Delhi High Court
Shiv Kant vs Union Of India And Others on 12 November, 2018
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ WRIT PETITION (CIVIL) No. 5890/2018 & CM.22952/2018
& 43730-33/2018
Reserved on: 2nd November, 2018
Date of decision: 12th November, 2018
SHIV KANT ..... Petitioner
Through Mr. Gopal Jain, Sr. Advocate with Mr. Amit
Dubey & Mr. Jayant Mehta, Advocates.
versus
UNION OF INDIA AND OTHERS .....Respondents
Through Mr. Dev. P. Bhardwaj, CGSC & Ms.
Akanksha Mishra, Advocate for respondent Nos. 1, 2
and 16.
Ms. Purti Marwaha & Ms. Henna George, Advocates
for the respondent-J.K. Jute Mills Company Limited.
Ms. Geeta Luthra, Sr. Advocate with Mr. Ujjawal Jain
& Mr. Prateek Yadav, Advs for respondent No. 4.
Mr. Gaurav Kejriwal & Mr. Atanu Mukherjee,
Advocates for respondent No. 7.
Mr. Ashok Kumar Jain & Mr. Karan Khanna,
Advocates for respondent No. 8.
Mr. G.S. Narula, Mr. Bhavit Yadav, Mr. Kushal
Mangal & Ms. Shefali Chopra, Advocates for
respondent Nos. 9 and 10.
Mr. Avneesh Garg & Ms. Vaishali Dixit, Advocates
for the applicant/impleader.
CORAM:
HON'BLE MR. JUSTICE SANJIV KHANNA
HON'BLE MR. JUSTICE CHANDER SHEKHAR
SANJIV KHANNA, J.:
Shiv Kant, who claims that he is an existing worker of M/s J.K. Jute
Mills Company Limited, (now known as Geo Jute Limited) has filed the
present writ petition with the following prayers:-
"(a) pass an appropriate order, direction, writ
declaring section 4(b) of the Sick Industrial Companies
(Special Provisions) Repeal Act, 2003 read with section
252 of the Insolvency and Bankruptcy Code, 2016 as
unconstitutional in so far it abates the proceedings before
BIFR & AAIFR and does not provide for efficacious
remedy for implementing the directions passed by the
Hon‟ble Supreme Court on 13-11-2014 and 18-11-2016
before the Adjudicating Authority under the provisions of
IB Code, 2016;
(b) pass an appropriate order, writ, direction upon
Union of India to remove difficulty and provide remedy
for implementing/execution of the directions passed by
the Hon‟ble Supreme Court on 13-11-2014 and
18.11.2016 read with the order dated 6-12-2017 passed
by this Hon‟ble Court;
Alternatively,
(i) pass an appropriate order, writ, direction declaring the
illegal sell of assets/undervalued transaction at
Saifganj, Katihar, Bihar on 2-7-2014 as void ab initio
& restore the position as it existed before the said
transaction;
(ii) pass an appropriate order, writ, direction declaring the
undervalued lease transaction dated 4-5-2017 in
favour of M/s Skyscappers Niwas Pvt. Ltd. as void ab
initio & restore the position as it existed before the
said transaction;
(iii)pass an appropriate order, writ, direction declaring the
illegal sell of assets/undervalued transaction on 5-5-
2017 & 8-5-2017 in favour of M/s Kurina Real Estate
Pvt. Ltd. as void ab inito & restore the position as it
existed before the said transaction;
(c) pass an appropriate order, direction, writ in the nature
of mandamus directing the Adjudicating Authority to
carry on with the investigation into all undervalued
transaction including the investigation which was started
by BIFR as per directions passed by this Hon‟ble Court
on 6-12-2017;
(d) pass an appropriate order, direction, writ for
appointment of Court Receiver for preservation of the
assets of JK Jute Mills Company Ltd.;
(e) pass such other further order/order(s) as this Hon‟ble
Court may be deemed fit and proper in the facts and
circumstances of the instant case."
2. The petitioner has also filed CM No. 22952/2018 praying for interim
relief and direction against M/s J.K. Jute Mills Company Limited (now
known as Geo Jute Limited), the Respondent No.1 for short and its
subsidiaries, namely, M/s JKJM Construction Private Limited, M/s JKJM
Housing Private Limited, M/s JKJM Warehousing Private Limited, M/s
JKJM Properties Private Limited and M/s JKJM Infrastructure Private
Limited, the Respondent Nos. 11 to 15 for short, from entering into any
transactions for sale of properties at Katihar, which was sold vide sale deed
dated 2nd July, 2014 to M/s Thapar Herbs and Spices Private Limited ('the
fourth respondent' for short), the property located in Dismil Abdulla Nagar,
District Purnea, Bihar statedly sold vide sale deed dated 5th May, 2017 to
M/s Kurnia Real Estate Private Limited ('the Respondent No.10' for short)
and the property located at Kalpi Road, Kanpur, subject matter of lease deed
dated 15th May, 2017 with M/s Skyscrappers Niwas Private Limited (now
known as M/s Skyscraper Jute and Mining Private Limited), the Respondent
No. 9 for short.
3. Reference made by the third respondent under the Sick Industrial
Companies (Special Provisions) Act, 1985 ('the SIC Act', for short) was
registered on 16th December, 1994 and the third respondent was declared a
„sick company‟ by the Board for Industrial and Financial Re-construction
('the BIFR' for short).
4. During pendency of the proceedings, a civil suit was instituted in
District Kamrup, Assam to declare that the BIFR had ceased to have
jurisdiction as the net worth of the third respondent had turned positive and
it was not a sick company under SIC Act. The third respondent in the
written statement did not object to the jurisdiction of the civil court and had
admitted that their net worth had become positive. The civil court passed an
order restraining further proceedings before the BIFR. Thereupon,
appearance was made by third parties opposing the proceedings before the
civil court. The matter reached the Supreme Court. On 8th May, 2014, a
restraint order was passed by the Supreme Court directing that capital assets
of the third respondent would not be disposed of without taking permission
of the Court. The Supreme Court vide judgment dated 13th November, 2014
reported as (2015) 1 SCC 298 after referring to the provisions of SIC Act
held that the civil court lacked subject-matter jurisdiction and that the BIFR
alone was competent to satisfy itself and determine whether the net worth of
the third respondent had turned positive. If the BIFR was so satisfied, it
would de-register the third respondent and thereupon the respondent would
be out of supervisory jurisdiction of the BIFR under the Act. In case the net
worth of the respondent no.3 had not turned positive, the BIFR would go
ahead and consider the Draft Revival Scheme (DRS, for short) for revival.
