As per case facts, Jaipur Udyog Ltd. (JUL) was declared a sick industry, and a rehabilitation scheme submitted by Gannon Dunkerley & Co. Ltd. (GDCL) was sanctioned but failed. BIFR ...
2026 INSC 364 1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL ORIGINAL JURISDICTION
WRIT PETITION (CIVIL) NO. 392 OF 2015
BHARTIYA MAZDOOR SANGH, U.P. & ANR. …Petitioner (s)
VERSUS
STATE OF U.P. & OTHERS … Respondent(s)
With
Contempt Petition (Civil) Diary No.61491 of 2025
J U D G M E N T
INDEX
Sl. No. Particulars Page
No.
Para No.
01 BRIEF FACTS 4-6 1 - 3.1
02 ARGUMENTS
Arguments on behalf of different
Labour Unions
6-17 4-32
Arguments on behalf of Noticee
No.3
17-18 33-35
Arguments on behalf of Noticee
Nos.1,2,4,6 to 9
18-20 36-42
2
Arguments by applicants
(i) I.A. No. 174033 of 2024
(ii) I.A.Nos. 19952/2026
and 19965/2026
21-25 43-53
Response of GDCL/JUL 25-42 54-96
Rejoinder by Petitioners and
Applicants
42-44 97-103
03 DISCUSSIONS
List of Dates and Events 45-53 104-105
Rehabilitation Scheme submitted
by GDCL (SS-92)
53 106
Contributions made by GDCL 54-57 107-110
Regarding JAIL 57-60 111-116
Regarding Financial Status of
GDCL
61-62 117-121
Conduct of GDCL 63-70 122-138
Sale of assets of JUL by GDCL 71-74 139-145
Present Status 74-79 146-152
Houses/Flats constructed by
GDCL in occupation of the
workers/employees
79-80 153-154
Regarding applications filed by
proposed investors
(i) Application by M/s
Frost Reality LLP
(ii) Application by M/s
Dickey Asset
Management Private
Limited
80-83 155-159.1
3
Offer of GDCL 84 160
Analysis of Offers 84-85 161-163.1
Credit to Applicants 85 164
Invocation of power of this Court
under Article 142
85-87 165-167
Legitimate expectation 87-89 168-169
Regarding abatement of
proceedings
89-94 170-176
Status of Share Allotment in JAIL
and JUL
94 177
Calculation of dues of workers 95-96 178-183
Status of winding up 96-98 184-189
Future course of action for the
assets of JUL and JAIL
98-99 190-195
04 RELIEFS
Regarding dues of the workmen 100 196-196.1
Houses/ Flats i n possession of
workers
100 - 101 196.2
Assets of JUL and JAIL 101 196.3
Sale of Properties of JUL a nd JAIL 101 -102 196.4
Sale of assets by GDCL 102 196.5 -196.6
Company Petition No. 21 of 2001
pending in Rajasthan High Court
103 196.7
Regarding applications filed by
M/s Frost Reality LLP and M/s
Dickey Asset Management
Private Limited
103 197
Court Administrator 103-105 198-199
4
BRIEF FACTS
1. The case in hand has a checkered history.
2. A writ petition was filed in this Court praying for the
following reliefs:
(a) For a writ of mandamus or order or direction to the
Respondents to forthwith pay the wages and dues of
the workmen of the M/s Jaipur Udyog Ltd. and its units
including M/s Kanpur Jute Udyog.
(b) For a writ of mandamus or order or direction to the
Respondents to forthwith implement the Award dated
05.12.2008 passed by Justice N.N. Mathur (Retd.) in
favour of the workmen.
(c) For a writ of mandamus or order or direction to
declare the date on which the Company was declared
sick under SICA as the cut-off date for the purpose of
implementation of award passed by Justice N.N.
Mathur (Retd.).
(d) For a writ of mandamus or order or direction to BIFR to
sell the properties of the Company and recover the
dues payable to the workmen and disburse the same
to the workmen.
(e) For an order or direction to pay costs of this petition to
the petitioners.
(f) For any other order or direction that this Hon’ble Court
may deem fit and appropriate in the interest of justice.
5
3. On 24.08.2016 a statement had been made at the Bar that
there are some other unions that were not represented in the present
writ petition. This Court, therefore, directed that notice be issued to all
such unions, the names/details of which would be furnished by
respondent nos.5 and 6. Vide order dated 25.08.2017, the respondent
Nos.5 and 6 furnished list of nine trade Unions, which are listed
hereinbelow and treated as Noticee Nos.1 to 9:
(1) Bhartiya Cement Majdoor Sangh, Shaka- Phallodi
Quarry, Rajasthan
(2) Jaipur Udyog Officer Union, Sawai Madhopur,
Rajasthan
(3) Cement Work Karamchari Sangh, Sawai Madhopur,
Rajasthan
(4) Sarvadaliya Samrik Sangharsh Samiti, Sawai
Madhopur, Rajasthan
(5) Kanpur Jute Udyog Trade Union Sanyukta Morcha,
Kanpur, U.P.
(6) Bhartiya Mazdoor Sangh, Kanpur, U.P.
(7) Bhartiya Mazdur Sangh, Sawai Madhopur, Rajasthan
(8) The Jaipur Udyog Works Karamchari Sangh, Sawai
Madhopur, Rajasthan
(9) Jaipur Udyog Staff Association, Sawai Madhopur,
Rajasthan
6
3.1 Contempt Petition (Civil) Diary No.61491 of 2025 has been
filed raising a plea of violation of orders passed by this Court by
Gannon Dunkerley & Co. Ltd.
1
and for initiating proceedings for
contempt against the Director of Jaipur Udyog Ltd.
2
and Managing
Director of GDCL.
ARGUMENTS
ARGUMENTS ON BEHALF OF DIFFERENT LABOUR UNIONS
4. Taking us through the historical background of the case in
hand, Mr. Nikhil Goel, learned senior counsel for the Noticee No.
6/Bhartiya Mazdoor Sangh (petitioner No.1 herein), submitted that JUL
had set up a cement factory at Sawai Madhopur, Rajasthan. In the year
1967, it acquired a jute mill at Kanpur. JUL was declared a ‘sick
industry’ vide order dated 17.09.1987 passed by BIFR
3 under Section
3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985
4.
5. On 21.04.1992, a rehabilitation scheme submitted by GDCL
was sanctioned by BIFR. JUL was to be reconstituted as a going
concern under the scheme. Inter alia, sale of the assets was permitted
only to the extent those were surplus or some scrap. The sale proceeds
1
M/s Gannon Dunkerley & Co. Ltd. (For short, ‘GDCL’)
2
Jaipur Udyog Ltd. (for short, ‘JUL’)
3
Board for Industrial and Financial Reconstruction (For short, ‘BIFR’)
4
The Sick Industrial Companies (Special Provisions) Act, 1985 (For short, ‘SICA’)
7
were to be utilized for renovation of the plant. Otherwise, GDCL was
to infuse its own funds. There were a lot of waivers/concessions given
by the banks and other financial institutions. In addition to that, there
were other conditions also laid down in the scheme.
6. On 19.09.1994, it was found by the BIFR that the proposal
submitted by GDCL could not be implemented. It called for fresh
proposals. With the aforesaid order, the 1992 scheme, sanctioned by
the BIFR, had gone into eclipse as BIFR passed an order calling for fresh
proposals. This order was challenged by GDCL before AAIFR
5 by
filing Appeal No.179/1994.
7. Referring to the conduct of the GDCL, it was submitted that
despite GDCL having no right in the management of the JUL, it had
changed the shareholding pattern of M/s Jai Agro Industries Ltd.
6
which otherwise was a subsidiary of JUL. It was without any permission
from the BIFR. Its shareholding pattern was changed by issuing fresh
shares to the sister concerns of GDCL. Strange enough that despite JAIL
being a subsidiary of JUL, it was not even part of the rehabilitation
scheme.
5
Appellate Authority for Industrial and Financial Reconstruction (for short, ‘AAIFR’)
6
M/s Jai Agro Industries Ltd. (for short, ‘JAIL’)
8
8. Vide order dated 24.11.2000, BIFR directed JUL to be wound
up, finding that the company was declared sick about 13 years back on
17.09.1987. Even otherwise, the order of winding up of JUL was found
to be in public interest.
9. In appeal
7 filed by JUL challenging the aforesaid order
passed by the BIFR, initially AAIFR granted stay, however, finally the
appeal was dismissed on 06.09.2001. The order specifically recorded
that GDCL had refused to argue the appeal on merits. It was further
recorded in the order that the total liability of JUL was exceeding ₹ 100
crores and there was no possibility of its rehabilitation.
10. In a writ petition
8 filed by the JUL before the Rajasthan High
Court, vide order dated 02.08.2004, the High Court set aside the order
dated 06.09.2001 passed by the AAIFR and the matter was remitted
back for fresh consideration.
11. Challenging the aforesaid order, one of the labour union
being Cement Works Karamchari Sangh filed SLP(C) No.4088 of 2005
before this Court, inter -alia, claiming that the dues of the workmen still
remained unpaid. Pending the aforesaid SLP before this Court, two of
the unions entered into a settlement with JUL, which at the relevant
7
Appeal No.22/2001
8
S.B. Civil Writ Petition No. 4380 of 2001
9
point of time was being managed by GDCL, though
unauthorizedly. On 04.12.2006, this Court permitted the settlement
without prejudice to the rights and contentions of the parties.
12. On 10.04.2007, this Court appointed Justice N.N. Mathur, a
Retired Judge of Rajasthan High Court, to calculate dues of different
categories of workmen.
13. On 24.03.2008, the aforesaid petition was converted into
Civil Appeal No.2076 of 2008 and was disposed of with two sets of
directions.
9
13.1 Firstly, Appeal No.22 of 2001 was restored to AAIFR on
conditions of deposit of ₹ 10 crores. Liberty was given to the AAIFR to
consider a fresh scheme at the instance of GDCL and also the
workmen.
13.2 Secondly, the status of appointment of Justice N.N. Mathur
(Retd.) was converted into an Arbitrator under Section 10-B added in
the Industrial Disputes Act, 1947, vide local amendment made in the
State of Rajasthan vide Act No.34 of 1958, w.e.f. 01.07.1960.
14. It was submitted that, up to this stage, the order passed by
BIFR recommending winding up of JUL was existing and further GDCL
did not have any locus, as initial order passed in its favour for
9
Cement Workers Karamchari Sangh V. Jaipur Udyog Ltd., 2008 INSC 390; (2008)4 SCC 701
10
rehabilitation of JUL had lost significance with the passing of winding
up order on 24.11.2000.
15. On 06.06.2008, on pre-deposit as directed by this Court, the
appeal filed by GDCL/JUL before AAIFR was restored. Fresh schemes
were submitted by the workers as well as by GDCL. At that stage M/s
Shree Cements Ltd.
10 filed application (M.A.No.185 of 2008 in Appeal
No.22 of 2001) for impleadment before AAIFR, seeking permission to
submit an independent scheme for rehabilitation. The application was
dismissed by the AAIFR vide order dated 17.07.2008.
16. Vide order dated 29.08.2008, passed in W.P.(C) No.5878 of
2008 Delhi High Court directed AAIFR to consider the scheme
submitted by SCL. The same was challenged by GDCL before this
Court by filing S.L.P.(C) No.22719 of 2008 (C.A. No.2937 of
2012). Finally, the order passed by Delhi High Court was set aside by
this Court on 24.08.2016.
17. On 05.12.2008, Justice N.N. Mathur (Retd.) passed his award
thereby deciding the principles on the basis of which the dues of the
workman were to be calculated. It was further directed therein that
AAIFR/BIFR will decide the modalities.
10
M/s. Shree Cements Ltd. (for short, ‘SCL’)
11
18. As the workmen had not been paid for more than last two
decades, the present writ petition was filed in this Court seeking
implementation of the award of Justice N.N. Mathur (Retd.) with further
directions.
19. Taking us through the facts regarding the locus of GDCL to
deal with the properties of JUL, it was submitted that on 01.12.2016
SICA was repealed. As a result, AAIFR/BIFR were abolished. All
proceedings pending before them stood abated. At that stage, the
appeal filed by JUL was pending before the AAIFR. At this very stage,
the Insolvency and Bankruptcy Code, 2016
11 was enacted. An
opportunity was afforded to those companies, whose proceedings
were pending before AAIFR or BIFR to move appropriate application
before NCLT
12 within 180 days. The fact remains that in the case in
hand JUL did not prefer any application in terms of provisions of
IBC. As a consequence, the order passed by the BIFR recommending
winding up of JUL, attained finality subject to its approval by the High
Court.
20. Again, referring to the conduct of GDCL, learned senior
counsel submitted that despite no right vested in it, GDCL, transferred
11
Insolvency and Bankruptcy Code, 2016 (for short, ‘IBC’)
12
National Company Law Tribunal (for short, ‘NCLT’)
12
the entire shareholding of the JUL to its associate companies in the year
2017-18. This is reflected in its Annual Returns. On objections raised
by various lenders, GDCL did not have any choice but to revert back
to the old shareholding pattern.
21. As BIFR only had competence to recommend winding up of
a company and it was subject to approval by the High Court. The
matter was registered with Rajasthan High Court as Company Petition
No.21 of 2001. As per the records of the High Court, the matter was last
taken up on 04.08.2020, wherein the High Court adjourned the same
sine die, since the matter between the parties was pending before this
Court.
22. During the pendency of the present writ petition before this
Court, a settlement was arrived at between the workmen of Kanpur Jute
Unit along with JUL and GDCL. In terms of that settlement, the workmen
were to receive ₹ 48.74 crores towards the claim of 1334 workmen out
of a total of 3535 workers. The amount was to be paid by GDCL. It is
despite the fact that GDCL did not have any right, either to settle on
behalf of JUL or offer to pay wages to the workmen. However, nearly 7
years later, till date, even that amount has not been paid. Though it is
claimed by GDCL that amount was deposited with this Court, however,
it was submitted that ₹ 20 crores out of that was by selling the scrap of
13
JUL. Hence, the amount was not deposited out of its own funds by
GDCL. It was further submitted that in the memorandum of settlement,
it was wrongly re corded that the management of the JUL was
transferred in favour of GDCL as per the rehabilitation scheme
sanctioned by BIFR on 21.04.1992. It was further referred to, from the
aforesaid settlement that, neither any timeline was mentioned for
payment nor the sources from which funds will be arranged to pay to
the workmen. In fact, it was an eye-wash. Kanpur Jute Unit was sold to
fulfil the demand of the workmen, however, without permission of the
court.
23. Vide order dated 29.07.2019 this Court accepted the
settlement dated 26.02.2019 entered into between the Union of Kanpur
Jute Unit and JUL. However, the manner in which the settlement was
recorded and also the locus of GDCL to enter into that settlement needs
to be adjudicated upon. GDCL was treating itself as the self- styled
owner of JUL.
24. This Court vide order dated 21.08.2018 appointed Justice
Aftab Alam (Retd.), a former judge of this Court, as Mediator to
facilitate quantification of the dues of workmen after fixation of the cut-
off date. Justice Aftab Alam (Retd.) had initially submitted a report
14
dated 31.03.2019 laying down the principles for calculation of dues of
workers of Sawai Madhopur unit and Phallodi Quarry.
