Supreme Court recalls order for Super Bazar revival scheme: Super Bazar Karamchari Dalit Sangh vs. Union of India (26 September 2018)

Date of the Judgment: 26 September 2018
Citation: Not Available
Judges: Dipak Misra, CJI, A.M. Khanwilkar, J, Dr. Dhananjaya Y. Chandrachud, J. The judgment was authored by Dr. Dhananjaya Y. Chandrachud, J.

Can a court recall its own order? The Supreme Court of India recently addressed this question in the context of a long-standing dispute regarding the revival of Super Bazar, a Multi-State Cooperative Society. The Court decided to recall its previous order, citing that all the facts were not presented before it in the previous hearing. This decision highlights the importance of ensuring that all relevant information is available to the court before a final determination is made.

Case Background

The case revolves around Super Bazar, a Multi-State Cooperative Society that faced significant financial difficulties due to mismanagement. This led to an inability to pay its employees’ wages, pensions, and other benefits, as well as meet its obligations to other stakeholders. On 5 July 2002, the Central Registrar of Co-operative Societies ordered Super Bazar to be liquidated. This order was challenged by the Employees’ Union in the Delhi High Court, eventually reaching the Supreme Court through Special Leave Petitions.

To protect the interests of all stakeholders, the Supreme Court formed a three-member committee to devise a revival scheme. The committee recommended M/s Writers & Publishers Pvt. Ltd. (WPL) to manage Super Bazar. On 26 February 2009, the Court accepted this recommendation. WPL’s bid included a proposed investment of Rs. 504 crores, allocated for share capital, working capital, and revival efforts.

The revival scheme aimed to avoid the winding up of Super Bazar. By 7 May 2008, all the workers’ unions agreed that the outstanding dues to workers amounted to Rs. 54.31 crores as of 31 December 2007. On 14 July 2009, WPL took over the administration of Super Bazar.

On 13 August 2010, the Supreme Court ordered the disbursement of Rs. 20 crores out of the Rs. 55 crores deposited by WPL, to be used for arrears of wages up to 31 December 2007. The remaining amount was to be disbursed after the constitution of the Board of Directors. WPL re-employed Super Bazar employees for three years, starting in October 2009. However, in September 2015, the Union of India stated that neither WPL nor Super Bazar’s management had submitted a revival plan to the Central Registrar of Cooperative Societies, thus hindering the revival process.

Timeline:

Course of Proceedings

On 29 March 2016, the Supreme Court noted that the revival plan had failed and sought suggestions for terminating the arrangement with WPL. The Court ordered a refund of WPL’s investment with 6% interest, minus any profits made, after verification by an auditor nominated by the Comptroller and Auditor General of India (CAG). The CAG’s determination was to be binding on all parties. WPL was also directed to hand over all Super Bazar’s properties to the Official Liquidator.

The CAG submitted its report on 1 September 2017, which WPL objected to. The Court extended the time for the Official Liquidator to settle WPL’s dues and directed the sale of Super Bazar’s properties to facilitate the refund.

WPL initiated contempt proceedings against the Official Liquidator for not refunding the full amount with interest. On 17 May 2018, the Court accepted two of WPL’s objections to the CAG report: that WPL was entitled to 6% interest on the entire investment and that losses not related to business operations should not be deducted. The Official Liquidator then released Rs. 35 crores to WPL on 18 May 2018.

However, on 20 May 2018, the Department of Consumer Affairs, Government of India, prohibited any further payments to WPL, stating that the matter was under review. The Official Liquidator then informed WPL that no further payments could be made.

Legal Framework

The judgment primarily deals with the procedural aspects of the case and the powers of the Supreme Court to recall its own order. The core issue is not based on any specific legal provision but on the principles of natural justice and the need for a fair hearing. The Multi-State Cooperative Societies Act, 2002, is mentioned as the governing act for the revival of Super Bazar, but no specific section is discussed in the judgment.