Two months‟ time was granted to the BIFR for the said purpose. The second
issue examined by the Supreme Court related to transfer/sale of Katihar
property by the third respondent to the fourth respondent vide sale deed
dated 4th April, 2013 registered on 2nd July, 2014. On the issue/question of
the transfer, following observations and directions were made:-
"38. Since in our view the Company continues to be a
sick company and it was not competent for anyone except
BIFR to determine whether the net worth of the Company
had turned positive, we hold the sale of Katihar property
effected by the Company without express leave or
permission of BIFR to be questionable. However, since
the transferee of that property is not before this Court we
relegate this matter for appropriate assessment by BIFR
after issuing due notice to the transferee. We also leave it
to BIFR to consider and assess whether there was any
necessity or expediency to sell the property in question. If
in its opinion such expediency and necessity are
established, BIFR may also consider whether the value
that the property has fetched is adequate or not. If the
value is adequate it may confirm the sale in favour of the
transferee. However, if the value in its opinion is
inadequate, it shall give offer and adequate time to the
transferee to make good the deficit. In any case if the sale
is held to be bad or if the transferee is not willing to make
good the deficit, the entire consideration for the
transaction be returned to the transferee. In such
eventuality whatever the transferee has paid in excess of
the consideration money towards stamp duty and
registration shall be recovered from the Directors and
persons responsible for effecting such sale on behalf of
the Company."
As the transfer of the Katihar property to the fourth
respondent was despite the restraint order dated 8th May, 2014
directing the third respondent not to transfer their capital assets, the
Supreme Court vide order dated 13th November, 2014 had observed
and held:-
"40. The appeals are allowed in the aforesaid terms.
FAO No. 10 of 2013 thus stands allowed and Writ
Petitions Nos. 4303 and 6286 of 2013 are dismissed. As
regards Contempt Petitions Nos. 338 and 375 of 2014,
since this Court had not issued any notice to the alleged
contemnors, we have not dealt with said petitions. By a
separate order we issue appropriate notice to the alleged
contemnors."
5. The fourth respondent was not impleaded as a party to the appellate
proceedings disposed of by the Supreme Court vide aforesaid judgment
dated 13th November,2014. However, the said respondent was impleaded as
a party to the contempt proceedings, which were disposed of and decided
vide decision dated 18th November, 2016 reported as (2017) 1 SCC 599. By
this judgment the third respondent and its Directors/servants were held to be
guilty of transgression and violation of the interim order dated 8th May,
2014, albeit the fourth respondent and its Directors/servants had not violated
the order. In totality of circumstances, the Supreme Court did not think it
appropriate to exercise their power and invalidate the sale deed registered on
2nd July, 2014. Fine of Rs.2,000/- each was imposed on the third respondent
and its Directors/servants for having violated the order dated 8th May, 2014.
For the purpose of clarity, we would like to reproduce some paragraphs of
the said judgment, which read as under:-
"23. We now turn to the involvement of alleged
Contemnors 14, 15 and 16 who are the transferee
Company and its Directors/servants. These alleged
contemnors were neither parties to the proceedings
pending in this Court in which the order of 8-5-2014
[Ghanshyam Sarda v. Shiv Shankar Trading Co., (2015)
1 SCC 298, 316 (footnote 14)] was passed nor is there
any material to indicate that such order was ever served
on them or brought to the notice of these alleged
contemnors. The role played by alleged Contemnor 17,
however, stands on a different footing. The documents on
record do show that he used to represent the Company
and was also given authority to collect documents on
behalf of the Company from the office of the BIFR.
Further, on his own showing, he had gone ahead and
registered the document not on the asking of the
transferee. He had gone along with the Directors of the
Company and on the directions of alleged Contemnor 3.
The knowledge about the passing of the order of 8-5-
2014 [Ghanshyam Sarda v. Shiv Shankar Trading Co.,
(2015) 1 SCC 298, 316 (footnote 14)] to the Company
and its Directors having been established, there is room
for suspecting the involvement of alleged Contemnor 17.
But mere suspicion may not be enough and we give him
benefit of doubt. Thus, none of the alleged Contemnors
14 to 17 have been proved to be guilty of violation of the
order of 8-5-2014 [Ghanshyam Sarda v. Shiv Shankar
Trading Co., (2015) 1 SCC 298, 316 (footnote 14)] .
24. As regards the involvement of alleged Contemnors
2 and 3, they were neither Directors nor shareholders of
the Company nor has it been shown that they have any
stake or interest in the transferee Company. It is
undoubtedly true that alleged Contemnor 17 in his
affidavit stated that he used to work under the directions
of alleged Contemnors 2 and 3 and that the registration of
the document on 2-7-2014 was done under the express
directions of alleged Contemnor 3. However, such a
statement coming from a co-contemnor, in our view, is
not sufficient to reach a conclusion about the involvement
of alleged Contemnor 3. Further, the documents
pertaining to Writ Petition No. 5670 (W) of 2016 pending
in the Calcutta High Court as well as the affidavit filed by
Dinesh Sarda are also not conclusive enough. The
criticism that such documents and the affidavit of Dinesh
Sarda are conveniently brought on record, would also
require assessment of facts. Thus, though there is room to
suspect the involvement of the said Contemnors 2 and 3,
the material on record is not conclusive enough to hold
them guilty of violation of the order of 8-5-2014
[Ghanshyam Sarda v. Shiv Shankar Trading Co., (2015)
1 SCC 298, 316 (footnote 14)] . We, therefore, close
these proceedings as against them.
25. XXXXX
26. In the present case the Company and its
Directors/servants were certainly guilty of transgressing
or violating the order of 8-5-2014 [Ghanshyam
Sarda v. Shiv Shankar Trading Co., (2015) 1 SCC 298,
316 (footnote 14)] but as found hereinabove, the
transferee and its Directors/servants have not violated the
order of 8-5-2014 [Ghanshyam Sarda v. Shiv Shankar
Trading Co., (2015) 1 SCC 298, 316 (footnote 14)] . The
transferee and its Directors/servants were neither parties
to the proceedings nor were they served with the order of
8-5-2014 [Ghanshyam Sarda v. Shiv Shankar Trading
Co., (2015) 1 SCC 298, 316 (footnote 14)] . In para 38 of
the judgment of this Court dated 13-11-2014 [Ghanshyam
Sarda v. Shiv Shankar Trading Co., (2015) 1 SCC 298] ,
this Court had found the transfer in favour of the
transferee to be questionable and had relegated the matter
to the BIFR to consider the matter in the light of
directions contained in said para 38. In the circumstances,
no further orders are called for invalidating the
registration dated 2-7-2014. Further, according to the
record the transferee had parted with full consideration
way back on 4-4-2013. In the totality of these
circumstances we do not think it appropriate to exercise
our power to invalidate the effect of registration of the
document on 2-7-2014.
27. We thus find the Company and its
Directors/servants, namely, alleged Contemnors 1, 4, 5, 6,
7 and 8 guilty of having violated the order of 8-5-2014
[Ghanshyam Sarda v. Shiv Shankar Trading Co., (2015)
1 SCC 298, 316 (footnote 14)] . In our view, ends of
justice would be met if fine is imposed on the
contemnors. We impose fine of Rs 2000 on the Company.
