also recited that as per

the direction of the High Court, the workers’

claim  was  to  be  adjudicated  by  DRT.  The

applicant  Bank  was,  therefore,  directed  to

issue advertisement and invite workmen as per

the  guidelines  formulated  by  DRT.  All  the

workers were directed to lodge their claims in

appropriate format in the Tribunal and all such

claims were ordered to be placed before the

Presiding Officer for adjudication.

20. Regarding  valuation  of  property,  it

was stated;

“Since the valuation was done in the year  2002,  before  considering  the proposal,  the  property  was  valued again  from  the  approved  valuer  from the  panel  of  DRT.  According  to  the valuation  report,  offer  of  the purchaser  is  above  the  distress valuation price”.

21. It  was  mentioned  that  the  Tribunal

accepted the offer of M/s Trans Asia Global

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Trade  for  purchasing  movable  and  immovable

property  of  the  Company  in  the  custody  of

Receiver  appointed  by  DRT  for  an  amount  of

Rs.47.82  crores.  The  auction-purchaser  had

deposited the amount of Rs.47,81,57,777 towards

sale  consideration  and  other  expenses.   The

recovery officer directed the purchaser to pay

balance amount. The matter was adjourned for

confirmation of sale. An order was passed to

send report to BIFR after confirmation of sale.

The above order has not been challenged by the

appellant in accordance with the provisions of

1993 Act.

22.  On December 6, 2005, again, the matter

was placed before the Recovery Officer, DRT-I,

Mumbai. Reference was made to all proceedings,

settlement arrived at between the parties and

sale of property for Rs.47.82 crores. It was

noted that no objection had been received from

any  person  under  Rule  60,  61  or  62  of  the

Second Schedule to the Income Tax Act, 1961 for

setting aside sale and the sale was required to

2

be  confirmed.   Accordingly,  the  sale  was

confirmed. Even this order was not challenged

under the Act.   

23. On  January  20,  2006,  the  Recovery

Officer,  DRT-I,  Mumbai  issued  a  sale

certificate  for immovable  property for  Rs.45

crores in favour of respondent No.7-Purchaser.

Another  certificate  of  sale  for  movable

properties  for  Rs.2.82  crores  was  issued  by

DRT.  Those orders  have remained  unchallenged

except in the present proceedings.

24. The learned counsel for the appellant

strenuously urged that on April 28, 1994, BIFR

had issued interim order restraining the first

respondent-Company  from  alienating,

transferring or disposing the property of the

Company without prior permission of the Board.

It was stated that if any action would be taken

in violation of the said order, it would be

punishable under Section 33 of SICA. In view of

the said order, neither the property could have

been sold without the prior permission of BIFR

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nor such sale could have been confirmed.  It

was  also  urged  that  even  under  1993  Act,

Recovery Officer could not have permitted or

confirmed sale and it could have been done only

by  the  Debt  Recovery  Tribunal.  Hence,  all

proceedings were non est and are required to be

ignored altogether.

25. The learned counsel for the contesting

respondents, on the other hand, submitted that

the order passed by BIFR was merely an interim

order and in 1996, it directed winding up of

the Company and forwarded its opinion to the

High Court. Moreover, no such point had been

taken by the appellant earlier. As discussed

above, even prior to the present petition which

had been filed by the appellant-herein in the

High  Court  under  Article  226  of  the

Constitution, he had submitted a representation

to the Chief Justice which was registered as

PIL Writ Petition. No such contention was taken

in  that  petition.  Even  in  the  present

proceedings,  what  was  contended  by  the

2

appellant before the High Court was as regards

a transaction under which property was sold by

Chairman  of the  first respondent-Company  Mr.

M.L.  Apte  through  his  constituted  Attorney

Kantilal Shankarlal Shah.  Nothing was stated

as to other properties.

26. But  even  on  merits,  the  impugned

action calls for no interference.  The order

dated April 28, 1994 passed by BIFR reads as

under;

“Whereas  a  draft  scheme  for rehabilitation  of  M/s  Laxmi  Vishnu Textile  Mills  has  been  prepared, circulated and published by the Board under  Section  18  of  the  Sick Industrial  Companies  (Special Provisions) Act, 1935 in pursuance of its  proceedings  held/orders  face  in the case on 14.2.1994.