Arguments

The arguments presented before the Supreme Court can be categorized as follows:

• WPL’s Arguments:
  • WPL argued that it had invested a large sum of money in Super Bazar’s revival, which was not successful.
  • WPL contended that it was entitled to a refund of its entire investment with 6% interest, after deducting any profits made during its management.
  • WPL submitted that the transfer of money between different accounts of Super Bazar was done to take advantage of higher interest rates.
  • WPL also argued that the properties were in a dilapidated condition and needed renovation and restoration.
  • WPL argued that it had to obtain permission from various statutory authorities to operate Super Bazar.
• Union of India’s Arguments:
  • The Union of India argued that the CAG report was not presented to the Court in a fair and proper manner.
  • The Union of India contended that the contempt petition filed by WPL was not maintainable.
  • The Union of India raised objections to the non-joinder of necessary parties such as the CAG and the Central Government in the contempt petition.
  • The Union of India stated that the former Official Liquidator instructed the counsel representing Super Bazar not to appear in court, preventing the full facts from being presented.
  • The Union of India submitted that the former Official Liquidator issued a cheque to WPL for Rs. 35 crores after his term had expired.
  • The Union of India argued that the amount claimed as loss by WPL was ineligible and not supported by documentary proof.
• Creditors Welfare Association’s Arguments:
  • The association argued that Super Bazar owed them Rs. 25 crores for goods supplied.
  • The association contended that the Central Registrar did not provide an opportunity to be heard to all interested parties.
• Employees of Super Bazar’s Arguments:
  • The employees contended that they were not paid their arrears of wages and other benefits.
  • The employees argued that WPL carried out amendments to the bye-laws of the society, ousting old shareholders in contravention of the Multi-State Cooperative Societies Act 2002.

Submissions Table

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a separate section. However, the primary issue that emerges from the judgment is:

1. Whether the order dated 17 May 2018, should be recalled due to the non-presentation of full facts and the absence of key stakeholders during the proceedings.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues:

Authorities

The judgment does not explicitly rely on specific case laws or legal provisions. The Court’s decision is primarily based on the principles of natural justice, the need for a fair hearing, and the Court’s inherent power to recall its own orders when necessary to prevent a miscarriage of justice.

The judgment mentions the Multi-State Cooperative Societies Act, 2002, but does not cite any specific section of the Act. The Court also refers to the CAG report, which highlighted irregularities in the accounts of Super Bazar during WPL’s management.

Judgment

The Supreme Court recalled its order dated 17 May 2018, citing that the full facts were not presented to the Court during the earlier proceedings. The Court noted that the former Official Liquidator had instructed the counsel representing Super Bazar not to appear, which prevented the Court from being fully informed. The Court also considered the objections raised by the Union of India, which were not presented in the earlier proceedings.

The Court emphasized that the interests of various stakeholders, including employees, creditors, and the public, were involved. It held that a full hearing was necessary to determine the dues to WPL and to ensure that justice was served.

The Court also noted the irregularities pointed out by the CAG report, which needed careful scrutiny. The Court stated that it was its duty to prevent a miscarriage of justice and to set down proceedings for a fresh hearing.

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• Multi-State Cooperative Societies Act, 2002: The Court acknowledged the relevance of the Act but did not make any specific observation about any specific section.
• CAG Report: The Court relied on the CAG report to highlight irregularities in the accounts of Super Bazar during WPL’s management.

What weighed in the mind of the Court?

The Court was primarily concerned with ensuring that all relevant facts were presented before it and that all stakeholders were given a fair opportunity to be heard. The Court was also concerned about the irregularities highlighted in the CAG report and the conduct of the former Official Liquidator.

The Court’s decision to recall its previous order was driven by the need to prevent a miscarriage of justice. The Court emphasized that it was its duty to ensure that the interests of all stakeholders were protected and that the proceedings were conducted fairly.

Fact:Law

Logical Reasoning

The Court considered the alternative interpretation that the order of 17 May 2018 should stand. However, it rejected this interpretation because it found that the order was passed without all the relevant facts and without the participation of key stakeholders. The Court reasoned that allowing the order to stand would lead to a miscarriage of justice.

