REPORTABLE  

IN THE SUPREME COURT OF INDIA  

CIVIL ORIGINAL JURISDICTION  

 CONTEMPT PETITION (C) NOS. 1665-1666 OF 2017  

 IN    

I.A. NOS. 102-103 OF 2017    

IN    

SPECIAL LEAVE PETITION (C)NOS.8398-8399 OF 2005      

M/S WRITERS AND PUBLISHER PVT LTD     PETITIONER                                      

Versus   

A K MISHRA, OFFICIAL LIQUIDATOR   THE COOPERATIVE STORES LTD. SUPER BAZAR        .....RESPONDENT         

With    

MA Nos. 1394-1395 of 2017   In     

I.A. Nos. 102-103 of 2017   In    

SLP (C) Nos. 8398-8399 of 2005     

With   

MA Nos. 677-678 of 2018   In    

SLP (C) Nos. 8398-8399 of 2005 & I.A. No. 3664 of 2018   

2    

With   

Contempt Petition (C) Nos. 866-867 of 2018     

In    

SLP (C) Nos. 8398-8399 of 2005    

And with  

M.A. Nos. ….D.Nos. 64493 of 2018; 64494 of 2018 & 64495 of 2018  

O R D E R   

Dr D Y CHANDRACHUD, J  

1 The revival of Super Bazar was being monitored by this Court over  

several years. By an order dated 7 May 2008, this Court noted that three bidders  

were identified by the Evaluation Committee; among them being M/s Writers  

and Publisher Pvt Ltd (WPL). This Court recorded that all the Unions  

representing the workmen had agreed that the dues of the workers as on 31  

December 2007 were Rs. 54.31 crores.   

2 By an order dated 26 February 2009, this Court accepted the report of  

the Evaluation Committee which had recommended acceptance of the offer  

made by WPL. Accordingly, the Official Liquidator (OL) and the Central  

Registrar, Multi State Cooperative Societies were directed to take steps to  

revive Super Bazar. In a further order dated 13 August 2010, this Court  

observed thus :

3    

“(ii) In terms of our order dated 7th May, 2008, an amount of  

Rs.54.31 crores, being arrears of wages upto 31st  

December, 2007, was directed to be disbursed by the  

highest bidder. Rs.55 crores stands deposited by the  

highest bidder. The sum of Rs.20 crores out of Rs.55 crores  

which lies with the Registry of the Supreme Court, will be  

disbursed by the Official Liquidator and the nominee of the  

Central Registrar Co-operative Societies in the presence of  

one Union representative of each Union within four weeks  

from today. The representative of the highest bidder will also  

remain present in the said meeting. It is made clear that the  

workers will sign the receipt of payment, which will be  

adjusted towards the arrears of Rs.54.31 crores.   

(iii) As far as the balance amount is concerned, we are directing  

the highest bidder to file an affidavit containing an  

Undertaking that within a period of eight weeks, from the  

date of constitution of the Board of Directors after the  

elections, the balance amount will be disbursed to the  

workers. This will cover arrears of wages up to 31st  

December, 2007.”  

3 Subsequently, in September 2015, an IA was filed on behalf of the Union  

of India stating that neither WPL nor the management of Super Bazar had  

submitted a revival plan before the Central Registrar of Cooperative Societies.  

As a result, the Super Bazar could not be revived in accordance with the  

provisions of the Multi-State Cooperative Societies Act 2000.  

4 Faced with this situation, on 29 March 2016, a two Judge Bench of this  

Court observed that despite earnest efforts made by the Court since the  

acceptance of the bid of WPL, it was not possible to give effect to the terms of  

revival. It appears from the order of this Court that the Union of India was  

associated in the preparation of the modalities by which WPL could be released  

from the arrangement. Accordingly, this Court observed as follows :  

4    

“Despite earnest efforts made by this Court ever since the  

acceptance of the bid of M/s Writers and Publishers Ltd., and  

despite a series of hearings in the matter ever since 2009, it  

came to be realised, that it would not be possible to give effect  

to the terms of revival. It is in the above view of the matter, that  

this Court sought suggestions from the rival parties, how the  

arrangement could be terminated. It is in the above  

background, 4 that the following motion bench order came to  

be passed on 23.02.2016:   

“The bidder has suggested two alternative  

courses of action in a written note handed  

over to us in Court today. The above note is  

taken on record and marked as Annexure-

A. Mr. P.S. Narsimha, learned Additional  

Solicitor General representing the Union of  

India seeks a short adjournment so as to  

enable him to obtain instructions in the  

matter. All other parties may likewise obtain  

instructions in the matter before the next  

date of hearing. Post for hearing on  

01.03.2016.”   