24.1 On 31.01.2021, Justice Aftab Alam (Retd.) submitted his final
report computing outstanding amount due to the workers at the Sawai
Madhopur plant to be around ₹115 crores plus interest @5% per
annum from the cut-off date fixed, i.e. 31.12.2008. It was in addition to
the amount of provident fund to be received from the Employees
Provident Fund Organization. The report categorically recorded the
stand of GDCL before the Mediator that if this amount is directed to be
paid it would suffer liquidation proceedings as GDCL was in dire
financial stress as its accounts had been declared Non-Performing
Assets (NPA).
25. In fact, the accounts of GDCL were subsequently declared
NPA as is evident from its B alance Sheet for the year 2022-23.
26. On 29.08.2023, the Company acknowledged liability of ₹98
crores towards wages, gratuity and leave encashment of the workers
of the Rajasthan Unit till the cutoff date of 31.12.2008, though the
petitioner-Union contested this figure claiming the amount due to be
around ₹115 crores plus interest and Provident Fund. Regarding the
Kanpur Unit Settlement approved on 29.07.2019, only 512 out of 1334
employees have been paid from the total ₹ 48 crores due, leaving
15
approximately ₹22 crores unpaid as 521 employees remained
unidentified.
27. As GDCL was not able to clear the dues of the workmen of
Cement Unit they arranged for an investor who is ready to revive the
company and also pay dues to the workmen. I.A.No.170433/2024 was
filed with the proposed scheme by M/s Frost Realty LLP.
28. On 23.08.2024, this Court was informed that GDCL had sold
the properties of JUL without seeking permission of the Court. These
alleged sales included three Sale Deeds executed by JUL and JAIL,
involving properties in Kanpur, Sawai Madhopur, and Jodhpur. The
sales included a ₹ 51 Crore transaction for sale of Kanpur Jute Unit (June
2024), a ₹ 21 Crore transaction (April 2021), and a ₹ 2.84 Crore
transaction (September 2022) for sale of properties of JAIL. All sale
transactions were undervalued. The sales were made by GDCL to
overcome its financial difficulties. This Court restrained GDCL and JUL
from further alienating any assets, except scrap, which was permitted
by this Court. Further direction was issued for deposit of ₹51 crore from
the Kanpur sale proceeds with the Registry within two weeks. The
respondents at that time claimed the other properties belonged to JAIL,
which was no longer a subsidiary of JUL. However, they were unable to
clarify its shareholding status at the time the sales were executed. This
16
court, therefore, directed GDCL to file affidavit disclosing the status of
the shareholding pattern of JAIL as on 01.04.1992.
29. In compliance to the order dated 19.09.2024, GDCL filed
affidavit dated 23.08.2024 in this Court. It is evident therefrom that the
shareholding pattern of JAIL was changed with issuance of fresh shares
to the associates of GDCL. This was done without any right available
with GDCL.
30. It was further submitted that there is no final adjudication of
rights in favour of GDCL and all proceedings are taking place in terms
of the orders passed by this Court. All the settlements took place
during the pendency of the present petition. At this stage, the revival
of the unit is impossible for the reason that the land pertaining to the
mining area for Sawai Madhopur Cement Unit now falls in notified
forest area.
31. In the aforesaid factual matrix and summing up the
arguments, learned senior counsel submitted that while
recommending winding up vide order dated 24.11.2000 BIFR recalled
its 1992 scheme. Thereafter, GDCL did not have any authority to deal
with the properties of JUL. No doubt, appeal against the aforesaid
order was pending before AAIFR, however, with the repeal of SICA the
appeal got abated. There was no fresh filing within the time permitted
17
before the National Company Law Tribunal (NCLT), under the IBC. The
position, as it stands today, is that, on recommendation made by BIFR
for winding up of JUL, the Company Petition No.21 of 2001, is still
pending before the High Court of Judicature at Rajasthan, for its
approval.
32. If it comes to sale of assets, only the best available scheme
should be examined by this Court to take care of the dues of the
workmen and also for their welfare. As on today there are multiple
applications pending before this Court proposing different schemes
for rehabilitation of the unit or payment to the workmen, etc. The
Scheme submitted by M/s Frost Reality is the best.
ARGUMENTS ON BEHALF OF NOTICEE NO.3
33. Mr. Colin Gonsalves, learned senior counsel appearing for
Noticee No.3 (Cement Work Karamchari Sangh) submitted that the present writ petition was filed for payment of dues to the workmen. Substantial amount stands paid. If the balance amount is
cleared in terms of the award by Justice Aftab Alam (Retd.), they do not
have any concern with the company. All false promises are being
made by different applicants. If the prayer in the writ petition is seen, it
is for payment of wages only.
18
34. The submission is that as far as Kanpur Jute Unit is
concerned, the settlement was for 1334 workmen. Out of which 938
have been paid and the balance remain . The amount due to them, to
the tune of ₹ 8.75 crores is lying deposited in this Court.
35. As far as Sawai Madhopur Unit is concerned, there were
3585 workers, out of which he represents a group of about 2000. Justice
Aftab Alam’s (Retd.) report calculated ₹ 115 crores as the amount due
to them, plus interest and the provident fund. ₹146 crores are lying
deposited in this Court. Another sum of ₹150 crores will be required
to clear the arrears of wages, provident fund plus interest thereon, for
which verification is in progress. JUL presently has assets of about
₹2000 crores. Adequate money being available, the workers are
interested only in settlement of their dues as the amount was
determined long back as the unit is lying closed since 1987. They
should be paid some interest on account of delayed payment.
ARGUMENTS ON BEHALF OF NOTICEE NOS. 1, 2, 4, 6 to 9
36. Mr. Gopal Sahankarnarayana, learned senior counsel
appearing for Noticee Nos.1, 2, 4, 6 to 9, submitted that the workmen of Sawai Madhopur Unit have not been paid anything till date. GDCL
could not take control of JUL as there is no effective order passed in its
favour by any competent authority or court. It was merely acting as a
19
trustee, but even that trust has been shattered . There was no authority
vested in GDCL either to change the shareholding pattern of JUL or its
subsidiary, or to sell its assets but GDCL had blatantly misused the trust
posed in it.
37. Firstly, it had changed the shareholding pattern of JAIL, a
subsidiary of JUL, by diluting shareholding of JUL in JAIL from 99.9% to
33%. It was done by issuance of new shares to its sister concerns. He
further referred to the judgment of this Court in Cement Workers
Karamchari Sangh’s case (supra) to submit that while noticing certain
facts therein, one more opportunity was granted to GDCL as well as the
workers including interveners to submit fresh rehabilitation scheme
before AAIFR, subject to deposit of ₹ 10 crores.
38. Without clearing dues of the workmen and seeking
permission of this Court, in 2017 GDCL transferred the entire
shareholding of JUL to its associates. However, when it was pointed
out, the same had to be reversed. This shows the conduct of GDCL. He
further referred to the report dated 31.01.2021 submitted by Justice
Aftab Alam (Retd.) wherein it is categorically recorded that GDCL
refrained from mediation process on the plea that it does not have the
ability to pay the employees their dues and if the computation is too
high, it may push the company to liquidation.
20
39. The sale of assets of JAIL was for a consideration lower than
the market price. In fact, in a clandestine manner, GDCL wanted to
square off its own liabilities by selling the assets of JUL without any
input from its own sources. Moreover, all sale transactions were made
without permission of the Court.
40. Another glaring fact pointed out by Mr. Sankarnarayana,
learned senior counsel, was that in the s ale deed dated 14.09.2022 vide
which agricultural land of JAIL was sold for a sum of ₹ 2.84 crores
witness is Shankar Lal Meena, who is the authorized signatory of
Noticee No. 3. The connivance of GDCL with the workers of Noticee
No. 3 is thus evident.
41. It was further submitted that the scheme initially approved,
was for revival of the unit, however, nothing was done. The assets of
the Kanpur Jute Unit were sold by GDCL. In the garb of sale of scrap,
even the machinery of Sawai Madhopur Unit was sold. In fact, it is from
such sale proceeds only that the dues are being paid to the workmen.
42. As the dues of the workmen have not been paid despite
decades having gone by, they have got investor to take over the unit
and square off the dues of the workers. In his opinion, the offer by M/s
Frost Reality LLP seems to be best, which has offered payment and in
21
addition a 50 sq. yard plot at Sawai Madhopur besides ₹1,00,000/- each
to Kanpur Jute Unit workers.
ARGUMENTS BY APPLICANTS
I.A. No. 174033/2024
43. Mr. Krishnan Venugopal, learned senior counsel appearing
for M/s Frost Realty, a Limited Liability Partnership (LLP), submitted that his client has given a proposal for rehabilitation of the unit in association with Bhartiya Cement Mazdoor Sangh, who is Noticee No.1
before this Court. Vide order dated 29.10.2025 passed by this Court,
M/s Frost Realty LLP was allowed to intervene. While referring to the
judgment of this Court in Cement Workers Karamchari Sangh’s case (supra), it was submitted that this Court, while remanding the appeal
back to AAIFR, allowed any of the parties therein to submit proposals for rehabilitation. The aforesaid order was further clarified in a
subsequent order passed by this Court on 24.08.2016 wherein it was
held that scheme could be filed only by the parties before this Court.
44. It was further submitted that vide order dated 09.08.2024,
this Court had directed M/s Frost Realty LLP to deposit a sum of ₹ 25
crores to show his bona fide. The needful was done.
22
45. Further argument is that Bhartiya Cement Mazdoor Sangh
represents about 3500 workmen. Its rehabilitation scheme was
endorsed by six other noticees. Memorandum of Understanding
entered into on 06.08.2024 between (1) M/s Frost Realty LLP and
Bhartiya Cement Mazdoor Sangh (Noticee No.1) and (2) M/s Frost
Realty LLP and (i) Sarvadaliya Shramik Sangharsh Samiti Cement
Factory (ii) Jaipur Udyog Officer Union (iii) Bhartiya Mazdoor Sangh,
Kanpur (iv) Bhartiya Mazdur Sangh, Swaimadopur (v) The Jaipur Udyog
Works Karamchari Sangh (vi) Jaipur Udyog Staff Association has also
been referred to.
46. He has also referred to a list of the properties sold by GDCL
without permission from this Court. These properties belong to JAIL,
Kanpur Jute Unit of JUL and the entire machinery of the cement plant at
Sawai Madhopur in the garb of scrap. In fact, the entire contribution
by GDCL either for deposit of any amount before this Court or payment
of dues to the workmen, was from the sale proceeds of the assets of JUL
for which GDCL did not have any right.
47. Further, the contention raised is that GDCL was, at the most,
custodian of the properties of JUL. The same could not be sold by
it. Vide order dated 12.07.2018, Rajasthan High Court had even
appointed the provisional liquidator in pursuance to the
23
recommendations made by BIFR for winding up of JUL, in which only
final order was to follow. However, vide subsequent order dated
28.05.2019, in an application filed by GDCL, operation of the earlier
order passed by the High Court on 12.07.2018, was stayed.
48. The argument is that, either the Court or AAIFR/BIFR was de
jure controlling JUL, which was under liquidation. However, the assets
were under physical control of GDCL, without there being any right
vested in it. Any property sold by GDCL is void and has to be declared
so, without even issuing notice to the subsequent buyers. The buyers
cannot be allowed to raise the plea of bona fide purchaser as they were
required to do due diligence. In support of his argument reliance was
placed upon the judgments of this Court in Kanhaiyalal v. Dr. D. R.
Banaji & Ors.,
13 NGEF Ltd. vs. Chandra Developers (P) Ltd.
14 and
Raheja Universal Limited Vs. NRC Limited and Ors.
15
49. He further referred to the scheme prepared by M/s Frost
Realty LLP. In terms of which subject to certain conditions, namely,
setting aside of sale of Kanpur Jute Unit, others properties of JUL and
JAIL, M/s Frost Realty LLP will pay ₹ 233.69 crores, due to the workmen,
13
1958 INSC 32; 1958 SCC OnLine SC 149
14
2005 INSC 459; (2005) 8 SCC 219
15
2012 INSC 77; (2012) 4 SCC 148
24
allot plots measuring 50 sq. yards at Sawai Madhopur to all the
workmen, refund the entire money, if any, deposited by GDCL from its
own resources besides other small benefits for the workmen.
50. On a query by the Court, as to the properties owned by JUL
and JAIL, reference was made to the list submitted by GDCL. However,
nothing was pointed out to show the list of properties, owned by JUL
and JAIL, as on the date, the rehabilitation scheme was prepared and
approved initially.
I.A.Nos. 19952/2026 and 19965/2026
51. Mr. Vikas Singh, learned senior counsel appearing for the
applicants in I.A. Nos. 19952 and 19965/2026 filed by the workmen/The Jaipur Udyog Limited Shramik Sangathan, submitted that the aforesaid application has been filed by 129 workmen, out of total 546 workmen
identified by the Court Commissioner, for payment of arrears of their wages and other dues. Along with them, 348 legal representatives of
the workmen, who had expired, have also joined the proceedings. He
supported the proposal of rehabilitation as submitted by M/s Dickey
Asset Management Private Limited (applicant in I.A. Nos. 43384 and 43386/2026). He further submitted that to determine siphoning of the
assets of JUL and JAIL by GDCL, without there being any right vested
25
in it, forensic audit will be required. It is to find out which of the
properties were sold, misappropriated or were transferred with
under-valuation.
52. It was further submitted that there was no contribution by
GDCL. The amount due to the workmen was not paid. Whenever it was
paid, the same was after sale of properties of JUL and JAIL. Because of
the pendency of the present petition, even the winding up proceedings
were also stalled. Even till today, some of the workmen have not been
paid. This writ petition was filed by the workmen after waiting for
decades for payment of their dues.
53. The interlocutory applications, bearing I.A. No(s). 43385
and 43388/2026 have been filed by the applicant/M/s Dickey Asset
Management Private Limited. No proposal was annexed for which time
was sought. Further, direction wa s sought to review the proposal
submitted by other bidders. An offer was made to deposit a sum of ₹ 25
crores with this Court, as was directed to be done in the case of M/s
Frost Realty LLP, to show its bona fide.
RESPONSE OF GDCL/JUL
54. In response, Mr. Dhruv Mehta, learned senior counsel for
the GDCL, submitted that from the arguments raised by learned
26
counsel for the petitioners and the applicants, mainly three issues may
arise (1) payment of entire dues to the workmen; (2) the right of GDCL
to deal with the properties of JUL and JAIL; and (3) the status of the
properties/assets of JUL and JAIL sold during the pendency of the
litigation.
55. Taking us through the historical background, it was
submitted that JUL was declared a sick company under the SICA on
17.09.1987 by BIFR. Industrial Reconstruction Bank of India (IRBI)
(which was later on renamed as ‘Industrial Investment Bank of India”
(IIBI)) was appointed as the operating agency to examine the viability
and preparation of the scheme for rehabilitation of JUL.
56. On 30.01.1989, BIFR formed a prima facie opinion that JUL
should be wound up. However, the recommendation for the purpose
was vague. On 12.06.1989, in an appeal preferred against the
aforesaid order, AAIFR directed the operating agency/IRBI
to furnish
fresh scheme. On 23.08.1990 GDCL submitted a proposal for taking
over and revival of JUL.