And  whereas,  the  Board  is  of  the opinion  that  in  the  interest  of rehabilitation of the sick industrial company,  creditors,  shareholders  as also  in  public  interest,  it  is necessary  to  direct  the  existing promoters/management  of  sick industrial  company;  M/s  Laxmi  Vishnu Textile  Mills  not  to  disposed  of, except with the consent of the Board, any  of  its  fixed  and  other  assets charged/hypothecated to the financial institutions,  banks  and  other

3

creditors, the board, in exercise of powers conferred on it by Section 22A of  the  Sick  Industrial  Companies (Special Provisions) Act, 1985 hereby directs  the  existing  promoters/ management  is  invited  to  the provisions of Section 33, where under violation of any of the orders of the Board is punishable in the manner laid down therein”.

27. Plain  reading of the order makes it

clear that the Board was of the opinion that in

the  interest  of  rehabilitation  of  the  sick

industrial company, its creditors, shareholders

as also in public interest, certain directions

were necessary.  The Company was, therefore,

restrained  from disposing  the property  which

was  charged  /hypothecated  to  financial

institutions.  The submission of the learned

counsel for the contesting respondents is that

there was no question of revival of the Company

in view of order passed by BIFR in 1996 and its

recommendation for winding up of the Company.

Regarding  interests  of  creditors  and  other

persons, it was stated that in March, 2005,

tripartite  agreement  had  been  arrived  at

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wherein representatives of labour Union, first

respondent-Mill Company and the purchaser were

present and the agreement was signed by all of

them. Likewise, in April, 2005, joint meeting

of  secured  and  unsecured  creditors,

representatives of Union and vendor and vendee

was held and all of them agreed for OTS and

expressed  their willingness  to accept  lesser

amount.  In the  circumstances, charge  imposed

and prohibition issued by BIFR on the Company

no more remained operative. On October 6, 2005,

therefore,  it  was  observed  by  the  Recovery

Officer of DRT-I, Mumbai to send information to

BIFR after confirmation of sale. Consequential

action of confirmation of sale was thereafter

taken on December 6, 2005 and sale certificate

was also issued on January 20, 2006.  All the

actions were taken only after March/April 2005.

They,  therefore,  could  not  be  said  to  be

contrary to law or in violation of the order

passed by BIFR.

3

28. Even  otherwise, on the facts and in

the circumstances of the case, we are fully

satisfied that had the agreements in question

not  been  arrived  at,  all  parties  including

workers for whom great concern had been shown

by the appellant would have suffered. In fact,

in an affidavit filed on behalf of the State

Bank of India, it was stated that in the light

of the decree passed in favour of State Bank of

India  by  DRT-I,  Mumbai,  the  Bank  would  be

entitled to Rs.222.34 crores.  Similarly, other

institutions were also entitled to substantial

amount. It was because of conjoint and combined

efforts  of  all  the  parties  that  agreements

could  be  arrived  at.  It  was  stated  that  a

Cabinet Minister used his good offices and One

Time  Settlement  (OTS)  had  been  arrived  with

Banks  and financial  institutions and  workmen

were able to get the amount which had not been

paid to them for many years. The contention

that  secured  and  unsecured  creditors  and

3

workers have not received their dues has no

force.

29. Again, who has approached this Court?

Neither a secured nor an unsecured creditor.

Nor a representative of a labour union. Nor

even  a  person  acting  pro  bono  publico.  As

already adverted to earlier, PIL Writ Petition

at the instance of the appellant was dismissed

by the High Court and the said decision was

never challenged by him. Here is an employee

who is also one of the workers, who has been

paid  his  dues.  He  accepted  the  amount  of

Rs.62,555/-  and  issued  ‘No  Objection

Certificate’ (No Dues Certificate) –no doubt by

putting  an  endorsement  “Accepted  under

Protest”. He has urged that the workmen have

not been paid their dues and injustice had been

done to them. To us, even there, the appellant

is not right. A Representative Union has taken

a decision which is binding on all employees.

That aspect, however, we will deal with at a

later stage.

3

30. The  learned  counsel  strongly  relied

upon a decision of this Court in NGEF Ltd. v.

Chandra Developers (P) Ltd., (2005) 8 SCC 219.

In  that  case,  this  Court  held  that  the

provisions  of  SICA  would  prevail  over  the

provisions of the Companies Act since it is a

special  statute  and  a  ‘complete  code’  in

itself.  The  Court  also  held  that  the

jurisdiction  of  the  Company  Court  in  the

matters  relating  to  winding  up  of  a  sick

Company would arise only when BIFR or AAIFR

exercises its jurisdiction under Section 20 of

SICA recommending the winding up of the Company

upon arriving at a finding that there does not

exist any chance of revival of the Company.