On the issue, as to how and under what terms and conditions  

M/s Writers and Publishers Ltd., could be released from the  

arrangement, the parties (consequent upon mutual  

negotiations), submitted a joint statement of the Government  

of India and the bidder – M/s Writers and Publishers Ltd., dated  

03.03.2016. It seems that on re-consideration, there was a  

change of heart, at the hands of Government of India, which  

then submitted a revised joint statement dated 05.03.2016.  

Learned counsel for the rival parties have assisted this Court,  

on the manner in which M/s Writers and Publishers Ltd., should  

be released from the obligation of the instant arrangement.  

Having heard learned counsel, we are satisfied in recording,  

that M/s Writers and Publishers Ltd. should be refunded the  

entire investment made by them, along with interest at the rate  

of 6% per annum (though it was suggested, that the rate of  

interest could be at 9% per annum), subject to deduction of  

profits made during the period when the arrangement  

subsisted.”  

5 The above order of this Court dated 29 March 2016 envisages that WPL  

would be refunded its “entire investment” together with interest at 6 per cent per  

annum. However, the amount invested was to be subject to a deduction of the

5    

profits made by WPL during the period when the arrangement subsisted. Since  

WPL was to be refunded the entire investment made by it with interest, it was  

evident that the profits realised by it during the subsistence of the arrangement  

would have to be deducted.   

6 In order to give effect to the above directions, the order of this Court  

envisaged a process of verification by Controller and Auditor General of India  

(CAG). The CAG was directed to nominate an auditor to verify the income and  

expenditure incurred by WPL and the profits earned from the Super Bazar  

establishment. The determination by the auditor was required to be verified by   

CAG, upon which it would be binding upon by the parties concerned. WPL was  

directed to handover all the movable and immovable properties of Super Bazar  

to the OL.   

7 The role which was ascribed to CAG emerges from the following extract,  

from the order of this Court dated 29 March 2016 :  

“In order to effectuate the refund referred to hereinabove 5 (to  

M/s Writers and Publishers Ltd.), we consider it just and  

appropriate to direct the Comptroller and Auditor General of  

India, to nominate an Auditor, to verify the income and  

expenditure incurred by M/s Writers and Publishers Ltd., and  

also, the profits earned by it from the Super Bazar  

establishment, during the period under consideration. The  

determination so made by the Auditor, will be verified by the  

office of the Comptroller and Auditor General of India,  

whereupon, the same shall be binding on all the parties  

including M/s Writers and Publishers Ltd. Needless to mention,  

that all interested parties shall have the liberty to appear before  

the nominated Auditor, and canvass their respective claims.”

6    

8 WPL was held to be entitled to the withdrawal of an amount of Rs. 14.84  

crores deposited by it in the Registry of this Court and to a further sum of Rs.  

8.07 crores which was deposited with the Regional Commissioner, Employees’  

Provident Fund Organization (EPFO), Delhi together with  interest. The above  

amounts were to be deducted from the principal amount payable to WPL, while  

refunding the payments due.   

9 In pursuance of the directions issued in the order of this Court, CAG  

submitted its report dated 1 September 2017. WPL has filed its objections to  

the report.   

10 Certain aspects of the CAG report form the subject matter of some  

dispute. They are:   

(i) Interest at the rate of 6 per cent per annum on the share capital infused by  

WPL has been disallowed. WPL contends that this is expressly contrary to  

the order dated 29 March 2016 by which its entire investment was to be  

returned together with interest at 6 per cent. According to WPL, the entire  

investment would include the amount invested towards share capital.  

According to WPL, subscription towards share capital was only a  

methodology by which the bid amount was to be brought in and utilized to  

discharge various dues in satisfaction of the orders of this Court. On the  

other hand. The affidavit filed by CAG contains a defence of its view that  

interest should not be allowed on share capital. CAG has stated thus :  

7    

“The investment by M/s WPL was primarily in the nature of  

Share Capital, wherein share holders bear the profits and  

losses of a business. Share Holders do not get interest on their  

investment made in the form of share capital. Further, if such  

a practice is to be followed then it should be made applicable  

for other shareholders of Super Bazar too.”  

(ii) The CAG report provides that the amount payable to WPL should be  

determined after adjustment of losses incurred by Super Bazar. WPL asserts  

that this would be expressly contrary to the order of this Court dated 29  

March 2016 under which CAG was not required to adjust losses but to only  

deduct the profits which accrued in favour of WPL, while determining the  

amount refundable. There was, according to WPL, no direction for the  

adjustment of losses. Moreover, CAG, in the view of WPL, has failed to  

notice that the so called losses in Super Bazar were not due to business but  

due to : (i) an amount of Rs. 54.31 crores being paid to the workers as their  

past dues in compliance of the orders dated 7 May 2008 and 13 August 2010  

of this Court; (ii)  an amount of Rs. 31 crores being paid to the workmen  

towards three years’ salaries; and (iii) an amount of Rs. 15 crores paid  

towards arrears of property taxes, education cess and dues which had  

accrued even before possession was taken over by WPL;   

