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M/S Writers and Publishers Pvt. Ltd. v. Dr. A.K. Mishra, Official Liquidator

Contempt Petition (Civil) · 2020 INSC 283Decided 5 Mar 2020
Contempt Petition (Civil) Nos. 1665-1666 of 2017
Dr. Justice D.Y. Chandrachud · Justice Ajay Rastogi

Background

Super Bazar, a well-known multi-state consumer cooperative society, was ordered wound up in 2002 after financial collapse. In 2009, following a Supreme Court-supervised bidding process, Writers and Publishers Pvt. Ltd. (WPL) won the right to revive Super Bazar by committing to invest Rs. 504 crore. After years of WPL's management failing to achieve the promised revival, the Supreme Court in 2016 directed that WPL exit and be refunded its investment with 6% interest, subject to deduction of profits earned, the final figure to be verified by the Comptroller and Auditor General (CAG). WPL then filed contempt petitions claiming it was owed about Rs. 142 crore, far more than what the CAG's audit computed.

Decision Breakdown

The Supreme Court held that the CAG's verified computation (just Rs. 3.39 crore payable to WPL, after deducting recoverable amounts and losses) was binding and could not be reopened. The audit revealed that WPL had never genuinely tried to revive Super Bazar: it manipulated the cooperative's membership to seize 98.89% of the share capital, entered into unauthorized deals handing over store operations to third parties in breach of its commitments, stripped the Connaught Place building of its fixtures, and recorded large transactions that were sham book entries. The Court ruled that WPL's refund claim must go through the Official Liquidator and be paid according to the statutory order of priority under the Multi-State Co-operative Societies Act (with Provident Fund dues to workers ranking ahead of WPL's claim). The contempt petitions were dismissed and all pending applications disposed of.

Lesson Learnt

A party permitted to take over a failing enterprise under court supervision cannot later demand repayment on its own terms: its conduct and accounts remain subject to independent audit, and any refund must respect the statutory priority of other creditors (such as employees' provident fund dues) rather than being paid first just because a court earlier ordered an exit.

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

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