Further, fine of Rs 2000 each is imposed on Contemnors
4, 5, 6, 7 and 8. Fine shall be deposited with the Registry
of this Court within four weeks from today. In case of
failure by Contemnors 4, 5, 6, 7 and 8 to deposit the
amount of fine within the time stipulated, they shall
undergo sentence of simple imprisonment for one
month."
6. Before the BIFR could decide the issues and aspects in terms of the
judgment of the Supreme Court dated 13th November, 2014, the Sick
Industrial Companies (Special Provisions) Repeal Act, 2003 (the Repeal
Act, for short) was enacted and enforced with effect from 1 st December,
2016. Consequently, proceedings before the BIFR under SIC Act abated
and came to an end, without adjudication. Simultaneously with the Repeal
Act, Insolvency and Bankruptcy Code, 2016 (IBC, for short) was enacted
and enforced with effect from 1st December, 2016. As DRS was pending
before the BIFR and had not been approved, the provisions in the IBC
relating to deemed resolution plan were not applicable. (It was stated by the
counsel for the third respondent that two DRS including one by the present
management were pending when the Repeal Act was enforced and
proceedings before the BIFR had abated.) This issue and question whether
the third respondent had ceased and was not a sick company under SIC Act
thus was not decided and adjudicated.
7. M/s. J.K. Jute Mills Mazdoor Ekta Union, a Trade Union, eighth
respondent in the present writ petition, was a party to the proceedings before
the Supreme Court. Similarly, Ghanshyam Sarda, who is respondent No. 7
in the present writ petition, was the appellant before the Supreme Court.
8. M/s. J.K. Jute Mills Mazdoor Ekta Union (hereinafter also referred to
as 'the Union') had filed W.P. (C) No. 440/2017 before this Court for various
reliefs, including a writ for declaring Section 4(b) of the Repeal Act, 2003
read with Section 252 of the IBC as unconstitutional insofar as the
provisions abate the pending proceedings under the SIC Act before the BIFR
and the appellate authority. They had also sought directions to remove
difficulty and provide remedy to implement the orders of the Supreme Court
dated 13th November, 2014 and 18th November, 2016. The eighth
respondent had stated that the jute mill was lying closed and the workers
were out of job since March, 2014. They had not been paid wages and
workers‟ dues were to the extent of Rs.127.90 crores. Claims made by Uttar
Pradesh Commercial Tax Department, Employees' State Insurance
Corporation, Employees' Provident Fund Organization, etc. were referred.
On 26th May, 2017, a Division Bench of this court had passed the following
order in W.P.(C)No. 440/2017, :-
"3. We are assured by Mr. A.S. Chandhiok, learned
senior counsel representing the respondent no.3/company
that the company has no intention of not abiding by any
order of payment determining lawful dues payable to the
workmen of the company and that every effort is being
made to restructure the debts and revive the company. He
submits that he shall file an affidavit of the respondent
no.3 undertaking to pay such dues as are found lawfully
due and payable to the workmen of the company. Such
undertaking on affidavit shall be filed in this court within
one week from today.
4. The respondent no.3 shall file an affidavit
disclosing the assets which existed of the company on the
date of repeal of the Act; the date on which the assets
were alienated and the details of the transactions
including the amounts received; the details of the
disbursement of the amounts received on account of the
transactions.
5. Without prejudice to the rival rights and
contentions, the respondent no.3 shall preserve an amount
of Rs.2.5 crores as is being claimed by the workmen."
9. Thereafter on an application, CM No. 19774/2017, filed by the eighth
respondent - union, on 16th June, 2017 another order was passed by the
Division Bench after referring to the affidavit filed by the third and fourth
respondent. Relevant portion of this order reads as under:-
"5. An affidavit purportedly in response to para
Nos.3 & 4 has been filed. In the affidavit, it is contended
that there are no dues payable to the Workmen. With
regard to the details that have been sought by paragraphs
4 & 5 of the order, i.e. (i) the disclosure of the assets
which existed of the Company on the date of repeal of the
Act (i.e. 01.12.2016); (ii) the date on which the assets
were alienated; (iii) details of the transaction including
the amounts received and (iv) details of the disbursement
of the amounts received on account of the transaction, an
affidavit has been filed by respondent No.3, which, inter
alia, reads as under:-
"6. It may be noted that the respondent
No.3 Company was constrained to declare a
lockout in the year 2014 and presently, also is in
lockout and no dues as alleged in the writ
petition are payable to the workers/employees.
The lockout of the Company was challenged by
the workers before the Government of Uttar
Pradesh and the same was declared illegal under
the provision of Section 3 (a) of the U.P.
Industrial Dispute Act 1947, which was
challenged by the J. K. Jute Mills Company
Limited in MISC. SINGLE No. 7208/2014
before the Hon‟ble Allahabad High Court,
Lucknow Bench. Thus the said legal issue is
already pending before the Hon‟ble Allahabad
High Court in MISC. SINGLE No. 7208/2014,
wherein the Hon‟ble Allahabad High Court was
pleased to issue interim order dated 19.11.2014.
A copy of the MISC SINGLE No. 7208/2014
pending before the Hon‟ble Allahabad High
Court is appended herewith and marked as
Annexure A-2 and a copy of the order dated
19.11.2014 passed by the Hon‟ble Allahabad
High Court in MISC. SINGLE No. 7208/2014 is
appended herewith and marked as Annexure A-
**** **** **** ****
11. Further, Sick Industrial (Special
Provisions) Companies (SICA) Repeal Act 2003
came into effect on 01.12.2016 and on the date
of repeal of SICA, the respondent No.3 company
owned the factory land, plant and machinery at
84/49, Zarib Chowki, Kalpi Road, Kanpur which
was lying closed since 2014. The company also
owns the property in Kolkata which has been
given on a long term lease sometime in 1960‟s.
This property is also mortgaged to third parties
holding charge on the same. The above plant
alongwith land and machinery and the bunglow
has been leased to Skyskappers Niwas Private
Limited w.e.f . 04.05.2017 by registered lease
deed dated 15.05.2017. I further state that the
subsidiaries being JKJM Construction Pvt Ltd,
JKJM Housing Pvt Ltd, JKJ, Warehousing Pvt
Ltd, JKJM Properties Pvt Ltd and JKJM
Infrastructure Pvt Ltd which were created in the
year 2013 and to whom certain assets of the
respondent No.3 Company were transferred
including the Gulab Bagh property which was
transferred to JKJM Housing Pvt Ltd.
12. It may be noted that the application
filed by the petitioner refers to godown situated
at Gulab Bagh, Bihar which is not owned by the
respondent No.3 Company and is owned by
JKJM Housing Pvt Ltd since 2013. The said
property has been sold by registered sale deeds
dated 05.05.2017 and 08.05.2017. Copies of
registered sale deeds dated 05.05.2017 and
08.05.2017 are appended herewith as Annexure
A-5 and Annexure A-6 respectively.
