Case: Shivanand Gaurishankar Baswanti Vs. Laxmi Vishnu Textile Mills &amp; Others

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 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 ]. 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 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 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 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 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

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]MERITS OF THE MATTER18. 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 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, 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 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 agreement19. On October 6, 2005, an order was passed by Recovery Officer, DRT-I, Mumbai in 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 adjudication20. Regarding valuation of property, it was stated;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 price21. It was mentioned that the Tribunal accepted the offer of M/s Trans Asia Global 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 Act22. 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 be confirmed. Accordingly, the sale was confirmed. Even this order was not challenged under the Act23. 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 proceedings26. But even on merits, the impugned action calls for no interference. The order dated April 28, 1994 passed by BIFR reads as under;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 14.2.1994And 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 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 promotersmanagement 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 therein27. 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 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 BIFR28. 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 workers have not received their dues has no force29. Again, who has approached this Court?Neither a secured nor an unsecured creditorNor 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 endorsement32. 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 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 Union33. 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 enactedo regulate the relations of employers and employees, to make provision for settlement of industrial disputes and to provide for certain other. The Act contains elaborate provisions for registration of Unions and their powers47. 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 area48. 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 sayinge in hand is better than two on. 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 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