The Supreme Court decided to recall its order dated 17 May 2018, stating, “In such a situation, it is the duty of the Court to prevent a miscarriage of justice and to set down proceedings for hearing afresh on the basis of the position as it obtained before the passing of the order dated 17 May 2018.” The Court also noted, “We are satisfied from the material on record that vital interests of all stakeholders are involved and that a full perspective of the matter was not presented to the court as a result of the written instructions given by the earlier Official Liquidator to the Counsel not to appear.” and further stated, “In our view, the interests of justice require that a full hearing be given to the Union of India, the CAG, the present Official Liquidator and to WPL as well before a final determination is made of what, if any amount is due to WPL.”

The Court’s decision was unanimous, with all three judges concurring. There were no dissenting opinions.

The implications of this decision are that the matter will now be heard afresh, with all stakeholders having the opportunity to present their case. The Court’s decision also highlights the importance of transparency and fairness in judicial proceedings.

The Court did not introduce any new doctrines or legal principles. The decision was based on the established principles of natural justice and the Court’s inherent power to recall its own orders.

Key Takeaways

• The Supreme Court can recall its own orders if it finds that the orders were passed without all the relevant facts being presented.
• It is essential to ensure that all stakeholders are given a fair opportunity to be heard in judicial proceedings.
• The conduct of officials involved in the proceedings must be transparent and in the interest of justice.
• The Court will prioritize the prevention of a miscarriage of justice over the finality of its orders.

Directions

The Supreme Court directed that the matter be heard afresh, with all stakeholders having the opportunity to present their case. The Court also dismissed the contempt petitions filed by WPL.

Development of Law

The ratio decidendi of the case is that the Supreme Court has the power to recall its own orders if it finds that the orders were passed without all the relevant facts being presented and without the participation of key stakeholders. This decision reinforces the principle of natural justice and the need for a fair hearing. There is no change in the previous positions of law.

Conclusion

The Supreme Court’s decision to recall its order dated 17 May 2018, in the Super Bazar case underscores the judiciary’s commitment to fairness and transparency. By acknowledging the procedural lapses and the absence of key stakeholders in the earlier proceedings, the Court has prioritized the principles of natural justice. This decision ensures that all parties involved, including the Union of India, the CAG, the Official Liquidator, WPL, employees, and creditors, will have a fair opportunity to present their case. The matter will now be heard afresh, setting a precedent for the importance of complete disclosure and inclusivity in judicial proceedings.

Category

Parent Category: Civil Law
Child Category: Super Bazar Revival Scheme
Child Category: Recall of Orders
Parent Category: Supreme Court of India
Child Category: Inherent Powers of Supreme Court

FAQ

Q: What was the main issue in the Super Bazar case?
A: The main issue was whether the Supreme Court should recall its previous order regarding the revival of Super Bazar, given that all relevant facts were not presented in the earlier proceedings.

Q: Why did the Supreme Court recall its previous order?
A: The Supreme Court recalled its previous order because it found that the former Official Liquidator had prevented the full facts from being presented to the Court by instructing the counsel representing Super Bazar not to appear, and key stakeholders like the Union of India were not heard.

Q: What is the significance of the CAG report in this case?
A: The CAG report highlighted irregularities in the accounts of Super Bazar during WPL’s management, which the Court found needed careful scrutiny.

Q: What happens now that the order has been recalled?
A: The matter will now be heard afresh, with all stakeholders having the opportunity to present their case before the Supreme Court.

Q: What does this case teach us about the Supreme Court’s powers?
A: This case demonstrates that the Supreme Court has the power to recall its own orders to prevent a miscarriage of justice and ensure that all parties have a fair hearing.

Q: What are the implications of this judgment for future cases?
A: This judgment reinforces the importance of transparency and fairness in judicial proceedings and highlights the judiciary’s commitment to ensuring that all relevant facts are considered before a final determination is made.