57. On 21.04.1992 BIFR sanctioned the scheme. The workers
preferred appeals against the aforesaid order. Vide order dated
13.04.1993, AAIFR approved the scheme of GDCL. On 20.10.1993
27
AAIFR directed GDCL to deposit ₹ 3.035 crores by 10.11.1993. The
condition was complied with by GDCL.
58. On 19.09.1994, BIFR called for fresh proposals as the earlier
rehabilitation scheme could not be implemented. The aforesaid order
was challenged by GDCL before AAIFR. On 30.09.1994 operation of
the order dated 19.09.1994 passed by the BIFR was stayed. In the
aforesaid appeal, AAIFR passed an order on 11.11.1994 directing
transfer of the management of JUL to GDCL. As a consequence, the
rehabilitation scheme submitted by the GDCL was revived.
Thereafter, ₹2 crores were deposited by the GDCL in November and
December 1994 making it a total deposit of ₹ 5.035 crores. On
31.01.1995, another sum of ₹ 1 crore were deposited by GDCL in the
JUL Revival Scheme Account.
59. On account of a notification dated 30.11.1984 issued by the
Forest Department of the State of Rajasthan stopping mining operation
in the area with JUL for the purpose manufacture of cement and also on
account of labour unrest, the Rajasthan unit had to be closed.
60. As the revival scheme could not be implemented, on
12.07.2000 BIFR issued show cause notice for winding up of JUL.
Subsequent thereto, on 31.08.2000 BIFR issued notice under Section
20(1) of SICA for winding up of JUL. Vide order dated 24.11.2000, BIFR
28
recommended winding up of JUL for consideration by Rajasthan High
Court.
61. The aforesaid order was challenged by JUL by filing Appeal
No. 22/2001 before the AAIFR, on behalf of which, GDCL being
appellant/promoter appeared. On 04.01.2001 AAIFR stayed operation
of the order dated 24.11.2000 passed by the BIFR recommending
winding up of JUL. On 03.08.2001, AAIFR directed GDCL to deposit ₹ 10
crores. The aforesaid order was challenged by GDCL before the
Rajasthan High Court by filing SB C.W. No.4380 of 2001.
62. On 06.09.2001 the appeal preferred by GDCL before AAIFR
was dismissed. The aforesaid writ petition was disposed of by
Rajasthan High Court on 02.08.2004 while setting aside the order
passed by the AAIFR and remitting the case back to AAIFR for decision
afresh.
63. On 29.01.2005, the aforesaid order passed by the Rajasthan
High Court was challenged by Cement Work Karamchari Sangh
(Noticee No.3) before this Court by filing SLP(C) No.4088 of 2005
raising the issue of non-payment of dues to the workmen.
64. During the pendency of the aforesaid petition before this
Court, a settlement was arrived at between the workmen working in
29
the Kanpur Jute unit and also the Cement Division in Rajasthan with JUL,
and GDCL on 28.06.2006. Vide order dated 04.12.2006, this Court
approved the aforesaid settlement.
65. In the aforesaid petition on 10.04.2007, this Court appointed
Justice N.N. Mathur, a Retired Judge of the Rajasthan High Court, to
determine the wages and other lawful dues payable to different
categories of workmen.
66. Vide order dated 24.03.2008, this Court disposed of SLP (C)
No.4088 of 2005 (C.A. No.2076 of 2008), by converting the appointment
of Justice N.N. Mathur (Retd.) into an Arbitrator under Section 10-B of
the Industrial Disputes Act, 1947 as amended in the State of Rajasthan.
67. On 16.05.2008, JUL deposited ₹ 10 crores. In the
proceedings pending before the AAIFR after remand by the Rajasthan
High Court, SCL filed an application for impleadment. The same was
dismissed vide order dated 17.07.2008. The aforesaid order was
challenged by SCL before Delhi High Court by filing W.P.(C) No.5878
of 2008. The same was disposed of by Delhi High Court by directing
AAIFR to consider the scheme of SCL as well. The aforesaid order was
challenged by GDCL before this Court by filing SLP(C)No.22719 of
2008 wherein this Court vide order dated 22.09.2008 stayed further
proceedings before the AAIFR.
30
67.1 This Court vide order dated 24.08.2016 passed in
SLP(C)No.22719 of 2008, set aside the order of the High Court and held
that SCL's rehabilitation scheme could not be considered since the
order of this court in Cement Workers Karamchari Sangh’s case
(supra) was meant to give all parties an opportunity to file their
rehabilitation schemes. As SCL was never a party before AAIFR, it was
not entitled to propose any rehabilitation scheme.
68. Justice N.N. Mathur (Retd.) passed his award on 05.12.2008.
In his Award, Justice N.N. Mathur (Retd.) had only determined the
principles on the basis of which the workmen were to be entitled to
receive their wages and even the percentage thereof. Actual
quantification was not done as the cut-off date was yet to be fixed.
69. From the aforesaid award, Mr. Dhruv Mehta, learned senior
counsel appearing for GDCL, referred to the arguments raised by
GDCL before Justice N.N. Mathur (Retd.) and also the conduct of the
workmen, noticed by him, who did not allow the unit to function.
70. As the wages of the workmen could not be quantified on
account of stay of proceedings before AAIFR by this Court vide order
dated 22.09.2008 passed in SLP(C)No.22719 of 2008, Bhartiya Mazdoor
Sangh filed the present writ petition in this Court in July 2015. Prayer
was for implementation of the 2008 Justice N.N. Mathur’s (Retd.) award
31
as no payment had been made till that date. It was specifically pleaded
by the writ petitioners that the GDCL be directed to pay the amount,
pointing to the fact that the learned Arbitrator had observed that GDCL
was responsible for withholding the dues of the workmen. As per the
arbitrator, such dues amounted to ₹ 1,241 lacs and it would be just and
fair to pay the aforesaid amount instead of ₹ 6 lacs, as per the settlement
arrived at in the year 2006, since the same would be grossly
inadequate.
71. Vide order dated 23.11.2015, this Court directed the parties
to submit calculation of the amount due to be payable to the workmen
on the basis of Justice N.N. Mathur’s (Retd.) award. On 07.12.2015, this
Court directed respondent Nos.5 and 6 to file list of workmen who
would be entitled to receive the awarded amount.
72. With effect from 01.12.2016, Sick Industrial Companies
(Special Provisions) Act, 1985 was repealed. It was replaced by the
IBC. On 24.08.2016 this Court had taken up the present writ petition
and C.A. No.3927 of 2012 together. Vide the aforesaid order passed in
the aforesaid writ petition, GDCL was directed to deposit ₹ 35 crores
with the Registry of this Court for payment to the
workmen/beneficiaries. Notice was directed to be issued to various
unions.
32
73. Vide order dated 21.08.2018, to make an effort to resolve
the pending dispute of payment of wages of the workmen, this Court
appointed Justice Aftab Alam, a former Judge of this Court as mediator
for quantification of the dues. All along, the effort of GDCL was to clear
the dues of the workmen. It had not shirked its responsibility towards
that. Besides initial contributions, GDCL had deposited ₹35 crores with
this Court on 01.10.2016. Thereafter, the process of verification of
claim of the workmen started, with appointment of retired District
Judges for the purpose.
74. On 31.03.2019, Justice Aftab Alam (Retd.) submitted his
report specifying the principles for calculating the dues of workers in
the Sawai Madhopur and Phallodi Quarry units. This report fixed
December 31, 2008, as the cut- off date for the cessation of employment
and mandated that simple interest @5% per annum be applied to all
dues from that date until payment is actually made. Crucially, the
Mediator reaffirmed that any amount previously disbursed to workmen
under the 2006 Settlement shall be adjusted and deducted, ensuring
that only the net outstanding dues are paid.
75. Vide order dated 29.07.2019, this Court accepted the
settlement arrived at between GDCL and the workmen of Kanpur Jute
Mill. The amount deposited with this Court was paid to them.
33
76. On 31.01.2021, Justice Aftab Alam (Retd.) had given his
second report. The learned Mediator accepted the computations
aggregating to approximately ₹ 115 crores (excluding interest and
Provident Fund). He further recommended for payment of simple
interest @5% per annum from the cut-off date (December 31, 2008)
until the date of actual payment. For the provident fund dues, he
recommended the same to be handled by the PF Department under the
Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
16,
which workers deemed to have contributed from 1987 to 2008. Finally,
the learned Mediator Court suggested that this Court may appoint a
retired Judge of the Rajasthan High Court to oversee the disbursement
of payments.
77. Vide order dated 28.09.2021, this Court directed GDCL to
calculate the amount as per the proposed settlement. In the order
passed by this Court on 29.08.2023, it is reflected that for Rajasthan
Unit, GDCL accepted that the amount payable is around ₹ 98 crores,
whereas unions claimed that as per their calculation the amount would
be about ₹ 115 crores plus interest and provident fund.
16
For short “EPF and MP Act 1952
34
78. Vide this Court’s order dated 29.08.2023, GDCL was
permitted to sell scrap lying in Sawai Madhopur Unit as the factory was
lying closed for decades.
79. Referring to the applications filed by M/s. Frost Realty LLP,
it was argued that a new dimension was given to the simple writ petition
filed for payment of wages. A new rehabilitation scheme was sought to
be proposed.
80. Vide order dated 09.08.2024, this Court directed GDCL to
deposit ₹100 crores with the Registry of this Court in two installments.
To see the bona fide of M/s Frost Realty LLP, even it was also directed
to deposit ₹ 25 crores with this Court.
81. Before that, the properties of JUL at Kanpur were sold by
GDCL without seeking permission of the Court. For that, Mr. Dhruv
Mehta, learned senior counsel for the GDCL, submitted that it was an
error, for which an apology was tendered.
82. Vide order dated 23.08.2024, this Court directed GDCL to
deposit the entire sale consideration of ₹ 51 crores received from sale
of Kanpur unit, with this Court.
83. Responding to the arguments raised by learned senior
counsel for the petitioner and the applicants regarding the assets of
35
JAIL, Mr. Mehta submitted that, for the last two decades no issue was
raised with reference to the assets of JAIL or the shareholding pattern
thereof. The issue cannot be permitted to be raised at this late stage.
For the purpose of allotment of new shares of JAIL proper procedure
under the Companies Act was followed. It was a sick unit. Money was
required to be infused to put it on rails.
84. As far as the assets of JUL is concerned, he submitted that
the record being very old, whatever is available with GDCL has been
placed on record. He referred to a communication dated 24.09.2003
sent by JUL to the State Bank of India, New Delhi wherein it enumerated
the details of title deeds of properties returned after the loans were
repaid. JUL being sick, its entire properties were under mortgage. It
was further submitted that more than 1600 flats/quarters in the cement
unit of JUL at Sawai Madhopur are still in occupation of the erstwhile
employees, their family members or they may have been sold or
transferred to third parties illegally.
85. To sum up his arguments on this issue, it was contended that
JUL cannot claim right on any of the property of JAIL even if it was its
subsidiary. The rights of a shareholder in a limited company, which is
a separate legal entity, are distinct. In support of the arguments,
36
reliance was placed upon judgment of this Court in Vodafone
International Holdings BV v. Union of India
17.
85.1 He further submitted that GDCL has not committed any
illegality. At the most, there may be some irregularities, which can be
condoned by this Court. The management of the company was
transferred to GDCL by an order passed by AAIFR. Ever since then,
GDCL has taken care of it. It has cleared the dues of all creditors and
as of today, no dues are pending. It is a fact that the recommendations
made by BIFR for winding up of JUL has not yet been accepted by the
Rajasthan High Court. Nothing is to be paid to any of the creditors. The
winding up of JUL should not be ordered. As far as dues of the
workmen is concerned, sufficient amount deposited by the GDCL is
lying with this Court.
86. GDCL has been making huge investments in JUL ever since
it submitted its rehabilitation plan. Initially the workers did not allow
the unit to function. Thereafter, the mining area was notified as
protected forest/sanctuary. Further, on account of an application filed
by SCL, substantial time was wasted.
17
2012 INSC 45; (2012) 6 SCC 613
37
87. To the argument raised by the learned senior counsel for
the petitioner/applicants regarding repealing of SICA and abatement
of the proceedings before AAIFR, it was not denied that after repeal,
JUL/GDCL had not taken any steps which were required. However,
that should not be taken as a fatal blow to the efforts made by GDCL all
along. It all happened during pendency of the present proceedings.
88. Challenging the locus of the applicants it was argued that it
is a lis between the workers, JUL and GDCL and no intervener can step
in. The petitioners and applicants are estopped by their conduct to
raise all the issues, which are now sought to be raised, when substantial
dues of the workmen have been paid and for the balance, the amount
is lying deposited with this Court.
88.1 The workers cannot be permitted to approbate and
reprobate. Initially, the writ was filed only for getting the wages. Now
after the same has reached at the fag end, proposals of rehabilitation
are being submitted. Considering the present scenario there is no
possibility of rehabilitation. The Kanpur Jute Mill had already been
sold. The Cement unit at Rajasthan cannot function as there is neither
mining lease nor any limestone available.
88.2 The action of the petitioner is also barred by doctrine of
election. All along, they have been treating GDCL as the relevant
38
party. The workers had been entering into settlement with it. GDCL
was even permitted to represent JUL. Monies were being deposited
by it and being released to the workmen. It is too late now to take a
summersault and raise an argument that GDCL does not have any
locus. In support of the aforesaid arguments, reliance was placed upon
judgments of this Court in Tata Iron & Steel Co. Ltd. v. Union of
India,
18 and Bank of India v. O.P. Swarnakar
19.
89. The limited role, which the new applicant/intervener can
play, is to assist the court and not claim any relief for itself. However,
in the applications filed by M/s Frost Realty LLP and M/s Dickey Asset
Management Private Limited, substantial relief has been claimed by
them, which is not permissible. In support of the arguments, reliance
was placed on the judgment of this Court in Collector v. Raja Ram
Jaiswal.
20
90. Even if JUL had been declared sick, that would not
automatically take away the status of JAIL, which was a subsidiary of
JUL and an independent company. It will not go into liquidation
18
2000 INSC 560; (2001) 2 SCC 41
19
2002 INSC 547; (2003) 2 SCC 721
20
1985 INSC 109; (1985) 3 SCC 1
39
automatically. Hence, the issue regarding JAIL cannot be dragged into
the present litigation.
91. It was further submitted that JAIL, though a subsidiary, was
never before BIFR or part of the scheme. Issue regarding JAIL cropped
up only when M/s Frost Realty LLP came into picture. It was in the
business of farming. GDCL had to infuse new equity therein as there
were liabilities to be cleared. The prayer is for permitting GDCL to
continue with its scheme and treat the same as approved.
92. He further submitted that GDCL has also submitted a revival
scheme to use the assets of JUL for execution of some plans. The revival
scheme proposes significant job creation and other benefits. The plan
details establishment of five distinct operational units:
● Unit I (Concrete Sleeper Plant): A state -of-the-art facility to
support railway infrastructure and provide technical skill
development for the local workforce.
● Unit II (ISO Container Complex): An integrated complex for
manufacturing shipping containers to bolster regional logistics
and export supply chains.
● Unit III (Agri-Logistics): A 10,000 MT Cold Storage Facility
designed to assist local farmers by reducing post-harvest losses
and improving market access.