Referring to Gray’s Inn Construction Co. Ltd.,

Re, (1980) 1 All ER 814 : (1980) 1 WLR 711 and

Pankaj Mehra v. State of Maharashtra, (2000) 2

SCC  756,  however,  the  Court  observed  that

“disposition of assets during the interregnum

may not be irretrievably void but the courts

3

are required to exercise power with caution and

circumspection”.

STATUS AND POSITION OF REPRESENTATIVE UNION 31. The learned counsel for the appellant

contended that respondent No. 8 could not have

agreed  to  accept  a  meager  amount  of  Rs.22

crores when the outstanding dues were more than

Rs.130 crores. It was also stated that majority

of workers are with the appellant and they are

opposed to the settlement. Thousands of workers

have  so  stated  in  writing  and  informed  the

appellant  that  the  grievance  raised  by  the

appellant is well-founded and they are entitled

to much more amount than what had been paid

under the settlement.

32. Even  this  contention  has  no  force.

The  learned  counsel  for  the  Union,  in  our

opinion, is right in submitting that under the

Bombay Industrial Relations Act, 1946, it is

the ‘Representative Union’ which has all powers

to enter into a settlement on behalf of workers

3

in the industry and it is only that Union which

can take a decision under 1946 Act.  The said

decision would bind not only the members of the

Union, but also to those workers who are not

members of such Union.

33. The  learned  counsel,  in  this

connection,  invited our  attention to  various

provisions of 1946 Act. As the Preamble of the

Act  declares,  the  Act  has  been  enacted  “to

regulate  the  relations  of  employers  and

employees, to make provision for settlement of

industrial disputes and to provide for certain

other  purposes”.  The  Act  contains  elaborate

provisions for registration of Unions and their

powers.

34. Section  2  defines  various  terms.

Chapter II deals with Authorities constituted

or  appointed  under  the  Act.  Chapter  III

provides for registration of Unions. Chapter IV

relates to Approved Unions. Chapter V titles

“Representatives  of  Employers  and  Employees,

and appearance on their behalf”.

3

35. Section  27  enables  the  State

Government  to  recognize  any  combination  of

employers  as  Association  of  Employers  in  an

industry in any local area and to represent an

employer  in  any  proceeding  under  the  Act.

Section  27A  correspondingly  provides  for

appearance  on  behalf  of  employees.  It  is,

however, in negative terms and enacts that save

as provided in certain cases (Sections 32 and

33), “no employee shall be allowed to appear or

act in any proceeding under this Act except

through the representative of employees”. The

section thus puts an embargo on appearance of

any employee except through the representative

of employees.

36. Section  14  empowers  Registrar  to

register  a  ‘Representative  Union’  for  any

‘Industry’  in  any  ‘Local  Area’.  It  is  thus

clear that there can be only one Representative

Union  for  one  Industry  in  one  Local  Area.

Section  30  enumerates  representatives  of

employees and provides for order of preference

3

in which such representatives are allowed to

appear or act in any ‘Industry’ in any ‘Local

Area’. It reads thus;

30. Representative of employees  Subject to the provisions of section 33A, the following shall be entitled to  appear  or  act]  in  the  order  of preference  specified  as  the representative  of  employees  in  an industry in any local area-

(i) a  Representative  Union  for  such industry;

(ii) a  Qualified  or  Primary  union  of which  the  majority  of  employees directly  affected  by  the  change concerned are members;

(iii) any Qualified or Primary Union in respect  of  such  industry authorised  in  the  prescribed manner  in  that  behalf  by  the employees concerned;

(iv)   the Labour Officer if authorised by the employees concerned;

(v)   the  persons  elected  by  the employees in accordance with the provisions of section 28 or where the  proviso  to  sub-section  (1) thereof  applies,  the  employees themselves;

3

(vi)   the Labour Officer:

Provided -

Firstly, that the persons entitled to appear  or  act  under  clause  (v)  may authorise  any  Qualified  or  Primary Union in respect of such industry to appear or act instead of them;

Secondly,  that  where  the  Labour Officer is the representative of the employees, he shall not enter into any agreement  under  section  44  or settlement under section 58 unless the terms of such agreement or settlement, as the case may be, are accepted by them in the prescribed manner;

Thirdly, where in any proceeding the persons  entitled  to  appear  or  act under clause (v) are more than five, the  prescribed  number  elected  from amongst them in the prescribed manner shall  be  entitled  to  appear  or  act instead.

