M/S WRITERS AND PUBLISHER PVT. LTD. versus A. K. MISHRA, OFFICIAL LIQUIDATOR THE COOPERATIVE STORES LTD. SUPER BAZAR

Citation: [2018] 5 S.C.R. 775 · Decided: 17-05-2018 · Supreme Court of India · Bench: DIPAK MISRA · Disposal: Disposed off

Judgment (excerpt)

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M/S WRITERS AND PUBLISHER PVT. LTD.
v.
A K MISHRA, OFFICIAL LIQUIDATOR
THE COOPERATIVE STORES LTD. SUPER BAZAR
(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)
       MAY 17, 2018
[DIPAK MISRA, CJI,  A.M. KHANWILKAR AND
DR. D.Y. CHANDRACHUD, JJ.]
Multi-State Cooperative Societies Act, 2000 – Process of
revival of Super Bazar, monitored by Supreme Court – Offer made
by petitioner-WPL accepted – Official Liquidator (OL) directed to
take steps to revive Super Bazar – WPL infused funds for revival of
Super Bazar inter alia through subscriptions towards share capital
– However, the process of revival could not take place – WPL was
directed to be refunded “entire investment” made by it during the
period when the arrangement subsisted, with interest @ 6% p.a.–
In terms of the direction, Comptroller and Auditor General of India
(CAG) submitted its report – WPL filed objections thereto – Also
instituted contempt proceedings against OL – Held: In terms of the
direction, WPL is entitled to interest at 6% 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 – 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 – Further, 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
Supreme Court – Report submitted by CAG needs to be corrected
on the said counts – OL has set out the steps taken in pursuance of
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SUPREME COURT REPORTS
[2018] 5 S.C.R.
the order of Supreme Court for valuation and sale of the properties
of Super Bazar – Petition for contempt as against the OL, not
entertained.
The process of revival of Super Bazar was being monitored
by Supreme Court. Offer made by the petitioner-WPL was
accepted. The Official Liquidator (OL) was directed to take steps
to revive Super Bazar. The bid submitted by WPL stipulated that
the infusion of funds for revival of Super Bazar was inter alia
through subscriptions towards share capital. The process of
revival could not take place and it was directed that WPL be
refunded “entire investment” made by it during the period when
the arrangement subsisted, with interest at 6% p.a. In terms of
the direction to effectuate the refund, Comptroller and Auditor
General of India (CAG) verified the income and expenditure
incurred by WPL, the profits earned from the Super Bazar
establishment. CAG submitted its report to which WPL filed
objections. Contempt petition also filed by WPL against OL.
Disposing of the contempt petitions, the Court
HELD: 1.1 WPL in terms of the direction in order dated
29 March 2016 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 said mandate. It is part of the overall
investment by WPL. The order of Supreme Court envisaged an
exit for WPL. The order directed 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. [Para 12] [782-G-H]
1.2  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. 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
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be adjusted. The 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.
The report submitted by CAG needs to be corrected on the said
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.  [Paras 13,
14

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