Holding

The appeal is dismissed; the appellant lacks locus standi and the settlement and sale are lawful, leaving no ground for interference under Article 136.

Summary

The appellant, a workman of Laxmi Vishnu Textile Mills, challenged a tripartite settlement and the sale of the mill’s assets to a purchaser, alleging that the settlement was illegal, that the sale violated a BIFR order under the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA), and that the workers’ dues were not adequately met. The High Court dismissed his writ petition under Article 226, holding that the matter was not fit for extraordinary jurisdiction. On appeal, the Supreme Court held that the appellant had no locus standi, that the Representative Union of workers had statutory authority to settle the claims and that the settlement and sale were carried out in compliance with the BIFR’s directions and the Bombay Industrial Relations Act, 1946. The Court found no extraordinary flaw or grave injustice warranting interference under Article 136 and dismissed the appeal.

Issues considered

The appellant’s locus standi to challenge the tripartite settlement and sale of assets.
Whether the tripartite agreement and sale violated the BIFR’s interim order under SICA.
Whether the High Court was correct in refusing to entertain the writ petition under Article 226.
Whether the Supreme Court should entertain a special leave petition under Article 136.
The scope of the Representative Union’s powers under the Bombay Industrial Relations Act, 1946 and the employee’s right to appear in proceedings.

Legislation cited

Bombay Industrial Relations Act, 1946s. 14, s. 27A, s. 30, s. 32, s. 33
Payment of Gratuity Act, 1972
Sick Industrial Companies (Special Provisions) Act, 1985s. 20, s. 22A, s. 33

Subjects

sick industrial companyBIFRSICAArticle 136Article 226Representative Unionlocus standione‑time settlementtripartite agreementindustrial relationswinding upsale of assets

Judgment

[2008] 10 S.C.R. 782

A ::-.iHt 1/ANAND GAURISHANKAR BASWANTI
II.
LAXMI VISHNU TEXTILE MILLS & ORS.
(Civ.il Appeal No. 4324 of 2008)
JULY 11, 2008
8
[C.K. THAKKER AND D.K. JAIN, JJ.]

Constitution .of India, 1950:
··Articles 136 and 226 - Company declared sick under
C the sick lndius Oriat Companies (Special Provisions) Act, 1.985
·(SICA) - BiFR opining for winding up of the Company - Offer ,'
..
for pwchase of property of ·the Company - In joint meetings
.
between the sick company, proposed purchaser, secured and
unsecured creditors and the Representative Union of work-
D men, agreement by the creditors -an.d workers to accept lesser
amount of the dues as one time settlement- PIL by one of the
workers .challenging the. agreement, disposed of with direc-
tion to ?pproach appropriate forum - Subsequent writ petition
·by the worker challenging the settlement dismissed as not
E maintainable - On appeal, .held: The appellant has no locus
standi to address the grievance - All the workers were bound
by the decision taken by the Representative Union - Indus-
trial employee has no right to represent the workmen - The
grievance should have been addressed before appropriate
F forum and not under Article 226 of the Constitution - In the
facts of the case the course taken for se_ttlement was appropri-
ate and was not contrary to law - Decision taken by the Union
does not suffer from any infirmity - Hence, in view of the facts
of the case, interference under Article 136 not called for -
G Bombay Industrial Relations Act, 1947 - ss. 14, 27A and 30.
Article 136 - Discretionary jurisdiction - Scope of - Held:
Discretionary jurisdiction under Article 136 has to be tampered
with equity - The Court to .exercise the jurisdiction only if ex-
traordinary flaws or grave injustice or other recognized grounds,
H 782
SHIVANAND GAURISHANKAR BASWANTI v. LAXMI 783
VISHNU TEXTILES MILLS & ORS .
. . -+
are made out - Court not to act as a regular court of appeal. A
Respondent No. 1-Company, incurred heavy losses
and was closed down. Proceedings had been initiated un-
der SICA. BIFR initially had restrained the management
from disposing or transferring the assets without its prior
permission, but finally it recommended winding up of the B
Company. In favour of one of the major creditors (State
Bank of India) Debts Recovery Tribunal (ORT) passed a
decree for Rs. 84.39 crores with interest. Controlling Au-
thority under Payment of Gratuity Act passed orders in
favour of the workers directing ·the respondent-Company c
to pay the gratuity with interest. Since the respondent-
Company was not in a position to pay the entire dues,
ORT ordered to take steps to hold a joint meeting of all
the financial institutions an~ representatives of workers
in order to settle the matter.In the meantime, respondent D
No. 7 expressed its willingness to purchase the property
for Rs. 46.65 crores .. A tripartite agreement had been ar-
rived at between the respondent-Company, respondent
No.8-representative Union of workers and respondent No.
7 purchaser. As the property owned by the respondent- E
Company was not enough to meet all the liabilities, work-
ers Union agreed to accept an amount of Rs. 22.21 crores
towards full and final settlement as against the claim of
Rs. 132 crores. In a subsequent joint meeting of secured
-y
and unsecured creditors, it was agreed that they would F
share the sale proceeds of Rs. 46.65 crores by One Time
Settlement foregoing their claim for the entire amount. In-
cidentally property was sold to respondent No. 7.
Appellant (a workman) on coming to know about the
agreements, submitted a representation to High Court <S
which was treated as Public Interest Litigation. Ultimately
... the same was disposed of observing that the grievance
~
could not be adjudicated under PIL and the same could
be pursued before appropriate forum.
H
784 SUPREME COURT REPORTS [2008] 10 S.C.R.