37. It is thus clear that Representative

Union is having priority and ‘preference’ over

other Unions to appear on behalf of employees

of such industry in the area. Section 42 in

Chapter VIII provides for change and lays down

procedure for such change. It reads;

4

42. Notice of change  (1) Any employer intending to effect any

change in respect of an industrial matter  specified  in  Schedule  II shall give notice of such intention in  the  prescribed  form  to  the representative  of  employees.  He shall send a copy of such notice to the  Chief  Conciliator,  the Conciliator  for  the  industry concerned  for  the  local  area,  the Registrar,  the  Labour  Officer  and such  other  person  as  may  be prescribed. He shall also affix copy of  such  notice  at  a  conspicuous place  on  the  premises  where  the employees affected by the change are employed for work and at such other place  as  may  be  directed  by  the Chief Conciliator in any particulars case.

(2)  Any  employee  desiring  a  change  in respect of an industrial matter not specified in Schedule I or III give a notice in the prescribed form to the  employer  through  the representatives  of  employees,  who shall forward a copy of the notice to  the  Chief  Conciliator,  the Conciliator  for  the  industry concerned  for  the  local  area,  the Registrar,  the  Labour  Officer  and such  other  person  as  may  be prescribed.

(3) When no settlement is arrived at in any  conciliation  proceeding  in regard  to  any  industrial  dispute which has arisen in consequence of a notice relating to any change given

4

under sub-section (1) or sub-section (2), no fresh notice with regard to the same change or a change similar in all material particulars shall be given  before  the  expiry  of  two months  from  the  date  of  the completion of the proceeding within the meaning of section 63. If at any time after the expiry of the said period of two months, any employer or employee again desires the same change or a change similar in all material  particulars,  they  shall give  fresh  notice  in  the  manner provided in sub-section (1) or (2), as the case may be.

(4)  Any  employee  or  a  representative union] desiring a change in respect of  (i)  any  order  passed  by  the employer  under  standing  orders,  or (ii)  any  industrial  matter  arising out  of  the  application  or interpretation  of  standing  orders, or  (iii)  an  industrial  matter specified  in  Schedule  III,  except item  (5)  thereof  shall  make  an application to the Labour Court and as  respects  change  desired  in  any industrial matter specified in item 5 of Schedule III, to the Industrial Court:

Provided that no such application shall lie  unless  the  employee  or  a representative  union  has  in  the prescribed  manner  approached  the employer with a request for the change and no agreement has been arrived at in respect  of  the  change  within  the prescribed period.

4

38. The aforesaid provisions came up for

consideration  before  this  Court  in  Girja

Shankar  Kashi  Ram  v.  Gujarat  Spinning  &

Weaving Co. Ltd.,  (1962) Supp 2 SCR 890.  In

that case, ‘G’ closed its business and sold its

assets to ‘T’.  The old company discharged all

its workmen when it closed the business.  The

new  company  re-started  the  business  and

employed all the workmen of the old company.

At the time of closure of ‘G’, a dispute was

pending  between  the  company  and  its  workmen

with  respect  to  bonus.   A  ‘Representative

Union’ of the Textile Workers in the city of

Ahmedabad  filed  an  application  before  the

Labour Appellate Tribunal wherein the dispute

was pending and the matter was sub-judice. The

matter was compromised and ‘G’ consented to pay

agreed bonus. The Representative Union accepted

the amount and gave an undertaking not to claim

compensation  in  future.   Later  on,  however,

about 400 employees issued a notice and claimed

compensation  for  closure.  The  Representative

4

Union  appeared  before  the  Labour  Court  and

contended that the application was liable to be

dismissed in view of the compromise arrived at

between  the  Mill  Company  and  Representative

Union.  The Labour Court upheld the objection

and dismissed the application. The order was

confirmed by Industrial Court in appeal as well

as  by  the  High  Court  in  a  petition  under

Article  227.   The  employees  approached  this

Court.

39. This  Court  considered  the  relevant

provisions  of  the  1946  Act,  the  object

underlying  conferment  of  power  on

Representative Union and the action taken by it

and  held  that  when  a  Representative  Union

appears in any proceeding under the Act, none

else  can  be  allowed  to  appear  not  even  the

employee  at whose  instance proceedings  might

have been started under Section 42(4) of the

Act.  The Court held that if the Representative

Union appears, the decision taken by that Union

would be final and binding.

