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 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 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] [783-A, C, D-E]
1.3 The OL has also set out the steps which have been taken in pursuance of the order of Supreme Court for valuation and sale of the properties of Super Bazar. Having regard to the contents of the said affidavit, the petition for Contempt as against the OL is not being entertained. [Para 15] [783-G-H]
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
This page is for informational and research purposes only and does not constitute legal advice. Consult a qualified advocate for advice specific to your situation.