40
● Unit IV (Renewable Energy): A 34 MW Solar Power Plant
featuring a Battery Energy Storage System (BESS) for clean
energy and industrial sustainability.
● Unit V (Hospitality): A 100 -key Luxury Hotel intended to tap into
Sawai Madhopur's tourism potential and support ancillary
services like transport and local crafts.
93. To the issue raised by the petitioner regarding Non
Performing Assets shown in the balance sheet of GDCL for the year
2022-23, it was submitted that the same stands cleared. GDCL is a
running concern having projects worth ₹ 2500 crores in hand.
94. To the proposal submitted by M/s Frost Realty LLP, it was
submitted that it is a limited liability partnership, which was constituted
only about two months prior to submission of the offer. It has no
background or source of funds. The offer submitted by it is conditional.
It does not have any locus. Such offers deserve to be rejected at the
threshold. M/s Frost Realty LLP is showing itself to be a representative
of some workers which, in fact, is a new union formed just on
11.06.2024.
95. With reference to an application filed by the M/s Dickey
Asset Management Private Limited, it was submitted that the applicant
herein is a paratrooper who has just filed the application in the matter
41
at the fag end of the litigation. It is claimed to be supported by a small
section of workmen whose credentials are yet to be proved. Even
otherwise, the Dickey Asset Management Private Limited does not
have any locus to enter into this litigation. No third party has been
invited to submit offers. The prayers made in the application go well
beyond the scope of the writ petition. The same accordingly deserves
to be rejected.
96. Dr. Abhishek Manu Singhvi, learned senior counsel
appearing for respondent Nos.5/JUL and 6/GDCL, in addition to the
arguments addressed by Mr. Dhruv Mehta, learned senior counsel,
submitted that the scope of a simple writ petition filed for release of
wages, has been expanded. It is being done by some vested interests
in the name of the labour but not for their welfare. When the issue is at
the fag end of settlement, new entities have jumped in to derail the
efforts. It is a fit case in which this Court should exercise its power
under Article 142 of the Constitution of India to give it a quietus. In case
there are any technicalities, this Court can iron out the creases. There
is no question of considering any of the schemes sought to be projected
by the applicants. If allowed, the process will be endless as there may
be offers and counter offers with some objections raised by either of
the parties. GDCL had infused about ₹266 crores in JUL to keep it alive
42
and pay its liabilities. Even if there was no formal infusion of equity,
the amount was paid by GDCL to square off the debts. Even the amount
due to the workmen is being regularly paid after verification. No assets
owned by JAIL can be treated as part of JUL, even if the holding
company goes, the subsidiary can still survive. Reference was made to
the judgment of this Court in BRS Ventures Investments Ltd. v. SREI
Infrastructure Finance Ltd.
21
REJOINDER BY PETITIONERS AND APPLICANTS
97. In response, Mr. Nikhil Goel, learned senior counsel
appearing for the Noticee No.6/Bhartiya Mazdoor Sangh, submitted that it is a fight between investors, which may go on. In case any revival scheme is considered, equal treatment should be given to the workmen of both the units, even if the dues of workmen of Kanpur Unit
were settled.
98. He supported the scheme submitted by M/s Frost Realty
LLP. He further submitted that the order passed by BIFR on 24.11.2000
became final as appeal against that order filed before AAIFR abated.
GDCL was merely a caretaker and cannot possibly claim its ownership.
The Kanpur properties were sold illegally. The same should be
21
2024 INSC 548; (2025) 1 SCC 456
43
restored to JUL. Similar is the position with regard to the shareholding
and properties of JAIL. In a clandestine manner, shareholding of JUL
was changed in the year 2017 and when pointed out, the same was
reversed in the year 2019. The workers could point out the same, only
when they came to know about it.
99. Mr. Colin Gonsalves, learned senior counsel appearing for
Noticee No.3 (Cement Work Karamchari Sangh), submitted that, in
addition to what he had argued initially, the workers also need to be
paid their provident fund dues and also the interest on account of
delayed payments. Verification of dues of a large number of workmen
is still pending. The same should be carried out without any delay.
100. Mr. Krishnan Venugopal, learned senior counsel appearing
for M/s Frost Realty LLP, submitted that after reference was registered,
BIFR had the control of the company. Reliance was placed upon
judgment of this Court in Ghanshyam Sarda v. Shiv Shankar Trading
Co..
22
GDCL was only given the management. It did not mean that it
could sell assets belonging to either JUL or JAIL, which is its subsidiary.
No part of the scheme can be relied upon for the purpose, as the same
was never approved. To show the financial worth of GDCL, it was
22
2014 INSC 775; (2015) 1 SCC 298
44
submitted that this company itself is sick. Bids were invited to sell off
the debts of GDCL running into about ₹ 1600 crores. This happens only
when a borrower is not able to serve its debts. Hence, it does not have
funds to execute the projects as proposed. As is the past conduct of
GDCL, it will only sell off the assets to cure its sickness.
101. To the applications filed by M/s Dickey Asset Management
Private Limited, it was submitted that the same has been filed by a small
group of workers, whose credentials are seriously doubtful.
102. Mr. Vikas Singh, learned senior counsel appearing for the
Jaipur Udyog Limited Shramik Sangathan/workmen in I.A. No(s). 19952
and 19965/2026, submitted that M/s Frost Realty LLP does not have any
credentials or past experience whereas M/s Dickey Asset
Management Private Limited has substantial experience in revival of
sick units. No payments were made by GDCL at the initial stage. Rather
it was quite at late stage, that too, after selling off the assets. GDCL was
only given the management and in that capacity it had been
representing JUL. Revised scheme has been filed in the Court, which
is said to be unconditional.
103. Mr. Balbir Singh, learned senior counsel appearing for M/s
Dickey Asset Management Private Limited (applicant in I.A. Nos. 43384
and 43386/2026), submitted that a new unconditional scheme has been
45
given. He again reiterated the stand that GDCL is in financial trouble
now, hence, short of funds to implement any scheme. No equities flow
in favour of GDCL. It cannot take the plea of estoppel.
DISCUSSIONS
104. Heard learned counsel for the parties, applicants in various
applications and perused the relevant referred record.
LIST OF DATES AND EVENTS
105. Before we proceed and discuss various facets of the
arguments raised by the learned counsel, we wish to add a brief synopsis of the case, as the same would help in appreciating the arguments raised by the learned counsels.
Date Details
17.09.1987 An application was filed by JUL before
BIFR, which was registered as Case No.17
of 1987. JUL was declared a sick industry
under Section 3 (1)(o) of SICA.
26.09.1987 Industrial Reconstruction Bank of India
(IRBI) was appointed as the operating
agency.
30.01.1989 BIFR prima facie formed an opinion that
JUL should be wound up.
12.06.1989 In appeal preferred against the aforesaid
order passed by the BIFR, the appellate
authority (AAIFR) directed the operating
agency to furnish a fresh scheme.
23.08.1990 GDCL submitted a proposal for taking
over and reviving JUL.
46
21.04.1992 BIFR sanctioned the scheme known as
Sanctioned Scheme 1992 (SS- 92). In terms
thereof, JUL was to be reconstituted as a
going concern.
June 1992 The aforesaid order was challenged by
the workers before AAIFR.
13.04.1993 AAIFR approved the scheme submitted by
GDCL.
20.10.1993 BIFR directed GDCL to deposit ₹3.035
crores by 10.11.1993. The same was
deposited by GDCL.
January 1994 CWP No. 146 of 1994 was filed before
Allahabad High Court by the workers of
Kanpur Jute unit challenging the order
dated 13.04.1993 passed by AAIFR.
19.09.1994 As the scheme proposed by GDCL could
not be implemented, BIFR called for fresh
proposals.
30.09.1994 Appeal No.179 of 1994 was filed by GDCL
impugning the order dated 19.09.1994
passed by BIFR.
11.11.1994 AAIFR set aside the order dated
19.09.1994 passed by BIFR and handed
over the management of JUL to GDCL
subject to certain conditions regarding
infusion of funds as there was default in
compliances to be made earlier. GDCL
agreed to deposit the entire balance
amount as per schedule up to 31.05.1995.
₹
1 crore was to be deposited within one
week and remaining ₹ 4 crores were to be
deposited by 31.03.1995. As on account of
delay in implementation of the
rehabilitation, more funds were required, GDCL was directed to deposit another ₹ 2
crores.
As claimed, GDCL deposited ₹ 1 crore on
17.11.1994, another ₹ 1 crore on
31.12.1994. ₹1 crore were further
deposited on 07.01.1995 and ₹ 1 crore
were deposited on 31.01.1995.
47
Making it a total of ₹6.035 crores out of ₹8
crores towards promoters contribution.
June 1998 As still the scheme submitted by GDCL
was not implemented, fresh proposals
were invited by the BIFR.
12.07.2000
BIFR issued notice to the interested parties
under Section 20(1) of SICA Act to show
cause as to why JUL should not be wound
up. No objections were received in
pursuance to the notice published in two
newspapers under Section 20(1) of SICA
Act. No proposals were received even for
rehabilitation of the company.
The relevant part of the order dated
12.07.2000 passed by BIFR is extracted
below:
“In view of the submissions made
during the course of the hearing,
the bench came to the conclusion
that SS- 92 had failed essentially
due to total inaction on the part of the new promoters, the important
points to be noted were (a) A
period of 8 years had already
lapsed since the sanction of the
scheme and the company had
made no efforts for the
implementation of SS- 92. (b) The
factory had been lying closed for
12 years and no production
activity had taken place. (c) The
paid up capital of the company
was only ₹ 6.11 crores whereas the
accumulated losses
conservatively amounted to
₹59.17 crores. (d) The accounts of
the company had not been audited for many years. (e) The company
had huge amount of dues both
from secured and unsecured
48
creditors and had failed in
meeting his liabilities as per the
sanctioned scheme. (f) The
statutory dues of the company
namely the excise dues and
income tax were also substantial.
(g) In spite of specific provisions
in SS- 92, the company had not
made any payment to the labour.
(h) The secured creditors and MA
had opined that in view of the
above, there was no chance of
revival of the company. The
bench, also noted that the
company had already been with
the BIFR for nearly 13 years and
thus more than adequate time and opportunity had been provided to
the new promotors to revive the
unit, which had failed. In view of
the above and keeping the view
the RBI guidelines limiting the
maximum period for rehabilitation
of sick unit to 7 years, the bench
formed its prima facie view that
the company was unlikely to
revive and make its net worth
positive while discharging its due
financial obligations within a
reasonable period.”
24.11.2000 After hearing all the stakeholders, BIFR
recommended winding up of JUL. The
stand of all the creditors was recorded,
who prayed for the winding up of JUL
except the promoters. The JUL had even
failed to submit the audited/provisional
Balance Sheet as on 30.06.2000, which
could have shown its financial status. At
this stage, JUL was under the management
of GDCL, in pursuance of order dated
11.11.1994 passed by AAIFR. Even the
MOU with the workers had not been
49
renewed. The BIFR found it just and
equitable to recommend winding up of
JUL. The creditors were granted liberty to
file suit or initiate proceedings for
recovery of the amount due to them before
appropriate forums.
12.01.2001
JUL filed Appeal No.22 of 2001 against the
order dated 24.11.2000 passed by BIFR.
04.01.2001 AAIFR stayed the order dated 24.11.2000
passed by BIFR.
03.08.2001 AAIFR passed the order directing GDCL to
deposit ₹10 crores in non-lien account
with the SBI, out of which, part was to be
utilised for payment of terminal benefits to
the retired workers.
2001 GDCL challenged the order dated
03.08.2001 passed by AAIFR by filing
SBCWP No.4380 of 2001 before the
Rajasthan High Court.
06.09.2001 Appeal No.22 of 2001 was dismissed by
AAIFR. The AAIFR specifically recorded
that the appellant had not come with any
other rehabilitation scheme. The debt of
JUL had increased to more than ₹100
crores. The JUL was already before the
BIFR for more than a decade. The
technology of the cement plant was
obsolete and not economically viable.
Hence, there was no possibility of
rehabilitation.
The important fact noticed by the AAIFR
was that GDCL having challenged the
order dated 03.08.2001 before the
Rajasthan High Court clearly showed that it was not in a position to deposit ₹ 10
crores, part of which was to be paid
towards terminal benefits of the workers.
02.08.2004 Rajasthan High Court allowed SBCWP
No.4380 of 2001 and set aside the order
dated 06.09.2001 passed by AAIFR. It is
noticed in the aforesaid order that JUL or
50
GDCL had not challenged the order dated
06.09.2001 passed by the AAIFR
dismissing the appeal. Judicial notice of
aforesaid order was taken by the Court,
while recording a fact that the High Court
had stayed the operation of the order
dated 03.08.2001 by which direction was
given to the GDCL to deposit ₹ 10 crores.
Hence, the appeal on merits should not
have been considered by AAIFR. The
orders dated 03.08.2001 and 06.09.2001
passed by the AAIFR were set aside and
the matter was remitted back to the AAIFR
for decision afresh within a period of two
months.
29.01.2005 The Cement Works Karamchari Sangh
filed SLP(C) No.4088 of 2005 before this
Court, challenging the order dated
02.08.2004, which later was registered as
Civil Appeal No.2076 of 2008.
26.08.2006
and 28.08.2006
During the pendency of the aforesaid
petition, settlement was reached between JUL and the workers of Cement Division at
Sawai Madhopur on 26.08.2006. Similar
settlement agreement was reached
between JUL and the workers of Kanpur
Jute Unit on 28.08.2006.
04.12.2006
This Court vide order passed on
04.12.2006 approved the settlement dated
26.08.2006 entered into between the
parties, considering the long pendency of
the matter before different forums,
however, with a caveat that the order is
without prejudice to rights of other
parties. Certain unions and workmen had raised objections.
It is relevant to add that at that stage JUL had been recommended to be wound up against which an appeal filed by the AAIFR
was rejected. However, in SBCWP
51
No.4380 of 2001, the Rajasthan High Court
had remanded the matter back to AAIFR.
Meaning thereby, whatever action GDCL
was taking, it was on behalf of JUL and not
in its independent capacity. The earlier
rehabilitation scheme, SS- 92, submitted
by it had already been rejected and the
matter was to be considered afresh.
10.04.2007
This Court appointed Justice N.N. Mathur,
a retired Judge of the Rajasthan High Court for undertaking the exercise of finding out
the dues of the workmen.
24.03.2008 Civil Appeal No.2076 of 2008 was finally
disposed of. In the judgment, this Court
noticed that as per the rehabilitation
scheme approved in the year 1992, the
cost was ₹38.41 crores out of which ₹ 18.12
crores were to come from GDCL. A sum of ₹10 crores was to be arranged by the sale
of assets and remaining ₹ 10.29 crores with
deferment of sale tax liability. Loans were rescheduled for repayment.
Justice N.N. Mathur, a retired Judge of the
Rajasthan High Court was appointed as
arbitrator as per Section 10B of Industrial
disputes Act, 1947 (Rajasthan
Amendment) for determination of the dues of the workmen.
The appeal was disposed of by this Court
on 24.03.2008 while restoring Appeal
No.22 of 2001 filed by JUL before the
AAIFR with a condition that a sum of ₹ 10
crores as directed by AAIFR on 03.08.2001
be deposited within two months. In case
the amount, as directed, was deposited, it will be open for GDCL to submit a revised rehabilitation scheme. Even other parties
including the workmen were given liberty
52
to do that. The matter was directed to be
disposed of by AAIFR within four months.