4

40. Explaining the scheme of the Act, the

Court stated;

“It will be seen that s. 27A provides that no employee shall be allowed to appear or act in any proceeding under the  Act,  except  through  the representative of employees, the only exception to this being the provisions of Sections 32 and 33. Therefore, this section completely bans the appearance of an employee or of any one on his behalf in any proceeding after it has once  commenced  except  through  the representative of employees. The only exceptions to this complete ban are to be  found  in  Sections  32  and  33;  to which we shall presently refer. But it is clear that bona fides or mala fides of the representative of employees can have nothing to do with the ban placed by  Section 27A on the appearance of any one else except the representative of employees as defined in Section 30 and that if anyone else can appear in any  proceeding  we  must  find  a provisions  in  that  behalf  in  either Section 32 or Section 33 which are the only exception to Section 27A. It may be noticed that there is no exception in  Section  27A  in  favour  of  the employee,  who  might  have  made  an application  under  Section  42(4),  to appear on his own behalf and the ban which  is placed by Section 27A will apply equally to such an employee. In order however to soften the rigour of the provisions of Section 27A, for it may well be that the representative of employees may not choose to appear in many  proceedings  started  by  an

4

employee  under  s.  42(4),  exceptions are  provided  in  ss.  32  and  33.  The scheme  of  these  three  provisions clearly is that if the Representative Union appears, no one else can appear and carry on a proceeding, even if it be begun on an application under s. 42 (4) but where the Representative Union does  not choose to appear there are provisions  in  ss.  32  and  33  which permit others to appear in proceedings under the Act.  

Section  32  gives  power  to  a conciliator, a board, a wage board, a labour court and the industrial court to  permit  an  individual,  whether  an employee  or  not,  to  appear  in  any proceeding  before  him  or  it.  This shows that the complete ban imposed by s.  27A  can  be  removed  if  the authorities  under  the  Act  think  it expedient to permit another person to appear  and  that  person  may  be  an employee or not. Thus the employee who has made an application under s. 42(4) may be permitted to appear before the authorities  under  the  Act;  but  this provision  is  subject  to  a  proviso namely that no such individual which would  include  an  employee  who  has himself made an application under s. 42(4), shall be permitted to appear in any  proceeding  in  which  the Representative  Union  has  appeared  as the  representative  of  employees. Reading therefore ss. 27A, 30 and 32 together, it is clear that on one else can appear in any proceeding under the Act  except  a  representative  of employees;  but  the  authorities  are empowered to permit anyone to appear

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whether he be an employee or not, if they  consider  it  expedient  for  the ends of justice (and we have no doubt that where representative of employees does  not  choose  to  appear  the authorities will generally permit the employee who has made the application under  s. 42(4) to appear), but this power  is  subject  to  the  proviso, namely, that on one will be allowed to appear if the Representative Union has made  an appearance. It will be seen that  the  proviso  puts  the Representative  Union  in  a  special position  out  of  the  six  classes mentioned  as  representatives  of employees in s. 30. Thus s. 32 makes it clear that where the Representative Union  of  the  six  classes  s.  30, appears  no  one  else  can  appear, including the persons who might have made an application under s. 42(4). If the  other  five  classes  which  are mentioned in s. 30 as representatives of  employees  appear,  the  authorities have the power to allow the employee or  any other person to appear along with them.  

Then we come to s. 33, which starts with a non-obstante clause and deals with the appearance of an employee or a  representative  union  through  any person. Section 33 thus is a exception to s. 27A and authorises an employees who could not appear in any proceeding under  the  Act  except  through  the representative  of  employees  under  s. 27A, to appear through any person in certain  proceedings  mentioned  in  s. 33,  but  this  again  is  subject  to provisos, with the first of which we

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are  not  concerned  here.  The  second proviso  lays  down  that  no  employee shall  be  entitled  to  appear  through any person in any proceeding under the Act in which the Representative Union has appeared as the representative of employees. This proviso again gives a special position to the Representative Union  out  of  the  six  classes  of representatives of employees provided in  s.  30  and  makes  it  clear  that though  an  employee  may  appear  in certain proceedings specified in s. 33 through any person in spite of s. 27A, he cannot do so where a Representative Union  has  appeared  as  the representative  of  employees.  Here again the position is the same as in s.  32;  if  a  representative  of employees other than a Representative Union has appeared in the proceeding the employee can also appear through any  person  in  the  proceedings mentioned in s. 33; but he cannot did so  where  the  representative  of employees which has appeared even in proceedings  under  s.  33  is  the Representative Union”.