13. It may further be noted that the
godown sold vide registered sale deeds dated
05.05.2017 and 08.05.2017 was at that time,
leased to Jute Corporation of India, which is a
government controlled company and has been
sold on „As is where is basis‟. It may be noted
that the respondent No.3 Company was not in
the physical possession of the said property and
the respondent No.3 Company has only
transferred the title of the said property to its
subsidiary and it is upto the subsidiary or the
new buyer to obtain the possession of the said
property though the respondent No.3 is helping
the new Buyer and its subsidiary to take
possession of the same.
14. It may be noted that the plant
including land and machinery has been leased by
the respondent No.3 Company in order to make
best efforts to revive the plant and machinery
which is evident from various clauses of the
Agreement.
15. It is stated that Respondent No.3
Company will not get any amount from the sale
of godown situated at Gulab Bagh, Bihar and the
same will be received by JKJM Housing Pvt Ltd
as per the enclosed sale deeds.
16. As aforesaid, the present petition has
not been filed by any genuine workmen and no
specific claim or crystallized amount supported
by any documents has been raised therefore the
present petition is a mala fide attempt to harass
the Respondent No.3 Company." (underlining
supplied)
6. Reading of above paragraphs of the affidavit
shows that respondent No.3 has been very vague in its
disclosure. Respondent No.3 has stated that it owns
property in Kolkata, which has been given on long term
lease. The details and description of the said property has
not been provided.
7. The Plant along with land and machinery and
the Bungalow has been leased with effect from
04.05.2017 by way of registered lease deed dated
05.05.2017 & 08.05.2017. Neither a copy of the
registered lease deed has been placed on record nor it has
been disclosed what has been consideration received by
way of security deposit or rental. The affidavit further
states that respondent No.3 has five subsidiaries to whom
certain assets of respondent No.3 have been transferred.
No details of the assets, so transferred to the subsidiary
Companies, have been specified in the affidavit. Even the
details of the assets of the subsidiary Companies are not
disclosed in the affidavit.
8. At this stage, learned counsel for the respondent
No.3 submits that the details of the assets are available.
9. We are of the view that respondent No.3 has not
made proper and accurate disclosure, as was directed by
paragraph 4 of the order dated 26.05.2017.
10. At request of learned counsel for respondent
No.3, one more opportunity is granted to respondent No.3
to file an affidavit in compliance of order dated
26.05.2017.
11. Let the affidavit be filed within a period of two
weeks.
12. List before the Roster Bench on 06th July, 2017.
13. Till the next date of hearing, respondent No.3 as
also the wholly owned subsidiaries of respondent No. 3,
i.e. respondent Nos.8 to 12 shall not transfer, alienate or
encumber or create any third party rights in any of its
assets without leave of the Court"
The aforesaid paragraphs refer to the factum that lock out had been
declared in the factory, which action had been made subject matter of
challenge before the Allahabad High Court, Lucknow Bench. The order
refers to the transaction regarding the land at Kanpur vide registered lease
deed dated 5th May, 2017 by the third respondent with the ninth respondent.
The order states that several assets of the third respondent had been
transferred to the subsidiaries, who as noted above, have been impleaded as
respondent Nos. 11 to 15 in the present writ petition. One of the subsidiaries
in turn had sold the property at Gulab Bagh, Bihar vide sale deeds dated 5 th
May, 2017 and 8th May, 2017 to the tenth respondent. Transaction relating to
Kolkata property in the form of long-term lease was referred to and
commented upon. Restraint order against transfer, alienation, encumbrance
or creation of third party rights was extended to the wholly owned
subsidiaries.
10. By the order dated 6th July, 2017, the interim order was also made
applicable to the fourth respondent before us (respondent No. 7 in the said
writ petition). By another order dated 12th July, 2017 in W.P(C) No.
440/2017, the ninth respondent was directed to maintain status quo with
regard to the factory, land, plant and machinery at Kanpur. By the order
dated 21st August, 2017, the stay restraining transfer, alienation and/ or
creation of third party rights was extended to M/s Kurnia Real Estate Private
Limited, respondent No. 10 in the present writ petition.
11. Writ Petition (C) No. 440/2017 filed by the Union was disposed of
vide order dated 6th December, 2017, which reads as under:-
"J.K. Jute Mills Mazdoor Ekta Union has invoked
writ jurisdiction of this Court under Article 226 of the
Constitution of India, challenging Section 4(b) of the Sick
Industrial Companies (Special Provision) Repeal Act,
2003 alleging inter alia that the provisions of the
Insolvency & Bankruptcy Code, 2016 („Code‟ for short)
do not provide for an efficacious remedy for
implementing the directions of the Supreme Court in
order dated 13th November, 2014 reported as Ghanshyam
Sarda v. Shiv Shankar Trading Company (2015) 1 SCC
(298) and order dated 18th November, 2016 passed in
Contempt Petition (Civil) No.338/2014. Another prayer
made in the writ petition is for passing appropriate orders
or directing the Union of India to remove difficulties and
provide for a remedy for implementation of the said
orders. Yet another prayer made, is for appointment of a
court Receiver.
2. During the course of the hearing, learned Senior
counsels for the petitioner and the respondents took us
through the provisions of the Code. We need not go into
the various factual and legal aspects raised, for the
counsels are ad idem and have reached a consensus on the
ambit and scope of power of the National Company Law
Tribunal (NCLT) under the Code.
3. Learned counsels agree that the workmen of M/s J.K.
Jute Mills Company Limited/Respondent No. 3 would be
„operational creditors‟ as defined in Section 5 (20) of the
Code. It is also agreed that they are entitled to invoke the
jurisdiction of the NCLT under Sections 6, 8 and 9 of the
Code.
4. On the question of the powers of NCLT, learned
counsels for the parties agree and accept that Sections 47
and 49 of the Code, which relate to under-valued
transactions, are not etched and seized by a fixed
limitation period as to the transactions which can be
looked into and examined. The said Sections can be
invoked when the conditions stipulated therein are
otherwise satisfied.
5. The orders passed by the Supreme Court in
Ghanshyam Sarda (supra) in paras 37 to 39 had issued
certain directions to the BIFR including:
To satisfy itself and determine whether the net worth of
the company had turned positive or not and upon
satisfaction either way, the BIFR was to either de-register
the company or consider the scheme for revival of the
company. This exercise was to be completed within two
months.
The transfer of Katihar property without express leave
or permission of the BIFR was held to be questionable
but since the transferee was not before the Supreme
Court, the appropriate assessment of the same was to be
done by the BIFR. As part of this exercise, BIFR was to
consider and assess whether there was any necessity and
expedience to sell the property in question and after
examining the whole matrix of the sale consideration for
the said transaction, the appropriate directions were to be
passed as contained in para 38.
Apart from this, in the order on the contempt proceedings
dated 18th November 2016, the Supreme Court had made
observations.