06.06.2008 M.A. No.185 of 2008 was filed by M/s
Shree Cements Ltd. for impleadment in
the matter pending before AAIFR.
17.07.2008 The aforesaid application [M.A. No.185 of
2008] was dismissed by the AAIFR.
29.08.2008 W.P.C. No.5878 of 2008 filed by SCL was
disposed of by Delhi High Court directing
AAIFR to consider the scheme submitted
by SCL as well.
22.09.2008 In SLP(C) No.22719 of 2008 filed by GDCL
challenging the order dated 29.08.2008
passed by Delhi High Court, operation of
the order dated 29.08.2008 passed by
High Court of Delhi was stayed. SLP(C)
No. 22719 of 2008 was converted into Civil
Appeal. No. 2937 of 2012.
24.08.2016 The aforesaid appeal was allowed by this Court, holding that SCL did not have locus
to submit any rehabilitation scheme.
Thereafter, the matter remained pending before AAIFR even though the eclipse on proceedings created with the intervention
of the SCL was over.
24.11.2016 With the enforcement of The Sick
Industrial Companies (Special Provisions)
Repeal Act, 2003, the SICA, 1985 was
repealed w.e.f. 01.12.2016.
01.12.2016 The IBC was enacted. Different provisions
were enforced at different times. Section
252 of IBC providing for amendment of
The Sick Industrial Companies (Special
Provisions) Repeal Act, 2003 was
enforced. The amendment as contained in 8
th
Schedule attached with IBC was
enforced w.e.f. 1.11.2016
In terms of the aforesaid amendment, all
appeals, references or inquiries pending under the SICA, stood abated. Liberty was
given to the party concerned in whose
53
cases the proceedings had abated, to
make reference to the Company Law
Tribunal under the IBC within 180 days
from the commencement of IBC.
The undisputed fact which remains on
record is that neither JUL nor GDCL filed
any proceedings before NCLT and the
appeal pending before AAIFR stood
abated.
Meaning thereby, the recommendation
made by BIFR for winding up of JUL stood
revived.
REHABILITATION SCHEME SUBMITTED BY GDCL (SS -92)
106. The salient features of the rehabilitation scheme submitted
by GDCL in the year 1992, were as under:
(i) Management of JUL to be taken over by GDCL along
with assets and liabilities.
(ii) Jute Mill was to be disposed of, for which process was
to be monitored by a Sales Committee comprised of
representatives from SBI, IRBI, Special Director BIFR,
State of Uttar Pradesh and GDCL.
(iii) Disposal of other assets not connected with the
production was also permitted through the same Sales
Committee.
(iv) Existing promoters were to write off equity and
preference shares by 90%. New promoters (GDCL)
were to contribute ₹8 crores with upfront ₹ 6.07 crores
immediately on sanction of scheme by BIFR. The
54
amount was to be converted into equity, and
thereafter, unsecured loans of ₹1.93 crores to be
inducted in two instalments, ₹ 1.5 crore by 31.03.1993
and ₹0.43 crores in 1994-95 (first quarter).
CONTRIBUTIONS MADE BY GDCL
107. BIFR vide order dated 28.04.1992 sanctioned the
rehabilitation scheme of JUL in favour of GDCL. Out of the required
promoter’s contribution which was an amount of ₹ 8 crores, GDCL
initially deposited an amount of ₹ 3.035 crores on 10.11.1993. Further,
as claimed by GDCL, it deposited ₹1 crore on 17.11.1994, another ₹ 1
crore on 31.12.1994. An amount of ₹ 1 crore was deposited on
07.01.1995 and ₹ 1 crore were deposited on 31.01.1995, making it a total
of ₹6.035 crores out of ₹ 8 crores towards promoters’ contribution. As
per AAIFR order dated 11.11.1994, GDCL was also required to deposit
an additional ₹ 2 crores to cater to the shortcomings in the
implementation of the rehabilitation scheme. However, this amount
was never paid by GDCL. Thereafter, another sum of ₹10 crores were
deposited in terms of order dated 24.03.2008 p assed by this Court.
108. As per the arguments submitted by Dr. Abhishek Manu
Singhvi, learned senior counsel appearing for respondent Nos.5/JUL
and 6/GDCL, GDCL had infused about ₹ 266 crores in JUL to keep it
55
alive and pay its liabilities. However, as per the figure mentioned in
‘Annexure A’ attached with the synopsis dated 25.11.2025 filed on
behalf of respondent nos.5 and 6, the cumulative figure is
₹236,72,63,660/-.
109. As per the aforesaid synopsis filed on behalf of respondent
Nos.5 and 6 on 25.11.2025, under the directions of this Court to deposit
money for safeguarding the interests of the workmen, GDCL has till
date deposited a sum of ₹ 166 crores approximately with the registry of
this Court, which with interest now have grown to ₹193.75 crores. The
details as available in the aforesaid synopsis, is reproduced herein
below:
Date of Deposit Amount Deposited as per
orders of this Court (in ₹ )
16.05.2008 10 crores
01.10.2016 35 crores
29.08.2023 10 crores
14.10.2023 5 crores
01.04.2024 5 crores
22.08.2024 50 crores
17.09.2024 51 crores
Total 166 crores
Money inclusive of
Interests
193.75 crores
56
109.1 Following details are available from the table in paragraph
41 of the synopsis filed on behalf of respondent nos.5 and 6.
Particulars Amount (in ₹)
Payments made to secured
creditors
7,47,00,000
Settlement amount paid
against utility bills
9,05,63,609
Payment of statutory liabilities 5,82,49,262
Payment against advance from
customers and sundry
creditors
2,52,44,343
Workers dues 44,18,91,082
Deposited with Hon’ble
Supreme Court
166,00,00,000
Total 235,06,48,296/-
(Rupees Two Hundred
and Thirty Five Crores
Six Lakhs Forty Eight
Thousand Two Hundred
and Ninety Six only)
109.2 For details of payment made to the creditors, reference was
made to ‘Annexure A’ annexed therewith. The aforesaid annexure
shows the total payments to the tune of ₹ 236,72,63,660/-, which
includes ₹166 crores deposited with this Court. The total amount
calculated at the end of the figures does not tally as such.
57
109.3 GDCL had, earlier to that, only paid a meagre amount
between 2003 till 2009 which as per its own affidavit amounts to
₹22,57,11,133/-. This amount includes a substantial sum of
₹8,93,13,000/- paid to Rajasthan Electricity Board and ₹ 4,17,05,901/-
paid to the Rajasthan Sales Tax. When we look at the amount paid to
multiple creditors between the years 2010 till 2012, it comes to
₹18,59,11,640/-. An amount of ₹ 1,69,03,641/- was paid by GDCL from
July, 2013 to July 2016. A sum of ₹1,64,12,692/- were paid to Rajasthan
State Mine and Minerals Ltd. in 2024-25. A sum of ₹ 35.59 crores are
shown to have been paid to the workmen of Kanpur Jute Unit upto July,
2024. The aforesaid table shows that besides initial payments, as per
the rehabilitation scheme (SS- 92), i.e., ₹ 7.035 crores, a very small
amount was paid to the creditors till 2013. The substantial payments
and deposits were made only thereafter. Even no dues certificate from
Jaipur Vidyut Vitran Nigam Limited is dated 25.11.2009.
110. Needless to add here that out of the aforesaid amount, the
sum of ₹ 51 crores has been deposited by GDCL in view of the sale of
Kanpur Jute Mill on 07.06.2024. It is important to mention here that the
sale proceeds of other two assets of JAIL, which were sold for a sum of
₹21 crores and ₹ 2.84 crores, vide sale deeds dated 26.04.2021 and
14.09.2022, respectively, have not been deposited before this Court.
58
REGARDING JAIL
111. Coming to the sale of assets of JAIL by GDCL, when this
issue was pointed out by learned counsel for the applicants, as noticed
in the order dated 23.08.2024, the stand taken by learned counsel for
GDCL was that it had nothing to do with JUL as it was no more a
subsidiary thereof. As the counsel could not readily provide the
shareholding pattern of JAIL, time was granted to file an affidavit
showing the shareholding pattern of JAIL as in April, 1992.
112. JAIL was a fully owned subsidiary of JUL as it held about
2,49,974 shares (99.99%) out of the total 2,50,000 shares. Despite the
fact that JAIL was undisputedly a fully owned subsidiary of JUL,
strangely enough, nothing about it was mentioned either in the winding
up proceedings, rehabilitation schemes or any time during litigation.
How GDCL came in control of JAIL is a mystery. Even if the argument
raised by GDCL is accepted to the extent that JAIL being an
independent company and rights of its shareholders may be limited,
the fact remains that when the holding company was being wound up
by reason of financial trouble, valuation of shares in a subsidiary
company should have been factored. To that extent it cannot be said to
be totally disconnected. The position may be different if only the
subsidiary company was being wound up. Therefore, even the scheme
59
for rehabilitation prepared for JUL is defective to the extent that it does
not take into account the finances of JAIL. In fact, it is a patent error in
the entire process which goes to the route of the case and in our
opinion, is also incurable.
113. GDCL is claiming that it has taken all actions as per the
rehabilitation scheme (SS- 92), however, the fact remains that JAIL is not
at all part of the scheme. On failure of implementation of the
rehabilitation scheme when the BIFR vide order dated 24.11.2000, had
recommended winding up of JUL, the rehabilitation scheme (SS- 92)
had lost its significance. Even as per arguments raised by learned
counsel for GDCL, JAIL was an independent company. In the absence
of any mention of JAIL in the entire process, there is no explanation
available with reference to GDCL’s control over JAIL.
114. As is evident from the rejoinder affidavit dated 21.08.2024
(Annexure R4) filed by the Noticee No.1, subscribed capital of JAIL was
2,50,000 shares out of which 2,49,974 were in the name of JUL.
Subsequent thereto, 1,00,000 shares each were allotted in the names of
United India Agencies Pvt. Ltd., Abhyuday Investments Ltd. and M.R.
Holdings Pvt. Ltd. on 25.06.1998. These new investors are stated to be
group companies of GDCL. As a result, through the group companies,
GDCL became the majority shareholder in JAIL. In addition to that,
60
70,000 shares each were allotted in the names of United India Agencies
Pvt. Ltd. and Abhyuday Investments Ltd. on 15.03.1999 and 60,000
shares were allotted in favour of M.R. Holdings Pvt. Ltd.. Meaning
thereby, out of total 7,50,000 shares, now the group companies of
GDCL owned 5,00,000 shares.
115. Regarding allotment of new shares in JAIL to the group
companies of GDCL, the only answer was that due process as per
Companies Act, 1956 was followed but to justify the same, there is no
material on record. There are no financial statements of JAIL on record
to show that this company was also in financial stress, hence, its assets
were required to be sold. There is no detail available about other
assets of JAIL. The sale proceeds of the property of JAIL are still lying
with GDCL. Again, it was a sale by private negotiation only, for which
the arguments raised by counsel for the petitioner is that it was
undervalued.
116. The entire transactions of share allotment in JAIL made by
GDCL to its group companies had to be held to be bad. At the cost of
repetition, we may hold that JAIL was never a part of the rehabilitation
scheme. Its worth was not considered by BIFR at the time of declaration
of JUL as a ‘sick industry’. It is not in dispute as it was almost a 100%
61
owned subsidiary of JUL. Maybe, with the sale of assets of JAIL at that
time, JUL could be out of financial trouble.
REGARDING FINANCIAL STATUS OF GDCL
117. It was pointed out at the time of hearing, that in the Balance
Sheet for the year 2022-23, debts of GDCL were declared to be NPAs.
118. Bid process document issued by the lenders of GDCL was
referred to. It is evident therefrom that GDCL was in financial trouble
and was not able to serve its debts. GDCL being in financial trouble,
the lenders had invited bids for sale of its debt of ₹ 1,392.02 crores. The
process was initiated in May 2025 and was to close by July 2025. The
debts were being sold on ‘as is where is’ basis. The bids were invited
as against the offer of ₹ 600 crores received by the Assets Management
Company. Any company doe s not go into financial stress all of a
sudden. From 2022-23 the facts have been placed on record by the
other side showing the account of GDCL to be NPA. In fact, it is the time
when the assets of JUL and JAIL were sold by GDCL without taking the
court into confidence.
119. If we go into the background, there is an order dated
03.08.2001 passed by the AAIFR which directed GDCL (as the
62
promoter of JUL) to deposit ₹ 10 crores into a no-lien account. ₹ 3 crores
from that were to be utilized for payment of retiral dues of workers.
This was a pre-condition for hearing the appeal filed by GDCL.
Meaning thereby, failure of the same would have led to dismissal of the
appeal. However, GDCL challenged that order before the Rajasthan
High Court by filing SB C.W. No. 4380 of 2001. Later, the AAIFR
dismissed the appeal on 06.09.2001. On 02.08.2004, the Rajasthan High
Court set aside both orders dated 03.08.2001 and 06.09.2001 and
remanded back the matter to the AAIFR to decide afresh. However, the
order dated 02.08.2004 was challenged by the Cement Works
Karamchari Sangh before this Court in S.L.P.(C) No.4088 of 2005 (Civil
Appeal No.2076 of 2008. Finally, vide final order dated 24.03.2008 in
the aforesaid Civil Appeal, this Court while remanding the matter back
to AAIFR, directed GDCL to deposit the amount of ₹ 10 crores. The same
was complied with by GDCL on 16.05.2008, at the fag end of the time
granted by this Court.
120. Further, from Justice Aftab Alam’s (Retd.) supplementary
mediator's report dated 31.01.2021, it is evident that the argument
raised by GDCL was that in case it is required to contribute the
employees' dues at a level that is too high, it does not have the ability
63
to pay and such a requirement "would ultimately push the company
into liquidation".
121. The aforesaid facts, prima facie , established that GDCL was
in financial stress for a long time.
CONDUCT OF GDCL
122. On 21.04.1992, BIFR sanctioned a rehabilitation scheme (SS-
92) submitted by GDCL, under which GDCL was to take over the
management of JUL along with its assets and liabilities, with the cut-off
date fixed as 31.03.1992. The total cost of the scheme was ₹ 38.41
crores. Of this, GDCL was required to contribute ₹18.12 crores,
comprising ₹8 crores as “Promoter's Contribution” and ₹ 10.12 crores
as interest-free funds to be arranged by it. The remaining contribution
was to come from sale of assets of JUL (₹10 crores) and sales tax
deferment (₹10.29 crores).
123. It is relevant to note in this context that the Sawai Madhopur
area, where JUL's cement factory was located, had already been
declared forest land vide notification dated 30.11.1984, and JUL's lease
over that mining land had expired in 1989. These pre -existing
encumbrances cast a shadow on the very viability of any revival of the
64
unit and should be in knowledge of GDCL when it took over
management, as well as the BIFR and other stakeholders.
124. As GDCL failed to implement the scheme, BIFR vide order
dated 19.09.1994 called for fresh proposals. GDCL challenged this
order before AAIFR. Vide order dated 11.11.1994, AAIFR set aside the
BIFR order, while expressly recording that the delay in implementation
of the sanctioned scheme was on account of GDCL's default in infusing
money into JUL as required. Notwithstanding this finding, one more
opportunity was extended to GDCL, with a revised time schedule for
further investment.