41. The Court also held that bona fides or

mala  fides  of  the  representative  Union  has

nothing to do with the complete ban imposed by

the  Act  on  the  appearance  of  any  one  else

except  the representative  of employees  under

Section 30 of the Act.

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42. It  was  argued  that  if  such

interpretation  is  accepted,  there  would  be

tyranny  of  the  Representative  Union.  This

Court,  however, negatived  even that  argument

and  observed  that  the  so-called  tyranny  or

motive  of Representative  Union cannot  change

the legal position and it has no relevance if

the intention of the Legislature is clear and

unambiguous.

43. The Court, therefore, concluded;

“The  result  therefore  of  taking  ss. 27A, 32 and 33 together is that s. 27A first  places  a  complete  ban  on  the appearance  of  an  employee  in proceedings under the Act once it has commenced  except  through  the representative of employees. But there are  two  exceptions  to  this  ban contained in ss. 32 and 33. Section 32 is  concerned  with  all  proceedings before the authorities and gives power to  the authorities under the Act to permit an employee himself to appears even  though  a  representative  of employees  may  have  appeared  but  his permission cannot be granted where the representative Union has appeared as a representative  of  employees.  Section 33 which is the other exception allows an  employee  to  appear  through  any person  in  certain  proceedings  only even  though  a  representative  of employees  might  have  appeared;  but

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here again it is subject to this that no one else, not even the employee who might have made the application, will have  the  right  to  appear  if  a Representative  Union  has  put  in appearance  as  the  representative  of employees. It is quite clear therefore that  the  scheme  of  the  Act  is  that where  a  Representative  Union  appears in  any proceeding under the Act, no one else can be allowed to appear not even  the  employee  at  whose  instance the proceedings might have begun under s. 42(4). But where the appearance is by  any  representative  of  employees other  than  a  Representative  Union authorities under s. 32 can permit the employee  to  appear  himself  in  all proceedings  before  them  and  further the employee is entitled to appear by any  person  in  certain  proceedings specified in s. 33. But whenever the Representative  Union  has  made  an appearance,  even  the  employee  cannot appear in any proceeding under the act and  the  representation  must  be confined  only  to  the  representative Union. The complete ban therefore laid by s. 27A on representation otherwise than  through  a  representative  of employees  remains  complete  where  the representative  of  employees  is  the Representative  Union  that  has appeared; but if the representative of employees that has appeared is other than the Representative Union then ss. 32 and 33 provide for exceptions with which we have already dealt. There can therefore  be  no  escape  from  the conclusion  that  the  Act  plainly intends that where the Representative Union appears in any proceeding under the  Act  even  though  that  proceeding

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might  have  commenced  by  an  employee under  s.  42(4)  of  the  Act,  the Representative  Union  alone  can represent  the  employee  and  the employee cannot appear or act in such proceeding”.

44. Again, in  Textile Labour Association,

Bhadra,  Ahmedabad  v.  Ahmedabad  Mill  Owners

Association, Ahmedabad, (1970) 3 SCC 890, this

Court held that once Representative Union of

Textile Industry in the local area of Ahmedabad

entered  into  a  compromise,  such  compromise

would  bind  all  the  employees  and  those

employees  who  are  not  members  of  the

Representative Union cannot contend that they

are against such compromise and are not bound

by it. 45. In  Santuram  Khudai  v.  Kimatrai

Printers & Processors Pvt. Ltd. & Ors., (1978)

1 SCC 162, a similar question arose. The Court

reiterated the law laid down in Girja Shankar

and  held  that  once  the  Representative  Union

appears  on  behalf  of  the  employees  in  a

proceeding  before  a  Labour  Court  under  1946

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Act, individual workman has no  locus standi.