+- ..
A Appellant thereafter filed the present writ petition
under Article 226 of the Constitution. High Court summarily
dismissed the petition holding that it was not a fit case to
entertain the petition in exercise of jurisdiction under Ar-
ticle 226. Hence the present appeals. '\

B Dismissing the appeal, the Court y

HELD: 1.1 This is not a fit case for exercise of discre-
tionary and equi~ble jurisdiction under Article 136 of th'e
Constitution. This Court is not expected to act as 'regular
c Court of appeal' settling disputes by converting into a 'Court
of Error'. It interfer~s only when justice demands interven-
tion by the highest Court of the country. The power of this
Court is plenary, overriding and extensive and there are
no words qualifying, restricting or limiting that power. The
very conferment of discretionary power defies any attempt
D
at exhaustive definition of that power. The power, however,
has to be exercised for doing full and complete justice. But
wider.the discretionary power, the more sparing its exer-
cise. [Para 16, 49 and 50] [798-a, 817-A,8,C]
E 1.2 The very width of the power under Article 136 is
a warning against its 'freewheeling exercise save in grave
situations'. Circumspection and circumscription must,
therefore, induce the Court to interfere with the decision
under challenge only if the extraordinary flaws or grave
F injustice or other recognized grounds are made out. [Para 'll; •.
53] [818-8,C] r
1.3 While exercising power under Article 136 of the
Constitution, this Court not only acts as a Court of law but
also as a Court of equity and hence the power exercised
G by this Court under Article 136 must subserve ultimately
the cause of justice. The Court must decide all issues
,4 .
coming before it on the considerations of justice, equity -;.. .I

and good conscience. Legal formulations cannot ·be di-
vorced from ground realities, fact-situations before the
H Court and the effect of laws on the human beings for whom
SHIVANAND GAURISHANKAR BASWANTI v. U\XMI 785
. VISHNU TEXTILES MILLS & ORS.

they are meant. Discretionary jurisdiction under Article A
• 136, therefore, has to be tampered with equity. This Court
would be failing in its duty if it does not notice equitable
considerations. [Para 51] [817-C,D,E]
1.4 In view of the developments in the present case,
if sale in favour of respondent No.7 is set aside, serious 8
prejudic_e will be caused not only to respondent No.1 and
respondent No.7-vendor and vendee, respectively, but
also to others like banks, financial institutions, other credi-
tors and also to workers for whose benefit and welfare
the appellant is fighting. It is pertinent to _note that no se- C
cured or unsecured creditor has come forward making
grievance that though he was entitled to more amount,
he has not been paid such amount. So far as workers are
concerned, the Representative Union has preferential
right to appear in the proceedings under the Act. Hence, b
taking any view of the matter, this is not a fit case to exer-
cise discretionary and equitable jurisdiction under Article
136 of the Constitution. [Para 55] [819-8,CD]
Sadhanathan v. Arunachalam, 1980 (3) SCC 141;
Statesman Ltd. v. Workmen, 1976 (2) SCC 223 - relied on. E
La Cite de Montreal v. Les Eccelesiasticues, 1889 (14)
AC 660 - referred to.
2.1 l;ven on merits, the impugned action calls for no
interference. The order passed by BIFR. makes it clear F
that the Board was of the opinion that in the interest of
rehabilitation of the sick industrial company, its creditors,
shareholders as also in public interest, certain directions
were necessary. The Company was, therefore, restrained
from disposing the property which was charged /hypoth- G
ecated to financial institutions. Tripartite agreement had
been arrived at wherein representatives of labour Union,
first respondent-Mill Company and the purchasers were
present and the agreement was signed by all of them. Like-
wise,' in the joint meeting of secured and unsecured credi- H
786 SUPREME COURT REPORTS . [2008) 10 S.C.R

