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Bhartiya Mazdoor Sangh, Uttar Pradesh and Another v. The State of Uttar Pradesh & Others

Contempt Petition · 2026 INSC 364Decided 15 Apr 2026
W.P.(C) No.-000392-000392 - 2015 (with Contempt Petition (Civil) Diary No. 61491 of 2025)
Justice Rajesh Bindal · Justice Vijay Bishnoi

Background

Jaipur Udyog Ltd. (JUL), which ran a cement factory at Sawai Madhopur, Rajasthan, and a jute mill at Kanpur, was declared a "sick industry" by the BIFR in 1987. A rehabilitation scheme was sanctioned in 1992 under which Gannon Dunkerley & Co. Ltd. (GDCL) took over management, but GDCL repeatedly failed to implement the scheme or pay the workmen's dues over more than three decades, while the units remained shut and litigation bounced between the BIFR, AAIFR, the Rajasthan High Court and this Court. Various labour unions (including the petitioner Bhartiya Mazdoor Sangh) sought payment of wages and dues owed to the workmen and enforcement of an arbitral award on those dues rendered by a retired judge appointed by the Supreme Court, while a connected contempt petition alleged that GDCL and JUL's management had violated the Court's earlier orders, including by improperly selling company assets.

Decision Breakdown

After reviewing the decades-long history, including GDCL's conduct, its unauthorised changes to a subsidiary's shareholding, its sale of scrap and mill assets without Court permission, and its financial status. The Supreme Court invoked its powers under Article 142 of the Constitution to bring the long-pending litigation to a comprehensive close rather than let it continue indefinitely. It directed that the workmen's outstanding dues be calculated and paid; ordered an inventory and valuation of JUL's and its subsidiary JAIL's remaining assets, to be sold as needed to fund those dues and reimburse GDCL's legitimate contributions; set aside GDCL's unauthorised sale of scrap from the Sawai Madhopur unit (while leaving its earlier sale of the Kanpur Jute Mill and other JAIL properties undisturbed); rejected takeover proposals from two prospective investors (M/s Frost Realty LLP and M/s Dickey Asset Management) as premature without a proper asset valuation, ordering refund of their deposited amounts; and gave directions on houses/flats occupied by former workers. The Court appointed a retired High Court Chief Justice as a Court Administrator to oversee compliance, valuation, and disbursement, and disposed of the writ petition and the connected contempt petition, with a compliance report due within six months.

Lesson Learnt

Where a company's insolvency/rehabilitation proceedings drag on for decades leaving workers unpaid, the Supreme Court can use its Article 142 powers to cut through the procedural deadlock directly (ordering asset valuation, sale, and distribution to workers under court-supervised administration) rather than leaving the matter to indefinitely churn through regulatory and appellate forums.

Official source (sci.gov.in)View Judgment (PDF)

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