11 While dealing with these objections, we must in fairness, advert to the  

fact that in the order dated 29 March 2016, CAG was required to nominate an  

auditor to verify the income and expenditure incurred by WPL as well as the  

profits earned by it from the Super Bazar establishment during the period under

8    

consideration. This determination of the auditor was to be verified by the office  

of the CAG upon which it would be binding on all parties including WPL. In other  

words, the actual exercise required to be carried out by the auditor was to verify  

the income, expenditure and the profits earned by WPL and it was this  

determination which would, subject to verification by the CAG, be final and  

binding. CAG has, however, proceeded on the basis that WPL is not entitled to  

interest at 6 per cent per annum on share capital on the ground that a  

shareholder who participates in the profits and losses of a business is not  

entitled to interest on share capital.   

12 Now the order dated 29 March 2016 indicates that :   

“…in the bid which was submitted by M/s Writers and  

Publishers Ltd, the infusion of funds stipulated, was to the tune  

of Rs.504 crores. The break up thereof, for the revival of Super  

Bazar, was roughly as under:   

Share Capital - Rs.102 crore   

Working Capital - Rs 276 crore   

Revival and Revamping - Rs 126 crore”  

All the above elements including share capital and working capital were part of  

the infusion of funds contemplated for the revival of Super Bazar. Eventually,  

when the process of revival could not take place, this Court formulated  

directions for the exit of WPL. After due deliberation by all the parties, including  

the Union government, this Court observed that WPL “should be refunded the  

entire investment made by them along with interest at the rate of 6 per cent per

9    

annum..subject to deduction of profits made during the period when the  

arrangement subsisted”. WPL in terms of the aforesaid direction is entitled to  

interest at 6 per cent on the entire investment made by it. Investment brought  

in by way of share capital, did fall within the above mandate. It is part of the  

overall investment by WPL. The order of this Court envisages an exit for WPL.  

The order directs that there be a deduction of profits made, since WPL was  

being compensated by way of interest on its investment. Consequently,  it would  

be impermissible to deny WPL the benefit of interest on its entire investment  

inclusive of share capital.   

13 We are also of the view that the adjustment of losses incurred in Super  

Bazar and their deduction from the amount to be refunded to WPL is contrary  

to the mandate of the order dated 29 March 2016. CAG was only required to  

deduct the profits which had accrued in favour of  WPL while determining the  

amount refundable to it. In its affidavit, CAG has proceeded on the general  

consideration that the term ‘profit’ represents a revenue earned from business  

activity exceeding the expenses/costs and that a loss is “vice versa”. What this  

ignores however are the specific terms of the directions issued by this Court   

which envisage that it was the profits earned by WPL from the Super Bazar  

establishment which were to be deducted. Once WPL was allowed a return on  

its investment, the profits which it earned were required to be deducted. This  

part of the direction does not contemplate that losses which accrued over the  

period were to be adjusted. We have also noted the submission of WPL that the

10    

loss accrued not as a result of the business as such but due to payments which  

were required to be made to the workmen in pursuance of the directions issued  

by this Court.   

14 We are accordingly of the view that the report submitted by CAG needs  

to be corrected on the above counts namely;   

(i) Denial of interest at 6 per cent on the entire investment of WPL including   

by way of share capital; and  

(ii) Adjustment of losses;     

as explained earlier.  

15 WPL has instituted Contempt proceedings against the OL. In the reply  

filed by the OL, it has been stated that the determination of the income and  

expenditure of WPL and the profits earned form the Super Bazar establishment  

was to be carried out by the auditor nominated by CAG which was to be  

thereafter verified by CAG. The OL has submitted that in these circumstances,  

it would be inappropriate to contend that he has violated any part of the  

directions of this Court. In pursuance of the order of this Court, the Director  

General of Audit nominated M/s SPMG for conducting an audit of the accounts  

of Super Bazar. Time for the completion of the audit was extended by this Court  

on 21 November 2016 and 27 April 2017. The OL has also set out the steps  

which have been taken in pursuance of the order of this Court for valuation and  

sale of the properties of Super Bazar. Having regard to the contents of the said

11    

affidavit, we are not inclined to entertain the Petition for Contempt as against  

the OL.   

16 However, we direct that all concerned shall now act in pursuance of the  

observations contained in this order and the interpretation placed on the earlier  

directions dated 29 March 2016.   

17 The Contempt Petition (Civil) Nos 1665-1666 of 2017 in I.A. Nos. 102-

103 of 2017 in Special Leave Petition (Civil) 8398-8399 of 2005 are accordingly  

disposed of.              

                      ……….......................................CJI  [DIPAK MISRA]  

……..…..........................................J   [A.M. KHANWILKAR]  

                                                               …..….…..........................................J                                                                           [Dr D Y  CHANDRACHUD]    New Delhi;  May 17, 2018.