A tors,. representatives of Union and vendor and vendee,
all of them agreed.fQr One Time Settlement and expressed
. their willi~griess tO accept lesser amount. In the1 circum-
..
stances, charge imposed and prohibition issuedj by BIFR
.orrthe Company ·no· more ·remained .operative. It was. ob- ..
B · serVed ·by the Recovery Officer of· ORT to send informa-
. •tion to BIFR after confirmation of sale. Consequential ac-
ticm of confirmation of sale was thereafter taken and sale
certificate was also issued, All the actiom; weretaken only.
·. a_fter thefjoirit meetings were held between the parties.
· .c They, the~e.fore; could_· not be said tO be contrary to law or
· · in violatimi otthe order passed by BIFR. [Para .26 & 271
.. [802-F, *303-D,E;F,G 804.;A,B]
· 2.2. Eve~ otherwi~e, on the fa(;ts.and in the circum~···
stances of the case; had the agreements in question not
· D been arrived at, all parties Including workers for whom
., grea(cc>ncern had. been shown by the appellant' would
.·have stJffered.. It vvas because of conjoint and combined·
effortS of an the partiestti~t agreements could be arrived
at·. arid workmen were··able to get the .. ~mouritwhichhad
E no~ been paid to them for many years. The contentionthat
secure,4 and m1secured · c.reditors and workers have not
receiv~d .their.
dues .has no· force.
. ..
If>ara·• 281[804•8,C,D,E]
'. ··, ..

. :. ~·· .... '
SHIVANAND GAURISHANKAR BASWANTI v. LAXMI 787
VISHNU TEXTILES MILLS & ORS.

High Court, therefore, was right in dismissing it in limine A
by passing the impugned order that it was not a fit case
to exercise extraordinary jurisdiction under Article 226 of
the Constitution. [Para 17] [798-8,C,D,E]
4.1 Neither by a secured nor an unsecured creditor.
nor a representative of a labour union; nor even a person B
acting pro bona publico has approached this Court. PIL
Writ Petition at the instance of the appellant was dismissed
by the High Court and the said decision was never chal-
lenged by him. Here is an employee who is also one of
the workers, who has been paid his dues. He accepted C :
the amount and issued 'No Objection Certificate' (No Dues
Certificate) -no doubt by putting an endorsement "Ac-
cepted under Protest". He has urged that the workmen
have not been paid their dues and injustice had been done
to them. Even there, the appellant is not right. A Repre- D
sentative Union has taken a decision which is binding on
all employees. [Para 29] [804-E,FG]
NGEF Ltd. v. Chandra Developers (P) Ltd., 2005 (8) SCC
219; Pankaj Mehra v. State of Maharashtra, 2000 (2) SCC E.
756 - referred to.
Gray's Inn Construction Co. Ltd., Re, 1980 (1) All ER 814
: 1980 (1) WLR 711 - referred to.
4.2 Under the Bombay Industrial Relations Act, 1946,
- -x it is the 'Representative Union' which has all powers to F
enter into a settlement on behalf of workers in the indus-
try and it is only that Union which can take a decision
under the Act. The said decision would bind not only the
members of the Union, but also to those workers who are
not members of such Union. Representative Union is hav-
ing priority and 'preference' over other Unions to appear
. ._ + on behalf of employees of such industry in the area.
[Paras 32 and 37] [805-F,G, 805-G, 807-G, 808-A]
Girja Shankar Kashi Ram v. Gujarat Spinning and Weav-
788 SUPREME COURT REPORTS [2008] 10 S.C.R.