6. This Court is of the opinion that the directions given
by the Supreme Court could be examined and considered
under Sections 47 and 49 of the Code, if other conditions
for invoking these provisions are otherwise satisfied.
Both these provisions are not, in any manner, restricted in
their application by any limitation period of either one
year or two years from the `insolvency commencement
date'. The directions as given in Ghanshyam Sarda
(supra) can be examined and undertaken by the NCLT
under the Code.
7. In view of our above observations and the consensus
on the ambit and power of the NCLT under the Code,
learned Senior counsel for the petitioner submits that the
workmen would invoke the jurisdiction of the NCLT
under Sections 6, 8 and 9 of the Code and would move
applications under Sections 47 and 49 of the Code for
appropriate relief and directions before the NCLT. It is
obvious that the application so filed would be dealt with
in accordance with the provisions of the Code.
8. It will be open to the workmen to allege and assert that
there has been a violation of the orders passed by the
Supreme Court and by this Court, as well as violation of
the restraint orders passed by the Board for Industrial and
Financial Reconstruction („BIFR‟) under Section 22A of
the Sick Industrial Companies (Special Provisions) Act,
1985. Third respondent and others can contest the said
submissions.
9. We may note that the learned Senior counsel for the
petitioner and the respondent No. 6 have alleged that the
respondent No. 3-company has violated the
aforementioned orders. Contention of the respondent No.
3 is that they have not violated any orders. Respondent
No. 7, on the other hand, states that he is a bonafide
purchaser for good value. We clarify that we have not
expressed any opinion on the said aspect and leave the
question open.
10. Whether or not there was/is any violation, and
the effect thereof and the consequences following
therefrom, would be examined by the NCLT. While
dealing with the aforesaid situation, the NCLT would
examine the directions given and findings recorded in the
order passed by the Supreme Court dated 13th November,
2014 reported as (2015) 1 SCC 298. The workmen and
the respondents would be entitled to refer to the
subsequent order passed by the Supreme Court in the
contempt proceedings dated 18th November, 2016.
11. We would clarify that, in case there is any
violation of the orders passed by this Court dated 16th
June, 2017, 6th July 2017 and 21st August 2017 in the
present writ petition, it will be open to the petitioner to
file contempt proceedings.
12. In view of the aforesaid position, learned Senior
counsel for the petitioner does not press his prayer
challenging vires of Section 4 (b) of the Sick Industrial
Companies (Special Provisions) Repeal Act, 2003 as
modified by the Code. He further submits that the
question as to whether Trade Unions can invoke the
jurisdiction of NCLT under the Code is subjudice before
the Supreme Court and they would abide by the decision
of the Supreme Court. This statement is without prejudice
to the rights and contentions of the petitioner-trade union
to challenge the vires of the Code, if so advised, for it is
submitted that the trade unions have been wrongly denied
the right to invoke the jurisdiction of the NCLT under the
Code.
13. We direct that the interim orders passed on 16th June,
2017, 6th July, 2017 and 21st August, 2017 would
continue and would be in operation for a further period of
2 months from today so as to enable the workmen to
approach the NCLT. It will be, thereafter, for the NCLT
to decide whether or not to continue with the said interim
orders and / or to modify, amend or vacate the same.
14. Similarly in case there is violation of the
directions given in the order dated 26th May, 2017, by
which it was directed that the Company would keep
Rs.2.5 crores in reserve, it will be open to the petitioner to
invoke contempt jurisdiction and also for the workmen to
highlight the said fact before the NCLT.
15. With the aforesaid observations, the writ petition
and all pending applications are disposed of without any
order as to costs."
12. Immediately after the order dated 6th December, 2017 was passed
relegating the workers to proceed in terms of the IBC, the third respondent
instituted two civil suits on 12th December, 2017 and 15th December, 2017
before the Civil Judge, Kanpur against about 3000 workmen and ex-
workmen. The prayer in the first suit against the workers was to injunct
them from representing their dues in various forums till the suit is decided;
declare any document submitted in the DRS before the BIFR by any third
party as null and void; declare that no amount was due and payable, if any,
to any of the workmen impleaded; award damages, etc. Similar though not
identical prayers have been made in the suit against the ex-workers.
13. Pursuant to the order dated 6th December, 2017, some of the workers
of the third respondent had approached National Company Law Tribunal,
Allahabad (NCLT, for short) under Section 9 of the IBC. By order dated 4 th
July, 2018, their application was dismissed on the ground that the third
respondent had already filed the civil suit in Kanpur and had sought various
declarations. The civil suit had been preferred by the third respondent
before notice of demand under Section 8 of the IBC was issued. As long as
a dispute truly exists in fact and was not spurious, hypothetical or illusory,
the adjudicating authority, i.e., NCLT was to reject the application made by
the workers as operational creditors. The order states that the third
respondent had paid the gratuity amount, as awarded by the labour court. It
is stated that an appeal preferred by the workers against this order before the
National Company Law Appellate Tribunal ('NCLAT', for short) is pending.
14. The petitioner before us had also moved to the NCLT under Sections
47 and 49 of the IBC, which applications were dismissed by the NCLT,
Allahabad Bench vide order dated 9th April, 2018 recording that the
applications were not maintainable as liquidation proceedings were not
pending against the third respondent. The applications under the provisions
would be maintainable only after process of liquidation starts after failure of
the resolution process.
15. It is in these circumstances that the petitioner has approached this
Court with the aforesaid prayers. Upon hearing counsel for the petitioner
and the third respondent in particular, vide order dated 5 th July, 2018, the
following directions in the form of interim order were passed:-
"Learned Senior Counsel for the petitioner states that
the National Company Law Tribunal („NCLT‟) has heard
arguments on the petitions/applications filed by workmen
under the Insolvency and Bankruptcy Code, 2016
(„Code‟) on several issues, including maintainability,
after order dated 6.12.2017 passed by this Court in
WP(C) No.440/2017, J.K. Jute Mill Mazdoor Ekta Union
v. UOI & Ors.
The petitioner herein had approached the NCLT under
the Code, albeit application was rejected vide order dated
9.4.2018. Petitioner submits that that he cannot be left
remediless, as the grievance or lis must be examined,
either by the NCLT or Court in a writ petition as
proceedings under Sick Industrial Companies (Special
Provisions) Act, 1985 have abated. The petitioner also
submits that interim order passed by this High Court in
WP(C) No.440/2017, which was extended vide order
dated 6.12.2017 for a period of two months, to enable the
workmen to approach the NCLT, is no longer in
operation.
Issue notice. We clarify that issue of notice would not,
in any manner, be treated as an expression of opinion or
finding with regard to the proceedings pending before the
NCLT, in which order has been reserved.
On the question of stay, learned counsel for the
petitioner has submitted that the interim order passed in
WP(C) No.440/2017 should be extended till the next date
of hearing.
Learned counsel appearing for respondent No.3, M/s
J.K. Jute Mills Company Ltd., now known as Geo Jute
Ltd., has submitted that the Supreme Court has passed a
restraint order in an appeal against the order passed by the
NCLT. She states that the said respondent would abide by
and comply with the restraint order passed by the
Supreme Court.
