NATIONAL LAW INSTITUTE UNIVERSITY, BHOPAL

Common Law in India – 1st Trimester Project

ANITA INTERNATIONAL AND ORS.

VERSUS

TUNGABADRA SUGAR WORKS MAZDOOR SANGH AND ORS.

Decided on: 04.07.2016

Hon'ble Judges/Coram: J.S. Khehar and A.K. Goel, JJ.

SUBMITTED BY: SUBMITTED TO:

AASHISH DHAKA PROF. (DR.) GHAYUR ALAM

SECTION- A

ROLL NO. – 2017BALLB15

ENROLLMENT NO. - A-1792

 An Analysis of

ANITA INTERNATIONAL AND ORS. …… APPELLANT

VS.

TUNGABADRA SUGAR WORKS MAZDOOR SANGH AND ORS.

…… RESPONDENTS

http://judis.nic.in/supremecourt/imgs1.aspx?filename=43749

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

Civil Appeal Nos. 6042-6048 Of 2011

NAME OF JUDGES: J.S. Khehar and A.K. Goel, JJ.

DECIDED ON: 04.07.2016

 TABLE OF CONTENTS

Sr. No. Particulars Page No.

1 CONCRETE FACTS
2 MATERIAL FACTS
3 QUESTIONS OF LAW AND ANSWERS TO
THESE QUESTIONS
4 CONCRETE JUDGEMENT
5 RATIO DECIDENDI
6 OBITER DICTA

CONCRETE FACTS
(i) Two company petitions were filed by Videocon International Ltd. and Tapti
Machines Pvt. Ltd., for winding up of Deve Sugars Ltd. before the High Court of
Madras. Deve Sugars Ltd. was running a sugar factory in the State of Karnataka.
Deve Sugars Ltd. was ordered to be woud up and the Official Liquidator took
possession of the assets of Deve Sugars Ltd.

(ii) State Bank of Mysore filed Company Applications, in the then pending Company
Petition, seeking leave of Company Court in High Court to pursue recovery
proceedings before Debt Recovery Tribunal (DRT).

(iii) Company Court granted leave “…subject to condition that…no coercive

steps are taken against assets of company during or after conclusion of proceedings
before Tribunal…”

(iv) After DRT, issued recovery certificate, State Bank of Mysore filed Company
Application with a prayer that bank be permitted to seek execution of recovery
certificate. Registry of High Court, at its own, returned above Company Application,
by recording an endorsement, that leave of High Court was not necessary.

(v) Recovery Officer thereafter proceeded with sale of properties of Deve Sugars Ltd.
Respondent-workers’ union of Deve Sugars Ltd., objected to execution of recovery
certificate by Recovery Officer. Official Liquidator, who was ordered to be
impleaded in recovery proceedings initiated by State Bank of Mysore also filed
objections. Objections were overruled by Recovery Officer.

(vi)Respondent-workers union, then assailed recovery proceedings, before High Court.

Videocon International Ltd. and Tapti Machines Pvt. Ltd. also filed writ petitions
before High Court.

(vii) In above writ petitions, petitioners assailed sale proceedings before Recovery
Officer. Based on a preliminary objection raised by Appellant-Anita International,
High Court relegated petitioners to their alternative remedy under RDB Act, by a
common order.

(viii) Above order was challenged through Writ Appeals before High Court. Writ
Appeals were dismissed.
(ix)Respondent-workers’ union thereafter preferred AOR No.15 of 2006 and Videocon
International Ltd. filed AOR No.1 of 2007. In both above matters, a challenged was
raised to order passed by Recovery Officer, whereby sale of properties of Deve
Sugars Ltd. to Anita International, was confirmed. Company applications were
dismissed and a challenge raised to order passed by Recovery Officer was also
dismissed by High Court.

(x) Applications filed by Official Liquidator and Ors. were considers collectively (with
Company Application Nos. 2740-2742 of 2007) and were rejected by a common
order, whereby all applicants were relegated to their remedy of appeal under RDB
Act.

(xi)A challenge raised to above order, by way of an intra-court appeal, was allowed by
High Court in impugned order, holding that proceedings before Recovery Officer,
including sale of properties of Deve Sugars Ltd. and confirmation thereof, had been
conducted in disregard of order of Company Court in High Court passed in
Company Applications, seeking leave of Company Court in High Court to pursue
recovery proceedings before DRT.

(xii) Sale and confirmation of properties of Deve Sugars Ltd. in favour of Anita
International were accordingly set aside.
 MATERIAL FACTS

(i) Two company applications were filed by two companies for winding up
of Deve Sugars Ltd. in Madras High Court.
(ii)Subsequently State Bank of Mysore filed company application for
recovery of the loan extended to Deve Sugars Ltd. before the DRT by
taking a prior permission of Company Court.
(iii) The recovery officer started the auction process of Deve Sugars
Ltd. and ultimately was sold to Anita International with a bid of 10.25
crore rupees while the base price was 10 crore rupees.
(iv) The two parent companies raised objections that the recovery
officer dealt unfairly and the evaluation at 10 crore rupees was too low.
(v) The jurisdiction of DRT was also in question because State Bank of
Mysore wanted to execute the recovery certificate given by the recovery
officer.
(vi) Ultimately the jurisdiction of Company Court and DRT were
challenged.
QUESTIONS OF LAW AND ANSWERS TO THESE QUESTIONS

(i) Whether the order passed by Company Court in High Court, was jurisdictionally
and legally impermissible, and as such, was liable to be set aside.

 No, it was not impermissible because the acts and proceeding coming in
the Company Act comes under the Company Court in the High Court.

 The Company Court has all the rights to set aside a sale of property of a
company which has not paid the dues and profident funds of the
employees of the company under section 529A of Company Act 1956.

(ii) Whether the amounts realized under the RDB Act at the instance of the appellant
can be straight away released in its favor.

 No, the amounts could not be released directly in the favor of applicants.
The benefit has to be given first to the workers of the company.
 CONCRETE JUDGEMENT

RATIO DECIDENDI OF THE CASE

(i) Once an advocate is convicted of an offence involving moral turpitude, his licence to
practice will stand suspended for a period of two years.
(ii) The averments regarding the complaints cannot be a defence for the appellant. Even
if we assume those averments about the complaints to be correct, then also, the
appellant cannot use such contemptuous language in the Court against the presiding
Judge.
(iii) The first thing to be done in that direction when a contemnor is found guilty
of a criminal contempt is to implant or infuse in his own mind real remorse about his
conduct which the court found to have amounted to contempt of court. Next step is
to seek pardon from the court concerned for what he did on the ground that he really
and genuinely repented and that he has resolved not to commit any such act in
future.
(iv)It is not enough that person tenders an apology. The apology tendered should
impress the court to be genuine and sincere. If the court, on being impressed of his
genuineness, accepts the apology then it could be said that the contemnor has purged
himself of the guilt.

OBITER DICTA
Legal profession being the most important component of justice delivery system, it must
continue to perform its significant role and regulatory mechanism and should not be seen to
be wanting in taking prompt action against any malpractice. The court has noticed the
inaction of the Bar Council of Uttar Pradesh as well as the Bar Council of India in spite of
direction of the High Court and in spite of notice to the Bar Council of India by this Court.
The court has also noticed the failure of all concerned to advert to the observations made by
the Gujarat High Court 33 years ago. In view of above, the court requested the Law
Commission of India and the Government of India to go into all relevant aspects relating to
Regulation of legal profession in consultation with all concerned at an early date.

Thus, there appears to be urgent need to review the provisions of the Advocates Act dealing
with regulatory mechanism for the legal profession and other incidental issues, in
consultation with all concerned.