A ing Co. Ltd., (1962) Supp 2 SCR 890; Textile Labour Asso-
ciation, Bhadra, Ahmedabad v. Ahmedabad Mill Owners As-
sociation, Ahmedabad, 1970 (3) SCC 890; Santuram Khudai
v. Kimatrai Printers and Processors Pvt. Ltd. and Ors., 1978
(1) sec 162, - relied on.
8 4.3 Combined reading of Sections 27A, 30, 32, 33 and Y,
80 of the Act make it clear that consistent with the avowed
policy and prevention of exploitation of workmen and aug-
men~tion of their bargaining power, the Legislature has
clothed the Representative Union ~ith plenary power to
C appear or act on behalf of employees in any proceeding
under the Act. Keeping in view the said object, it has de-
prived individual employees or workmen of the right to
appear or act in any proceeding under the Act where the
Representative Union enters appearance or acts as repre-
D sentative of the employees. [Para 45] [815-8,C,D]
4.4 Mala tides or bona tides of the Representative Union
has no relevance in construing the relevant provisions of
the Act. In case the employees find that the Representa-
tive Union is acting in a manner which is prejudicial to their
E interests, their remedy lies in invoking the aid of the Regis-
trar under Chapter Ill of the Act requesting him to cancel
the registration of the union. In the instant case in the local
area concerned respondent No. 8 is admittedly the only
Union which has the status of Representative Union in
F Textile Industry under the Act. In view of the above fact, no
other Union/Assocjation of employees or individual em-
pioyees have right to represent the workmen of that indus-
try in that area. [Paras 46 and 47] [815-E,FG,, 8_16-A]
G 4.5 There were about 4500 employees in respondent
No.1-Mill when it was closed down in February, 1995.
Within a period of about a decade, 400 workmen had al-
ready died. None of them, however, received any wages
or other benefits because of the pendency of several pro-
ceedings in different courts .. The Representative Union
H
SHIVANAND GAURISHANKAR BASWANTI v. LAXMI 789
VISHNU .TEXTILES MILLS & ORS. [C.K. THAKKER, J.]
• -+
considered'. their legitimate grievance and thought it A
proper toge'~ the matter settled if reasonable amount could
be paid to them, keeping in view well-known saying "one
in hand is better than two on bush". They considered the
matter in its entirety, financial condition of the first respon-
-y dent-Company, claim of secured and unsecured creditors, B
a number of decrees and orders passed by various Au-
thoriti~s under different laws and the properties of the
Company. In the larger interest, the Union decided to ac-
cept the amount of Rs.22.21 crores for workers towards
full and final settlement. By no stretch of imagination, such c
action could be held improper, illegal or mala fide. The
approach adopted and decision taken by the Represen-
tative Union-respondent No.8 suffers from no infirmity and
cannot be regarded as illegal or otherwise unreasonable.
[Para 48] [816-A,8,C,D,E]
D
CIVILAPPELLATE JURISDICTION: Civil Appeal No. 4324
of 2008
From the ·Judgment and final Order dated 12.2.2007 of
the High Court of Judicature at Bombay in W.P. No. 5664/2006
E
K.V. Vishwanathan, Goutam Godara and Gopal Balwant
Sathe for the Appellant.
Anil Diwan, Shekhar Nephade, S. Ganesh, Santosh Paul,
M.J. Paul, V.8. Joshi, Kailash Pandey, Vinay Navare, Abha R.
-) Sharma, Aparajita Singh, Sanjay V. Kharde, Asha Gopalan Nair, F
C.G. Solshe; Vinesh C. Solshe, Malvika Trivedi, T. Mahipal,
Arvind Gupta, John Mathew and C.K. Sasi for the Respondents.
The Judgment of the Court was delivered by
C.K. THAKKER, J. 1. Leave granted. G

... + 2. The present appeal is directed against summary dis-
missal of writ petition No. 5664 of 2006 on February 12, 2007
by the High Court of Judicature at Bombay observing that it was
not a fit case to entertain the petition in exercise of extraordi-
H
790 SUPREME COURT REPORTS [2008] 10 S.C.R.
+..._
A nary jurisdiction under Article 226 of the Constitution.
FACTUAL BACKGROUND
3. The case has a chequered history and with a view to
appreciate the contentions raised by the parties, .the background
B is required to be kept in view; Laxmi Vishnu Textile Mills ('Com- y
pany" for short)+respondent No, 1 herein was formerly known
as Vishnu Cotton Mills Ltd. It was registered on May 19, 1908
under the.Indian Companies Act, 1873 (then in force). It was
operating through two cotton textile mills, namely, (i) Laxmi Mill,
c and (ii) Vishnu Mill. Somewhere inthe year 1961, Laxmi Mill
was merged in Vishnu Mill and was given the present name i.e.
LaxmiVishnu Textile Mills Ltd.There were large number of work-
ers in the mill and there was considerable profit in the business.
By the passage of time, however, the Company started incur~
ring losses and things turned worse in later eighties. Proceed-.
D
ings under the Sick Industrial Companies (Special Provisions) +
Act, 1985 (hereinafter referred to 'SICA') had been initiated.
On April 28, 1994, the Board of Industrial and Financial Recon-
struction, New Delhi ('BIFR' for short) issued an order declaring
the Company as 'sick unit' and in exercise of powers conferred
E on it under Section 22A of the Act, it restrained the promoters/
management from disposing or transferring its assets described
in the order without prior permission of the Board. It was also
stated that violation of the order passed by the Board would be

F
dealt with under Section 33 of SICA.
,._
4. It is also the case of the appellant that without issuing
notice and without obtaining permission from the Appropriate
Authority as required under Sections 25-0 and 25-N of the In-
dustrial Disputes Act, 1947, the management of the Company
resorted to illegal closure and lockout of the Company. Thus,
G
from February 28, 1995, the Company is illegally closed.
~)>.
5. According to the appellant, BIFR considered the facts
and circumstances of the case in their entirety and on Decem-
ber 30, 1996 passed an order recording its satisfaction as re-
H
SHIVANAND GAURISHANKAR BASWANTI v. LAXMI 791
. ~...;. VISHNU TEXTILES MILLS & ORS. [C.K. THAKKER, J.]