Senior Counsel for the petitioner submits that interim
restraint order passed by the Supreme Court, and it is
accepted, relates to the assets of the third respondent,
whereas the restraint order(s) passed by this High Court
in WP(C) No.440/2017 were applicable to respondent
Nos.4, 9 and 10, which are separate companies.
Counsel for respondent No. 3 states that this writ
petition has been filed by the petitioner at the behest of
the 7th respondent. 7th respondent and petitioner have
denied the allegation.
As we have issued notice, we are inclined, at this stage,
to restore the interim orders dated 16.6.2017, 6.7.2017
and 21.8.2017 in WP(C) No.440/2017. Restoration of
interim order is only till the next date of hearing, when,
upon consideration of reply/rejoinder being filed, the
Court could vacate, modify, amend or affirm the said
orders.
Notice will be served on unrepresented respondents, on
steps being taken within 7 days. Reply may be filed
within four weeks. Rejoinder, if any, may be filed within
four weeks, after reply is served.
We would also clarify that if there is any change in
position after the order dated 6.12.2017 was passed and
the present order, it will be open to the respondents to file
an application/or state so in the reply, pointing out the
said change.
Learned counsel for the third respondent has submitted
that the petitioner should have filed an appeal under
Section 61 of the Code, challenging the order of the
NCLT.
Learned counsel for the petitioner states that the
petitioner accepts the order passed by the NCLT and,
therefore, is not inclined to file an appeal. We would
examine this aspect.
We would also clarify that this order will not prevent
or bar the NCLT from pronouncing orders in the pending
matters.
Relist on 16.10.2018.
Dasti."
The aforesaid order and the order dated 6th December, 2017
disposing of WP(C)No.440/2017 took notice of the proceedings initiated by
M/s J.K. Jute Mills Mazdoor Morcha, another Trade Union, before the
NCLT under the IBC in respect of the dues payable to the workmen. The
trade union, it was held, cannot invoke the provisions of the IBC. The order
was upheld by the NCLAT. The Union has thereupon preferred Special
Leave to Appeal, which has been granted and is registered as Civil Appeal
No. 20978/2017. In this appeal the Supreme Court has by order dated 5th
January, 2018 has directed the third respondent to maintain status quo as to
the assets of the said company. This order does not operate against the
subsidiaries.
16. Two more aspects are highlighted by the petitioner and the Union -
M/s J.K. Jute Mills Mazdoor Ekta Union, the eighth respondent before us.
The lease deed between the third respondent and the ninth respondent
regarding the property at Kanpur, it is submitted, is in fact and virtually a
sale deed, as it transfers 5 acres of land alongwith factory sheds and
godowns for the lease period from 4th May, 2017 to 3rd May, 2044 on
average annual rent of Rs.9,93,000/-. Further, there is a stipulation in the
registered lease deed that the respondent No. 9 can at any time during the
pendency of the agreement but not later on expiry of ten years from the date
of commencement of the agreement, exercise option to buy the demised
premises for Rs.11 crores. The second aspect highlighted by the petitioner
and the Union is that the third respondent and its subsidiary have not
accounted for the sale consideration received on transfer of the Gulab Bagh
property to the tenth respondent. Our attention was drawn to the affidavit
filed by the third respondent, quoted in the order dated 16th June, 2017
passed in Writ Petition (C) No. 440/2017, to the effect that payment for
Gulab Bagh, Bihar property shall be made to the subsidiary, i.e., M/s JKJM
Housing Private Limited and not to the third respondent. Our attention is
also drawn to affidavit filed by S.K. Jha on behalf of the third respondent
dated 29th June, 2017, which records that the third respondent would not get
any amount from the sale of the godown at Gulab Bagh, Bihar as per the
enclosed sale deeds. The Union to contradict this assertion had drawn our
attention to the sale deeds dated 5th May, 2017, which record that payment
of sale consideration of Rs.2,85,47,400/- had been made by way of five
cheques to the seller. The sale deeds were executed by the third respondent.
17. The third respondent who had preferred Special Leave Petition
challenging order dated 5th July, 2018 and was directed by the Supreme
Court to file counter affidavit to the present writ petition within one week
from 10th September, 2018. On 29th September, 2018 the third respondent
filed a short counter-affidavit, which affidavit does not deal with several
contentions and is not parawise. In this affidavit the preliminary objection
raised is that the writ-petitioner should have approached NCLAT to
challenge the order dated 3rd August, 2018 passed by the NCLT. Reference
is made to pronouncements of this Court upholding constitutional validity
on some of the provisions of the IBC in the factual matrix of the said cases.
It is asserted that the net worth of the third respondent is positive and
proceedings under SIC Act have abated. The petitioner, it is alleged, has
filed the present litigation at the behest of Ghanshyam Sarda, respondent
no.7 before us. In other words, this is a proxy or back door litigation.
During the course of arguments it was stated that the petitioner has an
unsubstantiated claim of Rs.10.0 lakhs. He has no locus to file this writ
petition with the aforessaid prayers. On the question of sale and transfer of
assets by the third respondent or its subsidiaries, no specific details and
particulars have been stated in the counter-affidavit. It is stated that the third
respondent company in exercise of right of corporate governance and
operations had transferred its assets. The sale/transfer would be valid in the
absence of any restraint order.
18. During the course of hearing before us, counsel for the third and tenth
respondents have stated at the Bar that the sale consideration for the Gulab
Bagh property has to be paid to the subsidiary and not to the third
respondent.
19. In rejoinder-affidavit filed by the petitioner, he asserts and states that
he has accepted the order dated 9th April, 2018 passed by the NCLT. In fact,
the third respondent has opposed the petition preferred by the petitioner and
hence the third respondent has taken contrary plea in the short counter-
affidavit.
20. Contesting the submissions of the third and fourth respondents
predicated on the order of the Supreme Court dated 18th November, 2016 it
was submitted by the petitioner and the Union that the order was passed in
contempt proceedings gave benefit of doubt to the fourth respondent, while
the third respondent was held to be guilty. Issue raised and subject matter of
enquiry in terms of paragraph 38 of the order dated 13th November, 2014
stands and has to be examined. Cancellation of sale deed for violation of the
restraint order of the court, and enquiry mandated as per paragraph 38 of the
order dated 13th November, 2014 stand on a different footing. Contempt
jurisdiction was relating to wilful disobedience of the order of the Supreme
Court, whereas direction given in the order dated 13th November, 2014
covers other aspects including misstatement of sale consideration.
21. Third and fourth respondents contest this submission and state that
once proceedings under SIC Act have abated, directions given in paragraph
38 would not survive for adjudication. In case of doubt or difficulty, the
party aggrieved should approach the Supreme Court. In alternative, it is
submitted that the second order of the Supreme Court dated 18 th November,
2016 had taken all the aspects and issues into consideration and thereupon
punished the third respondent company and its officers/servants for
contempt, but did not deem it appropriate to cancel the sale deed issued in
favour of the fourth respondent. The fourth respondent, who has appeared
before us, submits that the proceedings against them stand closed once the
Supreme Court had closed the contempt proceedings.