125. GDCL was permitted to continue looking after the
management of JUL. It was directed to deposit ₹ 1 crore by 18.11.1994,
followed by the remaining ₹ 4 crores (out of the ₹8 crore Promoter's
Contribution) in four monthly instalments from December 1994 to
March 1995. Additionally, GDCL was directed to deposit further ₹ 2
crores (₹1 crore in April and ₹ 1 crore in May 1995) to meet any shortfall
in implementation of the scheme. Total amount required to be
deposited was ₹ 7 crores in addition to the earlier deposited amount of
₹3.035 crores.
65
126. Against this, GDCL deposited only ₹ 6.07 crores out of the
total ₹8 crores due. The additional ₹ 2 crores directed to be deposited
to cover shortfalls was never paid.
127. On 19.01.1996, GDCL commissioned the Sawai Madhopur
cement unit, only to declare a lockout seven months later on
12.08.1996. Arguments of workmen have been noticed by this Court in
its judgment dated 24.03.2008 in Cement Workers Karamchari
Sangh’s case (supra), to state that the commissioning was an eyewash
and the promoters had no intention to run the unit on a sustained basis,
no repairs were made in the plant lying idle for a long time, no raw
materials were brought in, and no supervisory, managerial or technical
staff were engaged. The lockout by the management was subsequently
declared illegal by the State Government by order dated 25.05.1999
passed under Section 10(3) of the Industrial Disputes Act, 1947. On
11.08.1997, the management of JUL entered into a revised tripartite
settlement with the representatives of the workers, but, as the Court
observed, the revival of JUL remained as elusive as ever.
128. As no positive steps were taken for revival of the Unit, after
issuance of a show cause notice, vide order dated 24.11.2000, BIFR
recommended winding up of JUL. A perusal of the aforesaid order
66
shows that GDCL was duly represented before the AAIFR. Paragraph 4
of the aforesaid order records that no objections were received in
pursuance to the notice published in two newspapers under Section
20(1) of SICA. No proposal was received even for rehabilitation of the
company. The representatives of the State Bank of India or Punjab
National Bank submitted no objection against the proposal to wind up
JUL. Similar was the stand of the Ministry of Industry, Government of
India and Government of Rajasthan and Uttar Pradesh. Similarly, there
was no objection of various other creditors and government
departments as recorded in the aforesaid order.
129. BIFR noticed in its order that the company was not serious
about its revival as even the fresh audited/ provisional balance sheet
for the year 1999-2000 was not made available. The aforesaid order
refers to an earlier order passed by the BIFR on 12.07.2000 in which
following directions were issued:
“(a) A Show Cause Notice (SCN) be issued to the company and
other, interested parties under Section 20 (1) of the Sick
Industrial Companies (Special Provisions) Act, 1983 (SICA)
to show-cause as to why it should not be wound up.
(b) A separate notice shall be issued to the promoters under
Section 33 of SICA to show cause as to why they should not
be prosecuted for non-payment of labour dues and failure
67
to comply with the provisions of the sanctioned scheme of
1992.
(c) The Rajasthan Finance Corporation Ltd (RFCL) was directed
to take over possession of assets the company under
Section 29 of SFC Act.
(d) The SBI was directed to insure the company’s assets.”
130. Nothing has come on record to suggest that the earlier
order dated 12.07.2000 passed by the BIFR directing taking over of the
assets of JUL by Rajasthan State Financial Corporation under Section 29
of the State Financial Corporation Act, 1951 was challenged. Meaning
thereby, at that stage, GDCL had lost legal control of the assets of JUL.
131. GDCL challenged the order dated 24.11.2000 before
AAIFR, which stayed the proceedings on 14.02.2001. However, on
03.08.2001, AAIFR directed JUL to deposit ₹ 10 crores as a condition
precedent for admitting the appeal. JUL filed a writ before the
Rajasthan High Court challenging this direction on 04.09.2001, and the
High Court stayed that direction, though no stay was granted in respect
of the proceedings before AAIFR. On 06.09.2001, AAIFR dismissed the
appeal due to non-compliance of the condition as GDCL failed to
deposit the amount as required, thereby confirming BIFR's winding up
order.
68
132. The Rajasthan High Court, vide order dated 02.08.2004
passed in SBCWP No.4380 of 2001, set aside both the AAIFR orders
dated 03.08.2001 and 06.09.2001, and remitted the matter back to
AAIFR for fresh consideration after affording opportunity to all
concerned parties. The direction to deposit ₹ 10 crores as a condition
for admitting the appeal had, in the meantime, not been complied with
by GDCL/JUL.
133. The order of remand passed by the Rajasthan High Court
was challenged before this Court by the Cement Workers Karamchari
Sangh (supra). This Court, vide its judgment dated 24.03.2008, while
noting that the delay only benefits JUL/GDCL and causes great
prejudice to the creditors and deep distress to the workmen, gave one
further opportunity to GDCL as well as the workers to submit a fresh
rehabilitation scheme before AAIFR, subject to the deposit of ₹ 10
crores. GDCL ultimately deposited the ₹ 10 crores on 16.05.2008,
several years after it had first been directed to do so. Thereafter, on
06.06.2008, AAIFR restored Appeal No. 22/2001. Fresh schemes were
submitted by the workers along with Kamala Mills on 05.09.2008, and
by GDCL on 12.09.2008. However, while issuing notice in a challenge
filed by GDCL in SLP No. 22719 of 2008, this Court on 22.09.2008 stayed
69
further proceedings before AAIFR with the result that neither fresh
scheme was ever considered.
134. Other substantial payments to creditors were also made by
GDCL around the year 2015. Substantial amount of ₹ 1,69,03,641/- was
paid by GDCL from July, 2013 to July 2016 and later, ₹ 35 crores
deposited on 01.10.2016, pursuant to directions of this Court. Another
sum of ₹1,64,12,692/- were paid to Rajasthan State Mine and Minerals
Ltd. in 2024-25. A sum of ₹35.59 crores are shown to have been paid to
the workmen of Kanpur Jute Unit upto July, 2024. However, as pointed
out by the workmen, a significant portion of what GDCL claims to have
paid on behalf of JUL was sourced from the sale proceeds of JUL's own
assets and those of its subsidiaries, and not from GDCL's own
resources.
135. Upon repeal of SICA on 01.12.2016 and abolition of BIFR and
AAIFR, all pending proceedings abated. Companies affected were
entitled to approach NCLT under the IBC within 180 days. GDCL/JUL
chose not to do so, foreclosing any fresh rehabilitation. As on date, no
scheme is in existence, and GDCL continues to exercise control over
JUL without any legal sanction therefor.
70
136. Despite having no subsisting legal authority, and with the
matter sub judice before this Court, GDCL proceeded to sell the assets
of JUL and its wholly owned subsidiary, JAIL, without seeking any
permission from this Court. It may be noted that JAIL, which was a 100%
subsidiary of JUL as on the date of the sanction of the scheme in 1992,
was not part of the rehabilitation scheme. GDCL had, in a clandestine
manner, changed the shareholding pattern of JAIL in 1998 and 1999 by
issuing fresh shares to GDCL's group companies, thereby reducing
JUL's shareholding in JAIL from 99.99% to 33.33%.
137. Thereafter, GDCL sold JAIL's agricultural land situated at
Jodhpur by a registered sale deed dated 26.04.2021 for ₹ 21 crores, and
another agricultural land at Sawai Madhopur by sale deed dated
14.09.2022 for ₹ 2.84 crores, all without seeking prior permission of this
Court. The proceeds of these sales remain with GDCL.
137.1 The scrap of machinery lying at the Sawai Madhopur Unit
was also sold by way of private negotiation by GDCL. Although
permission for this was subsequently obtained from the Court. An
objection raised by the workmen led to a stay on lifting of the scrap.
The sale proceeds thereof continue to lie with GDCL.
71
138. Further, during the pendency of the present Writ Petition,
GDCL sold the Kanpur Jute Mill Unit by a registered sale deed dated
07.06.2024 for ₹ 51 crores, again without seeking any permission from
this Court or proceeding through the Sale Committee as envisaged
under the sanctioned scheme. Pursuant to the directions of this Court,
the sale proceeds were directed to be deposited with the Registry.
SALE OF ASSETS OF JUL BY GDCL
139. During the course of hearing of the present writ petition on
23.08.2024, it was pointed out by Mr. Ranjit Kumar, learned senior
counsel appearing for one of the applicants, that GDCL has sold Kanpur
Jute Mill vide sale deed dated 07.06.2024 without seeking permission
of this Court. GDCL could not affect the sale as it had to be through the
Sales Committee as provided under the Scheme. Further, the stand was
that the sale was undervalued as the property was worth about ₹ 150
crores and shown to be sold for ₹51 crores only.
140. Learned counsel appearing for GDCL admitted the fact that
Kanpur Jute Mill has been sold without taking permission from this
Court. The counsel fairly submitted that there is no explanation
available for selling the Kanpur Jute Mill without seeking permission
72
from this Court. This may be an error, which may be condoned as the
sale proceeds were deposited with this Court.
141. Further, as was submitted by Mr. Ranjit Kumar, learned
Senior Counsel that the properties of JAIL situated in Sawai Madhopur
and Jodhpur were sold by GDCL via two sale deeds. One of the Sale
Deeds was executed on 26th April, 2021 for a sale consideration of ₹21
crores and the other one on 14th September, 2022, for a sale
consideration of ₹ 2.84 crores, that too without taking this court into
confidence. This fact was also not denied by learned counsel for GDCL.
The only explanation given was that JAIL was not part of the scheme,
hence, its properties could be dealt with by GDCL.
142. However, after hearing the learned counsel for the parties,
we don’t find any justification in the action of GDCL in selling the assets
of JUL or JAIL. Firstly, even as per the Sanctioned Scheme (SS- 92),
Kanpur Jute Mill could be sold by the Sale Committee constituted
therein. That process was not followed. GDCL was dealing with the
assets of JUL as if it had been transferred full ownership thereof.
Whereas the fact remains that it was only the management of the unit,
which was transferred, which did not confer any rights on GDCL to sell
off its properties. Firstly, the procedure for sale of Jute Mill and other
property was mentioned in the scheme submitted before BIFR. Even
73
that process was not followed. However, the scheme had lost its
significance as subsequently winding up of JUL was recommended.
The appeal against that order filed before AAIFR stood abated with
repeal of SICA. Further, at the time when the sales were carried out,
the matter was pending in this Court. At least this Court could have
been taken into confidence. Nothing was done. Such an illegality
cannot be condoned by any stretch of imagination.
143. This Court vide order dated 23.08.2024 directed GDCL to
deposit ₹51 crores with this Court within two weeks. Needful was done.
144. Mere deposit of the sale proceeds in this Court, that too only
when the same was pointed out by opposite counsel or otherwise will
not come to the rescue of GDCL.
145. Even at the time of seeking permission for sale of scrap, this
Court was not taken into confidence about the status of the GDCL and
complete facts of the case. The permission was sought in a casual
manner. Even the conduct of the labour unions before this Court is also
fishy as neither of them pointed out complete facts of the case or the
status of GDCL nor did they object to the sale. However, when the scrap
was being lifted, the issue was raised and thereafter this court passed
an order dated 23.08.2024, restraining the sale of any properties
(movable/immovable) of JUL without permission of this Court. It needs
74
to be added there that as on the date of sale of scrap also, the only status
which GDCL had, was controlling the management of JUL and nothing
beyond. The Company Petition No. 21 of 2000 for winding up was
pending before Rajasthan High Court. This sale of scrap was also
without following any process, namely going through the mode of
auction or seeking permission about the mode of sale. Such sale cannot
be held to be bona fide and has to be held to be illegal. Any amount
paid by the buyer shall be refunded by GDCL to the buyer as those
sale proceeds were never deposited in this Court.
PRESENT STATUS
146. The position as it stands today is that JUL was declared a sick
company on 17.09.1987. Thereafter, the following events took place:
Background
regarding
closure of
Units at Sawai
Madhopur
and Kanpur
The Sawai Madhopur cement factory first
closed on 09.09.1975 due to recurring
losses and erosion of working capital, but
was restarted in April 1976 under a nursing
programme supported by the Central and
State Governments, and SBI. It was briefly
reopened in March 1988 unde r a
Government-appointed nominee, however,
owing to labour unrest and consequent
75
withdrawal of SBI's cash credit facility, the
factory closed again in July 1988.
Under GDCL's management, the factory was
reopened on 01.09.1995 and formally
commissioned on 09.01.1996, with a
successful trial run on 28.03.1996, which
however also marked the cessation of
operations due to fresh labour unrest. A
formal lock-out was thereafter declared
effective 21.08.1996 at the Sawai Madhopur
factory and Jaipur office, and at the Phalodi
Quarry unit, with effect from 07.09.1996.
As regards the Kanpur unit, it was acquired
in 1967 for manufacture of cement bags. It
suffered losses from 1972, and was closed in
October 1975. It was restarted again in
August 1976 pursuant to a Tripartite
Settlement between the management,
workers' union, and the State Government
of Uttar Pradesh, but remained largely non-
operational following the broader financial
crisis of 1987. BIFR, by 1992, found the unit
unviable and proposed its disposal.
21.04.1992 BIFR sanctioned a rehabilitation scheme
submitted by Gannon Dunkerley & Co. Ltd.
(GDCL), under which management and
76
assets were transferred to the new
promoters.
19.09.1994 Because the GDCL scheme could not be
implemented, BIFR called for fresh
proposals for revival of the company.
11.11.1994 In a challenge to the BIFR order, AAIFR
directed transfer of management to GDCL
to proceed with rehabilitation efforts.
24.11.2000 After more than 6 years of failed
rehabilitation attempts, BIFR formally
recommended winding up of JUL, noting
that no viable proposal had been submitted.
Post-2000 GDCL/JUL preferred an appeal (Appeal No.
22/2001) before the AAIFR impugning the
BIFR's winding- up recommendation.
Repeal of
SICA
During the pendency of the appeal, the Sick
Industrial Companies Act, 1985 (SICA) was
repealed w.e.f 01.12.2016. The Insolvency
and Bankruptcy Code, 2016 was enacted
and in terms of Section 252 thereof which
amended the The Sick Industrial Companies
(Special Provisions) Repeal Act, 2003, all
proceedings before BIFR and AAIFR abated.
Interested parties were given 180 days to
approach the NCLT within 180 days. The
appeal stood abated as JUL/GDCL did not
77
file any reference before the NCLT within
the permissible 180-day window.
Current
Status
The BIFR's order recommending winding up
stands revived. The matter is currently
pending in the Rajasthan High Court
(Company Petition No. 21 of 2001), where
proceedings have been stayed because of
pendency of proceedings before this Court.
147. As on today, more than 34 years since rehabilitation
scheme was first sanctioned by BIFR in 1992 and nearly three decades
after the initial lockout was declared by GDCL on 12.08.1996, the unit
remained completely non-functional. The BIFR, in its review hearing on
12.07.2000, and its subsequent recommendation for winding up on
24.11.2000, had recorded that the company had already been under its
purview for over 13 years and had failed to meet the 7-year maximum
period for rehabilitation prescribed by RBI guidelines.