quired by sub-section (1) of Section 20 of the Act that it was not A
possible for the Company to revive and it was just and equi-
table that Company should be wound up. The opinion was for-·
warded to the High Court of Judicature at Bombay with a re-
quest that banks and financial institutions may explore the pos-
sibility of sale of the assets of the Company. It was proposed to B
entrust the work of sale of assets to State Bank of India (SBI),
the lead bank in the case. The Operative Agency (OA), namely,
IDBI was directed to hold a joint meeting of all participating banks
and financial institutions and to furnish a detailed report on sale
of assets of the Company through SBI latest by February 28, c
1997.
6. It may be stated at this stage that SBI was one of the
major creditors. It initiated recovery proceedings against the
Company by filing Original Application No. 2638 of 1999 and
+ got a decree from Debt Recovery Tribunal (DRT)-1, Mumbai D
for a sum of Rs.84.39 crores with interest. Other financial insti-
tutions had also initiated proceedings for recovery of their dues.
Receiver was appointed by DRT-1, Mumbai, who took posses-
sion of the properties of the Comrany. Steps were also taken
to protect properties by employing police force. The Receiver E
also met representatives of Rashtriya Girni Kamgar Sangh, rec-
ognized Union-respondent No.8 herein. The Receiver was in
possession of the property except those properties which were
occupied by the employees who were in service of the Com-
- ); pany and were residing in the quarters provided to them while F
they were in employment. Possession of the machinery and
other movable properties of the Company was also taken over.
Since the dues of workers were neither settled nor paid, sev-
eral workers approached Controlling Authority under the Pay-
ment of Gratuity Act, 1972 for gratuity. Orders were passed in
G
their favour directing the Company to pay full amount of gratuity
"""'-+ with interest thereon. The said amount was also not paid. Mean-
while, Trans Asia Global Company-respondent No.7 ex-
pressed its desire to purchase the property. According to the
appellant, respondent No.8-Union had no authority to repre-
H
792 SUPREME COURT REPORTS [2008] 10 S.C.R.

A sent the interests of workers of respondent No.1-Company
and yet on March 8, 2005, it purportedly entered into a tripartite ,,.
agreement with respondent No.1-Company, respondent
No.8-Union and respondent No.7-M/s Trans Asia Global Com-
pany. Respondent No.1-Company under the tripartite agreement
s sold the property to respondent No. 7 for Rs.46.65 crores. The Y
claim of the workmen was settled at Rs.22.21 crores whereas
in fact, the claim of the workmen was more thanHs.132 crores.
The purported agreement never brought to the notice of the
workmen and they were kept in complete dark. The property of
C the Company was worth Rs.250 crores which could have satis-
fied claims of SBI, legitimate dues of the workmen as also of
financial institutions and other creditors. According to the ap-
pellant, the other agreement was also entered into between
secured and unsecured creditors, labour representatives, the
0
Company and the purchaser on April 20, 2005. The agreement +
states that all secured creditors, unsecured creditors and rep-
resentatives of the workmen had a meeting and they all agreed
on One Time Settlement (OTS) and accepted the scheme of
selling the entire property by a private treaty to respondent No. 7
and accordingly the property was sold. The action, however,
E was totally illegal, uncalled for and in contravention of various
provisions of law.
P/L WRIT PETITION
7. According to the appellant, as soon as he came to know
F about the above agreements, sale of property by private nego-
tiations and without taking workers in confidence, he submitted
a representation to the Chief Justice of High Court of Bombay
pointing out several illegalities committed by respondent No.1-
Company in not settling the dues of workmen. The representa-
G tion was converted into Public Interest Litigation (PIL) and was
registered as PIL Writ Petition No. 126 of 2005. The appellant
herein filed an affidavit in the said petition on June 27, 2006.
The writ petition came up for hearing before a Division Bench
- of the High Court on July 13, 2006 and after hearing learned
H counsel for the parties, the writ petition was disposed of by the
SHIVANAND GAURISHANKAR BASWANTI v. LAX.Ml 793
VISHNU TEXTILES MILLS & ORS. [C.K. THAKKER, J.]
1~
Court observing that the grievance of the workers could be re- A
dressed before 'appropriate forum'. The complaint against sale
of property by private treaty also could be adjudicated in 'proper
proceedings' and the controversy did not deserve to be taken
into PIL. Liberty, however, was granted by the Court to all ag-
grieved parties to pursue 'appropriate remedy' for redressal of B
their grievances.
PRESENT WRIT PETITION
8. The appellant, thereafter, filed present Writ Petition No.
5664 of 2006 in the High Court of Bombay under Article 226 of c
the Constitution and prayed for a writ of certiorari or any other
appropriate writ, direction or order quashing all the actions in
the matter of recovery proceedings before the Recovery Officer,
Mumbai Debt Recovery Tribunal No.1 and by examining the
validity, propriety and correctness of such proceedings and to
D
quash and set aside order of sale of properties-movable and
immovable-of respondent No.1-Company in favour of re-
spondent No. 7. A writ of mandamus was sought directing DRT-
1, Mumbai not to disburse any amount to anyone till the claims
of the workers have been properly adjudicated and the amount
paid. A prayer was made to continue to employ all workers till E
their services are legally terminated or till lawful closure is et-
fected. Interim relief was also prayed.
ORDER OF HIGH COURT
- >: 9. The High Court, as observed above, dismissed the writ F
petition observing that it was not a fit case to interfere with by
an order dated February 12, 2007 in exercise of extraordinary
jurisdiction under Article 226 of the Constitution. The said order
is challenged by the appellant in this appeal.
G
10. Notice was issued by this Court on September 7, 2007
and meanwhile order passed by DRT was stayed. Affidavits
""~- and further affidavits were thereafter filed by the parties. The
Registry was directed to place the matter for final disposal and
that is how the matter is before us.
H
794 SUPREME COURT REPORTS [2008] 10 S.C.R.