22. The factual position, as it emerges, is that the third respondent was
declared as a sick company under SIC Act on 16th December, 1994. The
proceedings under SIC Act had remained pending till 1 st December, 2016
when they abated pursuant to enactment and enforcement of the Repeal Act.
The BIFR till then had not adjudicated and decided whether or not net worth
of the third respondent had turned positive and accordingly it should be de-
registered under SIC Act. The BIFR had also not decided the controversy
and issue in terms of paragraph 38 of the order passed by the Supreme Court
dated 13th November, 2014 reported as 2015 (1) SSC 298. Pertinently vide
order dated 18th November, 2016 reported as 2017 (1) SSC 599, the
Supreme Court had held that the third respondent and its Officers/Directors
had violated and disobeyed interim order passed on 8th May, 2013 when they
had sold the Katihar property vide sale deed registered on 2 nd July, 2013.
The third respondent and its Directors/ Officers were held to be guilty of
contempt and had to pay fine/penalty of Rs.2,000/-. The third respondent
has also transferred immovable properties located in Kanpur, Gulab Bagh,
Garh Bandeli and Forebisganj in favour of five subsidiaries who have been
impleaded as respondent Nos.11 to 15. No cash consideration has been
paid by the subsidiaries for the transfers, albeit shares in the subsidiary have
been allotted to the third respondent. Land and property which originally
belonged to the third respondent at Gulab Bagh has been sold and
transferred to M/s Kurina Real Estate Private Limited, the tenth respondent.
As per the petitioner and the eighth respondent, JK Jute Mill Mazdoor Ekta
Union and eleven applicants seeking impleadment vide application CM No.
43730/2018, the transactions are dubious and details of the sale
consideration received are not forthcoming. The third respondent, M/s JK
Jute Mills Company Limited, has entered into a long lease agreement with
ninth respondent M/s Skyscrappers Niwas Private Limited, with the said
respondent's right to purchase the property.
23. Consequent to abatement of proceedings before the BIFR, the Union
i.e. M/s. J.K. Jute Mills Mazdoor Ekta Union had filed W.P. (C)
No.440/2017 in this Court wherein interim orders were passed restraining
the third respondent and its subsidiaries from transferring, alienating,
encumbering or creating any third party rights in any of the assets without
leave of the Court. Direction was also given to ensure that the third
respondent would reserve an amount of Rs.2.5 crores being claimed by the
workmen. The aforesaid writ petition was disposed of vide order dated 6 th
December, 2017, relegating the workers to invoke proceedings under the
IBC. However, it was directed that the interim orders passed would remain
in operation for a further period of two months from the said date to enable
the workmen to approach the NCLT, who would then decide whether or not
to continue with the said interim orders and/or to modify, amend or vacate
the same. Immediately after the order dated 6th December, 2017, the third
respondent had filed two suits on 12th and 15th December, 2017 against
3000 existing and erstwhile workmen to injunct them from representing
their alleged dues in various forums; to declare the documents submitted in
DRS as null and void and to hold that that no amount was payable to
workmen/ex-workmen. The respondent No.3 has declared lock out in the
factory and the validity of the said declaration etc. is subjudice before the
Allahabad High Court. M/s. J.K. Jute Mills Mazdoor Morcha, another trade
union had filed proceedings under Section 9 of the IBC, which
application/petition has been dismissed as not maintainable by a trade union
by the NCLT and NCLAT. Leave to appeal against the said decision has
been granted and Civil Appeal No.20978/2017 is pending before the
Supreme Court. The Supreme Court has also directed that status quo in
respect of the assets of the third respondent would be maintained. The
petitioner had also approached NCLT by way of an application under
Section 47 and 49 of the IBC seeking relief to investigate and cancel illegal
transaction in terms of the order of the Supreme Court dated 13 th November,
2014. This application has been dismissed by the NCLT as not maintainable
vide order dated 9th April, 2018. This order, however, also records that the
directions given by the High Court in their order dated 6 th December, 2017
would remain intact and the respondent company would have to keep Rs.2.5
crores in reserve. The Union claims that an amount of Rs.128 crores would
be due and payable to the workmen and ex-workmen.
24. The DRS pending before the BIFR, it is stated by the petitioner and
the Union, had acknowledged that Rs.23.06 crores was payable to the
workmen as gratuity and Rs.3.97 crores was payable on account of deposits.
The wages etc. had not been quantified. The counter-affidavit filed by the
third respondent on the question of dues of workmen is silent. On being
questioned, counsel for the third respondent had stated that the aforesaid
amounts were mentioned in DRS filed by a third person and not by the
present management of the third respondent, who had submitted another
DRS. However, counsel for the third respondent was not forthcoming and
had stated that she was not in a position to answer and state whether in the
DRS submitted by the present management, they had admitted and accepted
the amounts due to the workmen.
25. The core controversy, which is required to be resolved and settled,
relates to the claim of the workmen and ex-workmen of the third respondent.
The aspect and issue of affect of the order dated 18 th November, 2016 on the
order dated 13th November, 2014 and on merits would possibly arise and
survive for consideration if the primary or core issue - whether and if any
amount is due and payable by the third respondent to the workmen/ ex-
workmen is examined and decided. Another aspect would relate to the
forum / court that should decide this lis/ dispute. Yet another aspect relates
to the person(s) entitled to raise the lis/ dispute regarding the Katihar
property. Some of the workmen pursuant to order dated 6 th December,
2017, passed in W.P. (C) No.440/2017 have approached NCLT under the
IBC but their petitions have not been accepted and are pending or the
applications made have been rejected. The third respondent, it is apparent,
relies upon the two civil suits filed by them against 3000 workmen and ex-
workmen before the Civil Judge, Kanpur on 12th and 15th December, 2017.
On being questioned, counsel for the third respondent did not give candid
answer on whether the workmen or ex-workmen would be operational
creditors under the IBC. An ambiguous stand was taken that workmen or ex-
workmen could be classified as operational creditors provided and subject to
their claims being genuine. The question whether the workers‟ Union can
raise the claim of the ex-workmen/workmen as operational creditors under
the IBC is pending before the Supreme Court as NCLT and NCLAT have
both rejected their locus. It is, therefore, clear to us that the issue of workers'
dues etc. have to be examined in an appropriate forum. As per the third
respondent, this claim should be examined by the Labour Court/Tribunal.
Even if we accept the statement to be correct (indeed this could be a viable
solution), interim order against transfer of immovable and capital assets till
adjudication is made may be required and necessary to protect interest of the
workmen/ex-workmen.