148. The fact recorded in the BIFR order dated 24.11.2000,
recommending winding up of JUL, is critical, as the Bench concluded
that the company was unlikely to revive or make its net worth positive
within a reasonable timeframe. It was further observed in the BIFR
order dated 12.07.2000, and reiterated by the AAIFR on 06.09.2001,
that the technology utilized by the cement plant (old wet process
78
technology) is now obsolete and economically unviable in a
competitive market.
149. The current status of the assets confirms the impossibility of
a restart. The position as stands today is as under:
● Jute Mill: The Kanpur Jute Mill land was sold by GDCL for ₹ 51
Crores vide Sale Deed dated 7.06.2024, without prior permission
of the Court.
● Machinery: The factory and machinery have become rusted and
useless, with specific allegations that GDCL dismantled and sold
valuable machinery, including turbines worth approximately ₹ 20
Crores, as scrap. Though it was done with permission of this
Court, but scrap is yet to be lifted.
● Limestone Mining: While the promoters initially claimed to be
seeking renewal of mining leases for revival, such requests were
rejected by the State Government since the land around Sawai
Madhopur Cement Unit was notified as a forest land vide
notification dated 30.11.1984. Thereafter, mining of any kind in
those areas was declared to be prohibited and a violation of
Rajasthan Forest Act, 1953 and Soil Conservation Act, 1972.
79
150. This is even corroborated by rehabilitation scheme
submitted by GDCL. In that, even GDCL also does not propose to
revive the Cement Unit. It only proposed to setup a Concrete Sleeper
Plant, an ISO Container Complex, a Cold Storage Facility, a 34 MW
Solar Power Plant and a 100-key Luxury Hotel.
151. At the most, according to the AAIFR order dated 11.11.1994,
management of JUL was handed over to GDCL, but the promoters failed
to fulfil their financial commitments. BIFR recommended for winding
up of JUL vide order dated 24.11.2000. The appeal preferred by JUL/
GDCL against the aforesaid order to AAIFR stands abated with the
repeal of SICA, 1985.
152. Meaning thereby, as on today, the rehabilitation or restart
of the unit is a factual impossibility, and only the assets of JUL and its
subsidiary, JAIL, are available to satisfy the long- standing dues of the
workmen.
HOUSES/ FLATS CONSTRUCTED BY GDCL IN OCCUPATION OF
THE WORKERS/ EMPLOYEES
153. At the time of hearing, it was pointed out by learned counsel
for the GDCL that there are more than 1600 houses/flats constructed by
JUL in its Sawai Madhopur unit, which were allotted to the erstwhile
80
employees as licensees. Though the unit was closed more than 4
decades back, they are still occupying the same, without paying any
rent or license fee. If the workers are claiming their arrears of wages,
JUL is also required to be compensated for use and occupation of the
properties of the company by the employees.
154. For the purpose we add that an inventory of the house/flats
in possession of erstwhile workers of JUL shall be got prepared. It shall
contain the following details, besides any other relevant factor:
i) Identity of the accommodation, area thereof.
ii) the person who was allotted the same.
iii) the date of allotment.
iv) the person in possession of the accommodation, at
present.
v) Whether he is the family member of the original
allottee or any third party? If third party, the details
thereof.
vi) If any person other than the employee or his family
member is in possession thereof, his/her capacity and
status. How he/she came in possession thereof?
vii) If any underhand transactions are found where the
management, employee or his/her family member
had transferred the title or possession of the
accommodation to any third party, no right shall flow
to him/her and the property will revert back to JUL. If
in the process any clandestine transaction is found,
the person may be liable for criminal action as well.
Transferee of title or possession will have right to
proceed against the person who transferred him/her
the rights.
81
viii) after entire dues are paid to the workers of Rajasthan
Unit, they will handover vacant physical possession of
the accommodation in their possession to person
nominated by this Court at that stage, i.e., 6 months
after the payment is made to them. Thereafter, they
may be charged penal rent to be decided by this
Court at that time.
They will not be liable to pay any charges for use and
occupation of the same as their dues were not paid
and they were in litigation before various forums.
REGARDING APPLICATIONS FILED BY PROPOSED INVESTORS
155. A lot needs to be read between the lines. All of a sudden,
the Unions or certain groups of workers, who have now formed
different Unions, have brought in new investors to revive the unit.
Nearly four decades have passed since the company was declared sick
in 1987. All the workers of JUL may have now attained the age of
superannuation. Consequently, the physical revival of the unit as it
once existed is a factual impossibility. There is no legal liability for an
employer to offer employment to the family members of a serving
employee after he reaches the age of superannuation, with the sole
exception being compassionate employment for the ward of an
employee, who dies during service. This again is subject to specific
rules or policies of the employer and on fulfilment of certain mandated
conditions.
82
Application by M/s Frost Reality LLP
23
156. The scheme submitted by M/s Frost Reality LLP shows that
they intend to develop the area as an integrated multi- sector
redevelopment project by making further investments. This implies
that the primary interest lies in substantial properties of JUL or JAIL. The
proposal provides for reimbursement of the amount already paid by
GDCL to the lenders or for clearance of statutory liabilities, allotment
of plots of specific size to the workers of the Rajasthan unit, and
additional lump- sum payments to the workers of the Kanpur unit, who
had otherwise settled their dues. Furthermore, it is argued that these
investors will infuse huge amounts of capital, which will provide
employment to the family members of erstwhile employees and
generate further local employment.
157. There is a long list of assets belonging to JUL, as is evident
from various documents placed on record by GDCL. This includes land
and bungalow at Delhi, Jaipur, flat at Mumbai, land at Sawai Madhopur,
etc.
158. The offer includes payment of dues to the workers, and the
costs associated with the plots to be allotted. In this regard, M/s Frost
23
Ι.Α. Νο. 170433/2024 in W.P. (Civil) No. 392 of 2015
83
Realty has proposed to discharge a total liability of ₹ 264.93 Crores
under the scheme. This comprises ₹ 204.60 Crores towards dues of the
workers of the Cement Unit, including interest at 5% as per the Justice
Aftab Alam Report.
Application by M/s Dickey Asset Management Private Limited
24
159. M/s Dickey Asset Management Private Limited offered to
settle worker dues totalling approximately ₹ 214.10 Crores, which
includes the principal amount of ₹115.40 Crores (as crystallized in
Justice Aftab Alam’s (Retd.) report) plus ₹ 98.70 Crores as interest
calculated @ 5% per annum from 31.12.2008. It further proposes to offer an additional 5% interest on the gratuity amount from the cut-off
date, totalling approximately ₹ 20.10 Crores and another ₹ 10 Crores to
be distributed among verified workers or their heirs.
159.1 In addition to financial payments, the proposal includes
long-term support programs for workers and their families. They are
offering to provide training for verified workers or one family member in government-approved institutions, with preference for future
employment in revived projects. Further, they also offered to extend scholarship support for higher education (graduation and above) for
24
Ι.Α. Νο.43386 of 2026 in W.P. (Civil) No. 392 of 2015
84
one family member per worker for up to three years. They are further
offering quarterly health camps for workers and their families for three
years. In terms of housing support, an ex-gratia payment of ₹1 Lakh is
offered to workers willing to surrender occupied residential plots
within JUL-owned land in Sawai Madhopur. For verified Kanpur Jute
Unit workers, an ex-gratia payment of ₹ 1 Lakh for the purchase of
residential plots is also proposed.
Offer of GDCL
160. A scheme has also been submitted by GDCL, which
provides for a multi- sector redevelopment plan. This scheme includes
setting up of a concrete sleeper manufacturing plant, an integrated ISO
container complex, 10,000 MT cold storage facility, a 34 MW solar
power plant and a 100-key Luxury Hotel, alongside the settlement of
worker dues.
Analysis of Offers
161. How can such offers be accepted when there is a long list of
properties owned by JUL and its associate JAIL, and the current market
85
value of those assets remains unquantified before this Court? The
Court, acting as custodia legis of the assets of JUL and its associate, must
weigh all options to act in the best possible interest of the estate rather
than for the benefit of any single party.
162. None of the aforementioned parties have pointed to any
legal provision that would allow the assets of JUL to be transferred to
them through acceptance of these schemes without a formal valuation
being available with the Court.
163. At this stage, the first priority is to identify the workers or
their family members for payment of their dues and thereafter to deal
with the assets of JUL and JAIL.
163.1 The offers as submitted cannot be accepted.
CREDIT TO APPLICANTS
164. Still, in our opinion, credit for some core issues pointed out
by the applicants before this Court regarding sales of assets of JUL or JAIL by GDCL, has to be given to them. However, effectively they cannot be granted any relief. Had they not flagged some of the facts
before this court, the stamp of this Court could have been on the illegalities committed by GDCL, merely after payment of dues to the workers, on which stress was being laid from the very beginning. The
86
process was going on with the presumption that the scheme stood
approved and only wages were to be paid now as the unit could not be
revived.
INVOCATION OF POWER OF THIS COURT UNDER ARTICLE 142
165. The prayer was made by GDCL for condoning the
illegalities in the entire process in exercise of powers vested in this
Court under Article 142 of the Constitution of India. It was with
reference to retaining the properties, sale of assets of JUL and JAIL and
abatement of proceeding before AAIFR.
166. In our view, power under Article 142 of the Constitution of
India cannot be invoked to condone the illegalities committed. In fact,
after repeal of SICA with effect from 01.12.2016 and no proceedings
having been initiated before NCLT in terms of provisions of IBC within
the time permitted, the appeal filed by GDCL/ JUL before the AAIFR
stood abated. Thus, the recommendation made by the BIFR for winding
up of JUL revived. As a result, GDCL had lost any locus to deal with the
properties of JUL and JAIL. It is a matter of fact that GDCL is a
professionally managed company and in the case in hand, it had been
dealing with various litigations of JUL/ JAIL. It may be too far-fetched to
accept ignorance of GDCL to take action after repeal of SICA, within
87
the time permitted as per IBC. The abated appeal can neither be
revived nor an application which was required to be filed before NCLT
can be said to be deemingly filed.
166.1 It is also a fact that the present writ petition was filed in this
Court in the year 2015 and GDCL/ JUL filed the counter affidavit on
15.09.2015 and ever since then the proceedings are pending in this
Court. However, no effort was made even in the present writ petition to
highlight the aforesaid fact.
166.2 It is also a fact, which cannot be lost sight of, is that the bona
fide of GDCL could have been worth consideration had the unit been
revived. However, the fact remains that ever since the unit was closed
in the year 1987, it is only the properties of the JUL and JAIL which
remain. Those are also being disposed of by GDCL in clandestine
manner treating the same to be its own.
167. For the aforesaid reasons, we are of the considered view
that it is not a fit case for exercise of power under Article 142 of the
Constitution of India as it is not a case where merely ironing of creases
is required, rather, it will require condoning number of illegalities,
which cannot be done.
LEGITIMATE EXPECTATION
88
168. GDCL also invoked the jurisdiction of this Court raising the
principles of legitimate expectation. It was argued that GDCL having
cleared all the debts of JUL legitimately expected that the scheme for
revival, even if failed, the entire dues of JUL having been cleared by it,
the ownership and management of JUL along with its all assets and
liabilities will stand transferred to it. However, we do not find any merit
in the aforesaid submission as well. An illegality cannot be condoned.
Legitimate expectation cannot override the illegalities committed by a
party. The principle of legitimate expectation have been dealt with by
the Constitutional Bench of this Court in Sivanandan C.T. and Others
vs. High Court of Kerala and Others
25. Relevant paragraph for ready
reference is extracted below:
“46. From the above discussion, it is evident that the
doctrine of substantive legitimate expectation is
entrenched in Indian administrative law subject to the
limitations on its applicability in given factual situations.
The development of Indian jurisprudence is keeping in
line with the developments in the common law. The
doctrine of substantive legitimate expectation can be
successfully invoked by individuals to claim substantive
benefits or entitlements based on an existing promise or
practice of a public authority. However, it is important to
clarify that the doctrine of legitimate expectation cannot
25
2023 INSC 709; (2024) 3 SCC 799
89
serve as an independent basis for judicial review of
decisions taken by public authorities. Such a limitation is
now well recognised in Indian jurisprudence considering
the fact that a legitimate expectation is not a legal right. It
is merely an expectation to avail a benefit or relief based
on an existing promise or practice. Although the decision
by a public authority to deny legitimate expectation may
be termed as arbitrary, unfair, or abuse of power, the
validity of the decision itself can only be questioned on
established principles of equality and non-arbitrariness
under Article 14. In a nutshell, an individual who claims a
benefit or entitlement based on the doctrine of legitimate
expectation has to establish: (i) the legitimacy of the
expectation; and (ii) that the denial of the legitimate
expectation led to the violation of Article 14.
169. The case in hand does not fall in that category. The
management of JUL was handed over to GDCL by an order passed by
AAIFR on 11.11.1994. Despite being in management for a period of 13
years, the unit could not be revived. As a result, its winding up was
recommended by BIFR vide order dated 24.11.2000. As to what
happened thereafter in more than two decades, has already been
narrated in the previous part of the judgment. The conduct of GDCL
also has been noticed. There was no legitimate expectation arising in
favour of GDCL in the aforesaid facts and circumstances. Therefore,
90
even that argument raised by GDCL does not have any merit. Hence,
rejected.
REGARDING ABATEMENT OF PROCEEDINGS
170. Vide order dated 24.11.2000 passed by the BIFR, JUL was
recommended to be wound up. The reference was registered as Company Petition No.21 of 2001 and is currently pending before the Rajasthan High Court.
171. Simultaneously, GDCL/JUL challenged the order dated
24.11.2000 passed by the BIFR recommending winding up of JUL by
filing an appeal before the AAIFR. The matter reached up to this Court.
It was with reference to an application filed by SCL seeking to
intervene and propose a scheme for rehabilitation of JUL. Finally, this
Court vide judgment dated 24.08.2016 opined that SCL will not have
any locus to intervene. The appeal before the AAIFR was revived.
172. On the other side, in Company Petition No.21 of 2001
registered on the basis of recommendation made by the BIFR,
Rajasthan High Court vide order dated 12.07.2018 had appointed
provisional liquidator. He was directed to take immediate steps to take
over the assets of the company. However, subsequently vide order
91
dated 28.05.2019, the implementation of aforesaid order was stayed as
the matter was pending in this Court.
173. During the pendency of the appeal before the AAIFR, Sick
Industrial Companies (Special Provisions) Act, 1985 was repealed vide
The Sick Industrial Companies (Special Provisions) Repeal Act, 2003,
which came into force on 01.12.2016. Simultaneously, The Insolvency
and Bankruptcy Code, 2016 was enacted. Section 252 thereof came into
force with effect from 01.11.2016. The same is extracted below:
“252. Amendments of Act 1 of 2004. – The Sick Industrial
Companies (Special Provisions) Repeal Act, 2003
shall be amended in the manner specified in the
Eighth Schedule.
x x x
THE EIGHTH SCHEDULE (See section 252)
AMENDMENT TO THE SICK INDUSTRIAL
COMPANIES (SPECIAL PROVISIONS) REPEAL ACT,
2003 (1 OF 2004)
In section 4, for sub-clause (b), the following sub-
clause shall be substituted, namely—
“(b) On such date as may be notified by the
Central Government in this behalf, any appeal
preferred to the Appellate Authority or any reference
92
made or inquiry pending to or before the Board or
any proceeding of whatever nature pending before
the Appellate Authority or the Board under the Sick
Industrial Companies (Special Provisions) Act, 1985
(1 of 1986) shall stand abated:
Provided that a company in respect of which such
appeal or reference or inquiry stands abated under
this clause may make reference to the National
Company Law Tribunal under the Insolvency and
Bankruptcy Code, 2016 within one hundred and
eighty days from the commencement of the
Insolvency and Bankruptcy Code, 2016 in
accordance with the provisions of the Insolvency and
Bankruptcy Code, 2016:
Provided further that no fees shall be payable for
making such reference under Insolvency and
Bankruptcy Code, 2016 by a company whose appeal
or reference or inquiry stands abated under this
clause.