+-.\
A ·11. We have heard learned counsel for the parties.
APPELLANT'S SUBMISSIONS
12. Learned counsel for the appellant contended that all
. orders passed and actions taken by the Authorities are unlaw-
B ful, illegal and contrary to law. It was submitted that the first re- y
spondent-Company had resorted to illegal closure and unlawful
lockout due to which workers had suffered a lot. It was also sub-
mitted that when proceedings had been initiated under SICA
and an·order was passsd by BIFR restraining the management
c of the 1st respondent-Company from transferting, alienating or
disposing its property, no action could have been taken for sale
of the property. Apart from the factthat such action is Illegal and
in violation ofthe order passed by BIFR, it is also contrary to
law and is punishable under Section 33 of SICA. A grievance
was also made that though there were several secured and
D
unsecured creditors and more than 4,000 workers, whose dues + r
had not been paid, they were never taken in confidence and
private settlement had been arrived at. Such action could not
be said to be legal or in consonance with law. Moreover, the
property of the 1st respondent-Company which is worth more
E
than Rs.250 crores had been sold away by a 'throw away' price
of less than Rs.50 crores. It has prejudicially affected the inter-
est of families of thousands of workers who would have other-
wise got their legitimate dues but for the illegal settlement by
'interested' persons. According to the appellant, most of the
F workers were not in favour of so called settlement of accep- ;\-
tance of an amount of Rs.22.21 crores towards full and final
settlement of their dues when they were actually entitled to six
times more the said amount. Respondent No.8 could not have
represented all the workers and entered into such settlement
G ·by accepting less than 20% of their dues. According to the ap-
pellant, most of the workers have objection against such settle-
....

- ment and they have supported the appellant and several em- ~

ployees had expressed their opinion in writing to that effect.
The appellant had stated that when he came to know about the
H decree passed by ORT and execution proceedings in pursu-
SHIVANAND GAURISHANKAR BASWANTI v. LAXMI 795
~~ VISHNU TEXTILES MILLS & ORS. [C.K. THAKKER, J.]

ance of the said decree and sale of property, he drew the atten- A
tion of the Hon'ble Chief Justice of High Court of Bombay by
making a representation which was treated as PIL Writ Peti-
tion. The High Court ought to have granted relief in that pro-
ceeding. The High Court, however, disposed of the writ-petition
-y by granting liberty to the parties to take appropriate proceed- B
ings in accordance with law. The appellant, therefore, filed fresh
petition but the High Court by a 'cryptic' order; dismissed the
same without entering into the merits of the matter. It was, there-
fore, submitted by the appellant that the impugned order passed
by the High Court deserves to be set aside quashing and set- c
ting aside the order of sale in favour of respondent No. 7 and by
directing the authorities to decide the matter afresh in accor-
dance with law.
RESPONDENTS' SUBMISSIONS
-+ 13. The contesting respondents, on the other hand, strongly
D
urged that the appeal deserves to be dismissed and no inter-
ference by this Court is called for. The appellant has no locus
standi to file a petition either in the High Court or to prefer an
appeal in this Court. It was contended that respondent No.1-
Company was in continuous loss since several years and in the E
year 1995, it was closed,down. Crores of rupees were required
to be paid to State Bank of India, other financial institutions as
also to workers. Proceedings had been initiated under SI.CA
and BIFR was satisfied that the Company could not be revived
- }-.
and it favoured winding up of the Compny. A decree was passed F
in favour of SBI by DRT-1, Mumbai for substantial amount of
more than Rs.80 crores with interest. Over and above the said
amount, there were other secured and unsecured creditors.
Moreover, outstanding dues of workers were also there. Mov-
able and immovable property of the Company was not enough G
to clear up all the dues. It was, therefore, felt that a fair settle-
....\ .l_
ment could be arrived at so that all the parties could get an eq-
uitable share and proper and reasonable amount from the prop-
erty owned and possessed by respondent No.1-Company. It is
in the light of the above facts that the parties i.e., (i) Company; H