26. On being questioned, why the capital assets and immoveable
properties of the third respondent was transferred, the candid and frank
answer of the counsel for the third respondent was that the transfers were
authorized by the management and there were no stay or interim orders in
operation on the dates when transfers were made. Given these facts, we
have to express our concern for the ex-workmen/workmen, whose claims
have not been decided and adjudicated upon. It is in this context that the
order passed by the Supreme Court on 13 th November, 2014 and the
directions given therein assume importance, for if the ex-workmen/workmen
have not been paid their dues, the transfer made by the third respondent to
the fourth respondent vide sale deed registered on 2nd July, 2014 would
require scrutiny and examination. Of course, any answer would require
consideration of the findings recorded in the contempt proceedings vide
order dated 18th November, 2016.
27. Thus, even if the ex-workmen/workmen or the Labour Union initiate
proceedings under the Industrial Disputes Act, interim protection may be
required and necessary against sale, transfer and creation of third party
interest in respect of the capital assets and immoveable properties. The
Supreme Court has already granted stay of alienation and creation of third
party interest of capital assets belonging to and owned by the third
respondent. However, the third respondent has already transferred most of
its assets to its subsidiaries and hence, protection and restraint orders are
required against the subsidiaries.
28. The statute, be it the Companies Act or the IBC, does give primacy to
the claims of ex-workmen/workmen. There is urgency and need for
determining and deciding the claim and issues raised by ex-
workmen/workmen given the fact that the third respondent has transferred
and alienated capital assets and immoveable properties to third persons and
subsidiary companies, which in turn have again transferred their assets to
third persons. There are allegations that true and full transfer considerations
have not been recorded and accounted for in the books. The allegation is
denied, albeit this issue and contention has to be examined and decided on
merits to form a firm and final opinion. This adjudication is to be made in
proceedings in accordance with law etc. At present, the question of locus
and appropriate jurisdiction/forum having jurisdiction is pending
consideration before the Supreme Court, in this writ petition, before the
NCLT and also before NCLAT. Perhaps an authoritative pronouncement
would be made in Civil Appeal No. 20978/2017 filed by M/s JK Jute Mills
Mazdoor Morcha pending before the Supreme Court.
29. The third respondent has raised allegations against the petitioner that
he is fighting a proxy and backdoor litigation on behalf of Ghanshyam
Sarda, the seventh respondent. Another issue raised relates to the locus of
the petitioner to raise the claim/prayer for and on behalf of other workers or
ex-workers. In fact, the petitioner has not pleaded and filed this writ petition
in the representative capacity. M/s. J.K. Jute Mills Mazdoor Ekta Union has
been impleaded as respondent No.8, who had earlier filed W.P.(C) No.
440/2017, has filed an application for cancellation of under valuation of sale
transactions dated 5th May, 2017 and 8th May, 2017. This Union has not
filed a writ petition though the stay order passed on 6th December, 2017 in
WP(c) No.440/2016 was not extended, possibly in view of the order dated
6th December, 2017 passed in W.P.(C) No.440/2017. It will be debatable
and doubtful whether the petitioner would be entitled to raise the issue
regarding of Katihar property in terms of the directions given by the
Supreme Court, as the petitioner was not a party to the said proceedings. As
noticed the issue and question before us relating to dues of the workers/ex-
workers raised by M/s JK Jute Mills Mazdoor Morcha is pending before the
Supreme Court in Civil Appeal No.20978/2017, wherein interim order has
been passed against the third respondent. Thus, the third respondent
contends that multiple proceedings have been initiated and are pending
before the Supreme Court, NCLAT, NCLT as well as this court. In addition,
we have two civil suits filed by the third respondent against the workers/ex-
workers and a writ petition before the Allahabad High Court on the question
of lockout. Counsel for the petitioner and Union submit that multiplicity of
proceedings as there is lack of clarity on the forum that can adjudicate is
being used as ground to delay and complicate matters. In the process
properties of the third respondent have been transferred and alienated. The
workers/ex-workers would be left without remedy and would not be able to
enforce their claims and recover the amounts due.
30. Given the aforesaid position, learned Senior Advocate appearing for
the petitioner on instructions had stated that the petitioner may be permitted
to withdraw the present writ petition so as to approach the Supreme Court.
However, the interim order passed by this Court should be continued and
extended for a period of three weeks to enable the petitioner and others to
seek appropriate orders. Counsel for the eighth respondent i.e. the Union has
stated that they would examine and take appropriate action as may be
required and necessary to protect the interest of the workmen / ex-workers
including approaching the Supreme Court in Civil Appeal No.20978/2017.
31. One of the reasons why we have narrated the aforesaid facts and given
the background is that the learned Senior counsel appearing for the third
respondent had stated that they cannot agree to extension of stay in terms of
the statement made by the counsel for the petitioner. However, learned
Senior Advocate appearing for the fourth respondent had stated that they
have no intention of transferring or alienating the Katihar property at present
and without prejudice to their rights and contentions, being the bona fide
purchasers for which they rely upon order dated 18 th November, 2016,
passed in the contempt proceedings by the Supreme Court, they would not
sell, alienate or transfer the Katihar property for a period of 21 days from 2nd
November, 2018. Learned counsel appearing for the ninth and tenth
respondents, namely, M/s. Skyscrappers Niwas Pvt. Ltd. and M/s. Kurina
Real Estate Pvt. Ltd., on instructions, has made a similar statement that they
would not transfer, sell, alienate or create any third party rights in respect of
the properties acquired from the subsidiaries or the third respondent for a
period of 21 days from 2nd November, 2018. The aforesaid statements on
behalf of the petitioner, respondent Nos.4, 9 and 10 made without prejudice
to the rights and contentions are taken on record. They would be read as
part and parcel of the present order.
32. The writ petition is disposed of in view of the statement made by the
counsel for the petitioner, who seeks permission to withdraw the present
writ petition with liberty to approach the Supreme Court. In the meanwhile,
the statements made by the counsel for the respondent Nos.4, 9 and 10
would continue to operate and apply. These respondents would abide by the
statements made for a period of twenty one (21) days from 2nd November,
2018. We are also inclined to extend the stay order restraining the
subsidiaries of the third respondent from alienating, transferring or creating
third party interests in respect of the capital assets for a period of 21 days
from 2nd November, 2018. It is also open to the eighth respondent to avail
of remedies in accordance with law. If such proceedings are initiated and all
pending proceedings would be dealt with in accordance with law,
notwithstanding any observation and finding recorded in the present order.
The third respondent, subsidiaries-respondent Nos.11 to 15, respondent
Nos.4, 9 and 10 would equally be entitled to defend or initiate proceedings
notwithstanding the present order and the observations recorded therein. Of
course, the third respondent is bound by the stay order passed by the
Supreme Court. All pending applications including application for
impleadment are disposed of. Recording the above, the present writ petition
is disposed of without any order as to costs.
(SANJIV KHANNA)
JUDGE
(CHANDER SHEKHAR)
JUDGE
NOVEMBER 12th, 2018
VKR/ssn