According  to  the  Court,  combined  reading  of

Sections 27A, 30, 32, 33 and 80 of the Act make

it clear that consistent with the avowed policy

and prevention of exploitation of workmen and

augmentation  of  their  bargaining  power,  the

Legislature  has  clothed  the  Representative

Union with plenary power to appear or act on

behalf of employees in any proceeding under the

Act. Keeping in view the said object, it has

deprived individual employees or workmen of the

right to appear or act in any proceeding under

the Act where the Representative Union enters

appearance  or  acts  as  representative  of  the

employees. 46. Following  Girja  Shankar,  the  Court

observed that mala fides or bona fides of the

Representative  Union  has  no  relevance  in

construing the relevant provisions of the Act.

In  case  the  employees  find  that  the

Representative  Union  is  acting  in  a  manner

which is prejudicial to their interests, their

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remedy  lies  in  invoking  the  aid  of  the

Registrar  under  Chapter  III  of  the  Act

requesting him to cancel the registration of

the union.

47. Respondent  No.8  in  its  affidavit

asserted  that  it  is  a  Representative  Union

under the Act of 1946, in Textile Industry in

Sholapur  Municipal  Corporation  Area.  It  was

further stated that once a Representative Union

exists in any industry in a given local area,

it alone has the exclusive right to represent

the entire class of workmen in that industry in

the concerned local area.  In the instant case

in  the  local  area  of  Solapur  District,

respondent No. 8 is admittedly the only Union

which has the status of Representative Union in

Textile Industry under the Act.  In view of the

above  fact,  no  other  Union/Association  of

employees or individual employees have right to

represent the workmen of that industry in that

area.

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48. In  the  counter-affidavit,  it  was

stated by the Representative Union that there

were about 4500 employees in respondent No.1

Mill when it was closed down in February, 1995.

Within a period of about a decade, 400 workmen

had  already  died.   None  of  them,  however,

received any wages or other benefits because of

the  pendency  of  several  proceedings  in

different  courts.   The  Representative  Union

considered  their  legitimate  grievance  and

thought it proper to get the matter settled if

reasonable  amount  could  be  paid  to  them,

keeping in view well-known saying “one in hand

is better than two on bush”.  They considered

the matter in its entirety, financial condition

of  the  first  respondent-Company,  claim  of

secured and unsecured creditors, a number of

decrees  and  orders  passed  by  various

Authorities  under  different  laws  and  the

properties  of  the  Company.  In  the  larger

interest,  the  Union  decided  to  accept  the

amount of Rs.22.21 crores for workers towards

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full and final settlement.  By no stretch of

imagination,  such  action  could  be  held

improper, illegal or mala fide. We are of the

view  that  the  approach  adopted  and  decision

taken  by  the  Representative  Union-respondent

No.8 suffers from no infirmity and cannot be

regarded as illegal or otherwise unreasonable.

EQUITABLE JURISDICTION UNDER ARTICLE 136 49. There  is  one  more  reason  for  not

interfering with the order passed by the High

Court and impugned in the present appeal. The

appellant  has  invoked  Article  136  of  the

Constitution. The said Article does not confer

a  right  of  appeal  on  any  party.  It  merely

confers discretionary power on this Court to

grant special leave to appeal in suitable and

appropriate cases. In several cases, this Court

has held that the provision confers right on a

litigant  merely  to  prefer  an  application

seeking leave to appeal and the discretion is

vested in this Court to grant or refuse such

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leave in its wisdom. In view of the language of

Article 136, this Court is not expected to act

as ‘regular Court of appeal’ settling disputes

by  converting  into  a  ‘Court  of  Error’.  It

interferes  only  when  justice  demands

intervention  by  the  highest  Court  of  the

country. 50. It is undoubtedly true that the power

of  this  Court  is  plenary,  overriding  and

extensive and there are no words qualifying,

restricting or limiting that power. The very

conferment  of discretionary  power defies  any

attempt at exhaustive definition of that power.

The power, however, has to be exercised for

doing full and complete justice. But wider the

discretionary  power,  the  more  sparing  its

exercise. Times out of number this Court has

stressed  that  though  parties  promiscuously

provoke  this  jurisdiction,  the  Court

parsimoniously  invokes  the  power  [vide

Sadhanathan v. Arunachalam, (1980) 3 SCC 141].

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51. While  exercising  power  under  Article

136 of the Constitution, this Court not only

acts as a Court of law but also as a Court of

equity and hence the power exercised by this

Court  under  Article  136  must  subserve

ultimately the cause of justice. The Court must

decide  all  issues  coming  before  it  on  the

considerations  of  justice,  equity  and  good

conscience.  Legal  formulations  cannot  be

divorced from ground realities, fact-situations

before the Court and the effect of laws on the

human  beings  for  whom  they  are  meant.