Provided also that any scheme sanctioned under sub-
section (4) or any scheme under implementation
under sub-section (12) of section 18 of the Sick
Industrial Companies (Special Provisions) Act, 1985
shall be deemed to be an approved resolution plan
under sub-section (1) of section 31 of the Insolvency
and Bankruptcy Code, 2016 and the same shall be
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dealt with, in accordance with the provisions of Part
II of the said Code:
Provided also that in case, the statutory period within
which an appeal was allowed under the Sick
Industrial Companies (Special Provisions) Act, 1985
against an order of the Board had not expired as on
the date of notification of this Act, an appeal against
any such deemed approved resolution plan may be
preferred by any person before National Company
Law Appellate Tribunal within ninety days from the
date of publication of this order.”
174. Vide aforesaid section, amendment made in Section 4 of the
2003 Repeal Act provided that all pending proceedings before BIFR or
AAIFR shall stand abated. However, any company affected by that, in
whose case the proceedings were abated, was given liberty to make
reference to the NCLT under IBC within 180 days from the
commencement of IBC, in terms of provisions thereof. It is not in
dispute that IBC came into force with effect from 01.12.2016. No
proceedings were initiated by GDCL or JUL before NCLT within the
permitted time. Meaning thereby, the appeal pending before AAIFR
abated. As a consequence thereof, the recommendation of the winding
up made by the BIFR to the High Court was revived.
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175. The fact remains that neither any rehabilitation scheme was
submitted by GDCL in terms of liberty granted by this Court years
back in 2008 nor can the Unit be revived because of subsequent
developments. It will be too late now to permit GDCL to submit any
rehabilitation scheme. Firstly, the Unit cannot be revived, for which
details have already been noticed in the previous paragraphs. And
further none of the employees who may be working in the JUL may be
up to the age, who can be reengaged for employment. It is only their
children who also may or may not be interested. Furthermore, they
also do not have any right to claim employment merely because their
predecessors were working in any unit, which is closed. They only
have a right to receive unpaid wages.
176. At this stage we are unable to accept the argument raised
by learned counsel for GDCL that it was merely a lapse, and this court
can iron out the creases instead of going into technicalities. GDCL is a
big corporate, which is managed by professionals. In fact, actions were
being taken by GDCL from the very beginning as per its convenience.
No benefit can accrue to GDCL on this lapse especially when the unit
has not been revived and its only sale of its assets. The scheme for
setting up alternative industrial units also came from GDCL, when other
applicants submitted their proposals.
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STATUS OF SHARE ALLOTMENT IN JAIL AND JUL
177. It is a fact that the rehabilitation scheme prepared and
initially approved by BIFR was not implemented, and thereafter, BIFR
recommended winding up of JUL. GDCL was only handed over
management of JUL by an order dated 11.11.1994 passed by AAIFR.
That also lost significance after the winding up of JUL was
recommended by BIFR. Appeal against that order abated with repeal
of SICA. Any allotment of new shares by GDCL to its group companies
has to be declared illegal. Ordered accordingly.
CALCULATION OF DUES OF WORKERS
178. As far as calculation of dues of the workmen is concerned,
it has come on record that the same stood settled as far as the workers of Kanpur Jute Mill is concerned. However, the issue is pending with regard to the cement plant.
179. There is an initial award dated 05.12.2008 passed by Justice
N.N. Mathur (Retd.) deciding the principles on the basis of which the
calculation of the dues is to be made.
180. Subsequently, quantification thereof was made by a
committee headed by Justice Aftab Alam (Retd.).
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181. According to GDCL, the aforesaid amount is about ₹ 96
crores whereas the workmen claimed that the dues are to the tune of
₹115 crores. In addition to that, simple interest @5% per annum was
also awarded. Further, provident fund dues are also to be calculated.
182. We may clarify that we have merely noticed briefly what
transpired in the two reports. For the purpose of calculation, the
reports have to be considered in detail.
183. For the purpose of identifying the workers or their family
members, exercise is being done since 02.09.2021 by appointment of
Court Commissioners with representation of the workers union as well
as GDCL. Substantial amount has been paid as well. Whatever amount
remains, for that, exercise has to be carried out in a time bound manner
as the matter cannot be kept pending for infinity for that purpose.
Simultaneously, the provident fund dues of the workmen also need to
be calculated for which Regional Provident Fund Commissioner,
Rajasthan may have to be looped in.
STATUS OF WINDING UP
184. From various documents on record, it is evident that BIFR
had recommended winding up of JUL vide order dated 24.11.2000 to
the Rajasthan High Court. Initial notice of the winding up of JUL was
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issued on 27.07.2001. However, subsequently on 18.01.2002, the
proceedings were directed to remain pending on account of stay of the
order dated 24.11.2000 passed by the BIFR recommending winding up
of JUL in S.B. (Civil) Writ Petition No.4380 of 2001. After the appeal filed
by JUL/ GDCL against the order dated 24.11.2000 abated with the
repeal of SICA and enactment of IBC, the proceedings were re-
initiated.
185. Before that, vide order dated 12.07.2018, the Rajasthan High
Court appointed the official liquidator attached to that Court as the
provisional liquidator. He was directed to take steps for taking over the
assets of the company. Formal order in terms of Rules 106 and 109 of
Companies (Court) Rules, 1959 was directed to be prepared, however
the publication was dispensed with.
186. Vide order dated 15.11.2018, Rajasthan High Court noticing
the pendency of the present writ petition before this Court kept the
matter in abeyance, to wait for further orders by this Court.
187. On 18.01.2002, the Rajasthan High Court stayed further
proceedings in the main Company Petition No. 21 of 2001 because the
underlying orders of the BIFR and appellate authority had already
been stayed in a separate writ petition. The second stay was granted
on 28.05.2019, wherein the Court stayed the operation and effect of its
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own provisional winding- up order dated 12.07.2018 , noting that it was
appropriate to keep that order in abeyance until the related matter was
decided by this Court to avoid any ambiguity.
188. As such, the aforesaid petition is pending before Rajasthan
High Court.
189. Winding up of JUL was recommended by BIFR as it had
failed to pay its debts. Even the rehabilitation scheme submitted by
GDCL was also not implemented. However, the fact which emerge as
on today, is that all the debts of GDCL have been cleared. Meaning
thereby, it is not a company in default. Considering the aforesaid fact,
the recommendation made by BIFR for winding up of JUL, as pending
before the Rajasthan High Court, will be rendered infructuous.
FUTURE COURSE OF ACTION FOR THE ASSETS OF JUL AND JAIL
190. There is a long list of assets of JUL and JAIL, as was pointed
out by Mr. Dhruv Mehta, learned counsel appearing for Respondent
Nos. 5 and 6. No defects were pointed out in the list. But still, the Court
appointed Administrator can enquire if there is any other asset of JUL
and also the leftover assets of JAIL.
191. Some part of the assets of JUL as well as JAIL were sold by
GDCL without following any process of law.
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192. As far as sale of Kanpur Jute Mill is concerned and two
properties of JAIL is concerned, we do not wish to enter into that part
as it may open a new pandora’s box. The buyers of those properties
may have to be heard in compliance with principles of natural justice.
Accordingly, we do not set aside the sales. Even though, the allegation
of the petitioners as well as the applicants is that the transactions were
under valued. To reach to that conclusion, evidence will have to be
lead.
193. As far as the sale of scrap of Sawai Madhopur Unit is
concerned, though permission from this Court was taken, however, on
an objection raised by some of the workers, lifting of the scrap was
stayed by this Court. For how much amount the scrap was sold, was not
disclosed before the Court. The amount is also lying with GDCL.
194. An application (I.A. No.253716 of 2024) has been made by
the buyer of the scrap, namely R.A. Enterprises seeking permission
from this Court to lift the same. However, considering the fact that the
scrap has not yet been lifted, we set aside the sale. GDCL shall refund
the amount received on account of sale of scrap along with interest @
8% p.a. within a period of two months.
195. As far as the balance properties of JUL and JAIL is
concerned, in terms of the documents placed on record, an inventory
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thereof shall be prepared. Before any action is taken, its proper
valuation has to be made after finding the status thereof. It is only after
the estimated valuation thereof is available with the Court, any action
for disposal or use thereof can be taken. This Court, at this stage, is not
forming any opinion on this issue. The same is left upon to be
considered after the dues of the workmen are cleared. But prima facie
it should be used for some good public use. However, the process of
identification and valuation of the assets can go simultaneously and
needs to be done in a time bound manner.
RELIEFS
REGARDING DUES OF THE WORKMEN
196. An exercise be carried out in a time bound manner for
verification of dues of the workmen in order to clear that liability within a period of four months. As all the employees or their wards are represented before this Court through various Unions, it will be the last
and final public notice to them to cooperate in the process so that beneficiaries could be identified and the amount be paid to them. Needful be done finally by 31.08.2026. 196.1 Simultaneously, Employees Provident Fund Organisation
be also looped in for calculating the provident fund dues of the
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workmen and even that payment should also be released in their
favour.
HOUSES/ FLATS IN POSSESSION OF WORKERS
196.2 As far as the houses and plots in the Sawai Madhopur Unit
or at any other place is concerned, following directions are issued:
i) Identity of the accommodation, area thereof.
ii) the person who was allotted the same.
iii) the date of allotment.
iv) the person in possession of the accommodation, at
present.
v) Whether he is the family member of the original
allottee or any third party? If third party, the details
thereof.
vi) If any person other than the employee or his family
member is in possession thereof, his/ capacity and
status. How he/she came in possession thereof?
vii) If any underhand transactions are found where the
management, employee or his/her family member
had transferred the title or possession of the
accommodation to any third party, no right shall flow
to him/her and the property will revert back to JUL. If
in the process any clandestine transaction is found,
the person may be liable for criminal action as well.
Transferee or title or possession will have right to
proceed against the person who transferred him/her
the rights.
viii) after entire dues are paid to the workers of Rajasthan
unit, they will handover, vacant physical possession of
the accommodation in their possession to person
nominated by this Court at that stage, i.e., 6 months
after the payment is made to them. Thereafter, they
may be charged penal rent to be decided by this
Court at that time.
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They will not be liable to pay any charges for use and
occupation of the same as their dues were not paid
and they were in litigation before various forums.
ASSETS OF JUL and JAIL
196.3 An inventory of assets of JUL and JAIL may be prepared. Its
present status and the person in possession thereof may be found. An exercise may be undertaken for its valuation. Local authorities of the places concerned shall assist in the process.
SALE OF PROPERTIES OF JUL and JAIL
196.4 For the purpose of payment of dues to the workmen and,
reimbursement of the amount spent or invested by GDCL, some of the
properties of JUL/JAIL may have to be sold. After the process of identification of the properties and its valuation is complete and report is before this Court, the issue will be decided as to how and which of the properties need to be sold.
SALE OF ASSETS BY GDCL
196.5 The Kanpur Jute Mill and two properties of JAIL sold by
GDCL without permission of either this Court or through the committee as suggested by BIFR is not interfered with. However, the sale of scrap of Sawai Madhopur Unit is set aside as the amount of sale consideration
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is lying with GDCL. The same may be refunded to the buyer, alongwith
interest @ 8% p.a. within 2 months.
196.6 The amount already paid by GDCL to the creditors of JUL
shall be reimbursed to it from the sale proceeds of the properties of
JUL along with interest @ 8% p.a. after sale of propert ies. Amount lying
deposited in this Court will be refunded to GDCL along with interest
accrued thereon. However, a sum of ₹ 1 crore shall be retained out of
the same for the process to be carried out as per directions issued in
this judgment, which shall be paid to GDCL along with other amount
payable to it, after sale of properties of JUL/JAIL.
COMPANY PETITION NO. 21 OF 2001
196.7 The Company Petition No.21 of 2001 pending before the
Rajasthan High Court shall stand disposed of as infructuous as JUL is no more in debt.
REGARDING APPLICATIONS FILED BY M/S FROST REALITY
LLP AND M/S DICKEY ASSET MANAGEMENT PRIVATE LIMITED
197. I.A.No.170433/2024 filed by M/s Frost Realty LLP and
I.A.No(s).43385 and 43388/2026 filed by M/s Dickey Asset
Management Private Limited shall stand rejected, as without valuation
of the assets of JUL, their proposal for taking over of the unit upon some
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payment to the workmen either in cash or in the form of plots cannot
be accepted. A sum of ₹ 25 crores deposited by M/s Frost Realty LLP
with this Court shall be refunded to it along with the interest accrued
thereon. The amount be transferred in its bank account on furnishing
the details thereof.
COURT ADMINISTRATOR
198. For the purpose of compliance of directions issued in
paragraph Nos. 196-197, to oversee work of the Court Commissioners
appointed for verification of the claims of the workmen and also
coordinate with the PF authorities for calculation of PF dues. We
appoint Justice Manindra Mohan Shrivastava, former Chief Justice of
Madras High Court as Administrator. He can engage staff as per
requirement and exigency of the assigned tasks. He shall also have the
power to call for copies of relevant records from government offices
for valuation of assets and liabilities. In the process of valuation, he may
avail the services of experts/professionals as need be. An amount of
₹50 lakhs is to be transferred from ₹1 crore, to be retained with this
Court in an escrow account in the name of JUL, with the appointed
administrator being its authorized signatory. For the period of his
appointment, the administrator shall be paid a monthly honorarium of
₹2 lakhs. In addition, a sum of ₹2 lakhs per month shall remain at his
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disposal for payment to the staff engaged, payment to the experts and
other miscellaneous expenses. In case more than the aforesaid amount
is required for the the tasks assigned, the administrator will be at
liberty to write a letter/communication to the Registrar of this Court,
who shall list the same before the Court without any delay, treating the
same as a Miscellaneous Application. The soft copies of the entire
records of the Writ Petition (Civil) No. 392 of 2015 shall be supplied by
the Registry of this Court to the Administrator.
199. Before parting with the order, we may make it clear that
how the balance assets or surplus after clearance of the dues of the
workmen will be used is to be decided by this Court, later on, when
entire exercise is completed. For the purpose of compliance, a report
in that regard be filed before this Court within six months. Liberty to
mention and seek clarification from the Court by the appointed
administrator.
200. The present Writ Petition (Civil) No.392 of 2015 is
accordingly disposed of.
201. In view of the discussions made above, no further order is
required to be passed in Contempt Petition (Civil) Diary No.61491 of
2025. The same is accordingly disposed of.
202. Pending application(s), if any, shall also stand disposed of.
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……………….……………..J.
(RAJESH BINDAL)
……………….……………..J.
(VIJAY BISHNOI)
New Delhi;
April 15, 2026.
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