•t
796 SUPREME COURT REPORTS [2008] 10 S.C.R.
t
~- li

A (ii) Secured and unsecured creditors; and (iii) Union sat to-
.
gether, discussed the problem and settled the matter. SBI which 1t"
.,.
was having a decree for Rs.84 crores with interest thereon, )o

agreed to let go substantial part of the amount so that workers
may not be prejudicially affected. Other creditors also adopted
B positive and constructive attitude. The Union considered the fate
of families of several workers and in the capacity of 'Represen-
tative Union' under the Bombay Industrial Relations Act, 1946
exercised the power and agreed to the settlement. In fact, it
was the case of respondent No.7-Union that during the inter- "
c vening period of about one decade after the closur~ of the Mills
in 1995, about 400 workers died. If settlement wo'uld not have
been arrived at, it would have resulted into further agony to the
remaining workers and their families as also the families of
those workers who lost their lives during the pendency of pro-
ceedings. It was in these circumstances that the best solution
D
had been thought by way of settlement and no fault can be found +
against Representative Union in agreeing to such settlement.
14. It was also submitted that under the Act of 1946, it is
the Representative Union which alone has exclusive right in any
E industry to represent the entire class of workmen in the local
area. The appellant had no locus or standing to agitate griev-
ance or raise dispute on behalf of workers/labourers. But, even
otherwise,.arepresentation which was treated as PIL Writ Peti-
tion was dismissed by the High Court and that order had never
F been challenged by the appellant by approaching this Court and ;}. - I-
the decision had become final. It was contended that from the
order of the Court it was very clear that liberty was granted to
aggrieved parties to take appropriate remedy, in appropriate ,...
forum in appropriate proceedings. The appellant, however, nei-
ther approached Labour Forum nor went to Debt Recovery
G
Appellate Tribunal but filed a fresh writ-petition. Obviously, the
subsequent petition in which the impugned order Is passed was ).f
not PIL as it was registered as Writ Petition instituted by an
individual. The High Court was. therefore, wholly right and fully
justified in dismissing the said petition in limine, particularly in
H 1~

f•
SHIVANAND GAURISHANKAR BASWANTI v. LAXMI 797
VISHNU TEXTILES MILLS & ORS. [C.K. THAKKER, J.]
fi~
the light of the order passed in previous PIL Writ Petition. A
i
--r 15. It was submitted that the situation today is irreversible
inasmuch as after the settlement had been arrived at between
the parties, the purchaser-respondent No.7 had deposited the
entire purchase price with ORT. The secured creditors as well
---(
as labourers were paid their dues as per the said settlement B
and their respective shares. Creditors had issued 'discharge
certificates'. The Assistant Labour Commissioner had disbursed
the amount to the workers and their family members who are
more than four thousand. The appellant who was also one of
the workers was paid more than Rs.60,000/- and he issued a c
receipt in token of acceptance of the said amount. The order of
• sale in favour of respondent No. 7 was confirmed by ORT and
the sale became final. Sale certificate was also issued in favour
of the purchaser. It had also paid an amount of Rs.2.25 crores
--\ towards stamp duty and got the property registered in its name. D
-+ All those orders were never challenged by the appellant by tak-
ing 'appropriate proceedings'. If at this stage, this Court inter-
feres and sets aside the orders passed by the authorities from
time to time, irreparable injury and loss would be caused not
only to the purchaser-respondent No. 7, but to other respondents E
as well. For instance, it would be very difficult for the workers
who had received the amount to refund or pay back the said
amount which would be the direct consequence. It would be dif-
ficu It for respondent No. 7 also if it will not be able to recover the
amount which it ~as paid. Moreover, no secured or unsecured F
- .k
creditor has come forward and has made a.complaint to this
Court that though he was entitled to a particular amount, he had not
.;- been paid and he has grievance against the settlement. The ap-
pellant who is only one pecson and has received his dues, has
approached the High Court under Article 226 of the Constitution
G
after dismissal of Public Interest Litigation and it is he who con-
.. ,,,.\
tends that several creditors have not been paid their dues and work-
ers have also suffered and the settlement should be set aside. It
was submitted that the High Court was right in not entertaining such
petition and this Court, in exercise of power under Article 136 of
H
798 SUPREME COURT REPORTS [2008] 10 S.C.R.