Discretionary jurisdiction under Article 136,

therefore, has to be tampered with equity. This

Court would be failing in its duty if it does

not notice equitable considerations. 52. We  are  reminded  of  the  following

pertinent and instructive observations of Lord

Watson  in  La  Cite  de  Montreal  v.  Les

Eccelesiasticues, (1889) 14 AC 660. “Cases  vary  so  widely  in  their circumstances that the principle upon which an appeal ought to be allowed do

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not admit of anything approaching to exhaustive definition. No rule can be laid down which would not necessarily be  subject  to  future  qualification, and an attempt to formulate any such rule might therefore prove misleading… A  case  may  be  of  a  substantial character, may involve matter of great public  interest,  and  may  raise  an important  question  of  law,  yet  the judgment from which leave to appeal is sought may appear to be plainly right, or  at  least  to  be  unattended  with sufficient doubt to justify.”

53. As observed by this Court in Statesman

Ltd. v. Workmen,  (1976) 2 SCC 223, the very

width  of  the  power  under  Article  136  is  a

warning against its ‘freewheeling exercise save

in  grave  situations’.  Circumspection  and

circumscription  must,  therefore,  induce  the

Court  to  interfere  with  the  decision  under

challenge only if the extraordinary flaws or

grave injustice or other recognized grounds are

made out.

54. We  have  elaborately  dealt  with  the

facts  of  the  present  case.  Respondent  No.1—

Company was closed down in February, 1995. It

never started functioning thereafter. Financial

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liability  continued  mounting  up  day  by  day.

There  were  several  secured  and  unsecured

creditors  and  dues  of  workers.  Proceedings

under  SICA  had  been  initiated,  decrees  and

orders were passed against the Company and the

property  owned  by  the  Company  was  not

sufficient  to  clear  up  all  debts  and

liabilities. Keeping in view the entire facts

and  circumstances  that  initially,  tripartite

agreement was entered into between respondent

No.1-Company,  Representative  Union  and

intending purchaser on March 8, 2005, a joint

meeting was held between secured and unsecured

creditors,  representatives of  the Union,  the

Company and the purchaser in April, 2005 and in

that  meeting,  One  Time  Settlement  (OTS)  had

been  reached.  Several  actions  were  taken  in

pursuance  of  the  settlement.  The  amount  was

deposited by the purchaser, dues of creditors

were paid, workers and laborers were informed

and  they  were  also  paid  the  amount.  The

property  was  sold  by  respondent  No.1  to

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respondent No.7 on October 6, 2005, sale was

confirmed on December 6, 2005, possession of

the property was given to respondent No.7 on

December 14, 2005, sale certificate was issued

on January 20, 2006, respondent No.7 got the

property registered in its name on January 30,

2006 by paying stamp duty of Rs.2.25 crores,

secured creditors gave discharge to respondent

No.1-Company  on  March  30,  2007.  By  May  17,

2007,  4054  workers  were  paid  and  the  said

figure, at the time of hearing of this appeal

reached  to  4105.  It  was  also  stated  by

respondent  No.7-purchaser  that  plant  and

machinery  were  removed  and  sold  as  scrap

materials.

55. If, at this stage, we set aside sale

in favour of respondent No.7, serious prejudice

will be caused not only to respondent No.1 and

respondent  No.7—vendor  and  vendee,

respectively, but also to others like banks,

financial  institutions,  other  creditors  and

also to workers for whose benefit and welfare

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the appellant is fighting. It is pertinent to

note that no secured or unsecured creditor has

come forward making grievance that though he

was entitled to more amount, he has not been

paid  such  amount.  So  far  as  workers  are

concerned, we have already dealt with rights of

Representative-Union  in detail  and have  held

that the Representative Union has preferential

right to appear in the proceedings under the

Act. Hence, taking any view of the matter, in

our opinion, this is not a fit case to exercise

discretionary and equitable jurisdiction under

Article 136 of the Constitution.

FINAL ORDER 56. For  the  forgoing  reasons,  in  our

opinion,  the  appeal  has  no  substance.  It

deserves  to  be  dismissed  and  is  hereby

dismissed.  On  the  facts  and  in  the

circumstances of the case, however, there shall

be no order as to costs.

……………………………J.

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(C.K. THAKKER)

NEW DELHI, …………………………….J. July  11 , 2008. (D.K. JAIN)

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