A the Constitution, may not interfere with the said order.
CONSIDERATION OF RIVAL CONTENTIONS
16. Having heard the learned counsel for the parties and
h_aving gone through the records and proceedings of the case,
B in our opinion, this is not a fit case for exercise of discretionary
and equitable jurisdiction under Article 136 of the Constitution.
17. It is clear that so far as the present proceedings are
concerned, they are not in the nature of por bonopublico. The
appellant herein had made representation to-the Hon'ble Chief
C Justice of 'High Court of Judicature at Bombay earlier which
was treated as Writ Petition (PIL) and the petition was disposed
. of by the Court granting liberty to the aggrieved parties to ap-
. preach appropriate forum in appropriate proceeding without
granting any relief. Prima facie, therefore, in our opinion, the
D contention of the contesting respondents is well-founded that ·if
the appellant herein was aggrieved by certain orders passed +
by Debt Recovery Tribunal (ORTH, Mumbai, he ought to have
approached Debt Recovery Appellate Tribunal (DRAT) by filing
appeals against those orders. lfhe had grievance against the
E Company or inaction on the part of the Authorities under Labour
Laws on the ground that they had not protected the interests of
workers of Laxmi Vishnu Textile Mills, he ought to have ap-
proached Labour Forum. The appellant, however, did neither.
As soon as the PIL Writ Petition was disposed of, within few
F days, he filed another writ petition in his individual capacity. The
High Court, in our opinion, therefore, was right in dismissing it
in '!imine by passing the impugned order that it was not a fit
case to exercise extraordinary jurisdiction under Article 226 of
the Constitution.
G MERITS OF THE MATTER
18. On merits also, we find no substance in the contention
raised by the learned counsel for the appellant. From the record,
it is clear that from eighties the respondent No. 1..:Company was
H in financial doldrums. Day-by-day, the position deteriorated and
SHIVANAND GAURISHANKAR BASWANTI v. LAXMI 799
VISHNU TEXTILES MILLS & ORS. [C.K. THAKKER, J.]

' it had incurred heavy losses. So much so that. the Mill was re-
quired to be closed down somewhere in 1995. Admittedly, af-
ter February, 1995, the Company has never revived. It is also
clear from the record that substantial amount was due and pay-
able by the Company to State Bank of India, several other fi-
A

nancial institutions, secured and unsecured creditors and to B
workers. Proceedings had been initiated under SICA. BIFR
had passed orders from time to time and finally it recommended
winding up of the Company on being satisfied that rehabilita-
tion of the Company was not possible. A recommendation was,
therefore, made and papers were forwarded to the High Court c
concerned, i.e. the High Court of Judicature at Bombay. It is
further clear that in favour of one major creditors, i.e. State Bank
of India a decree was passed by ORT-I, Mumbai for Rs.84.39
crores with interest thereon. It has been brought on record that
several other financial institutions had approached ORT and
-+ 0
either orders were passed in their favour or proceedings were
pending. It is brought to our notice that many workers had gone
to Controlling Authority under the Payment of Gratuity Act, 1972
and obtained orders in their favour directing the first respon-
dent Company to pay gratuity with interest thereon. The Com-
pany was not in a position to pay entire dues. In the circum.... E
stances, ORT-I, Mumbai ordered to take appropriate steps so
that joint meeting of all financial institutions and representatives
of workers be held and the matter could be settled. Meanwhile,
respondent No. 7-Trans Asia Global Trade expressed its de-
sire to purchase the property. On March 8, 2005, a tripartite F
agreement had been arrived at between respondent No. 1-Com-
pany, representatives of respondent No.8-Union of workers an.d
Trans Asia Global Trade-intending purchaser. In the agreement
it was stated that the Comp:~ny had huge liability and there were
several secured creditors. The property owned by the Company G
was not enough to meet with all liabilities. The representatives
of respondent No.8 Union were aware of the said fact and
agreed to accept amount of Rs.22.21 crores towards full and
final settlement of dues of workers. Respondent No. 7 decided
to purchase the property for Rs.46.65 crores. The agreem¢nt H
800 SUPREME COURT REPORTS [2008] 10 S.C.R.

A was executed on March 8, 2005 and signed by all the three
parties to the agreement, i.e. by the Mill-Company, by the pur-
'
chaser of property and also by representatives of respondent ' ....
No.8 Union. A joint meeting of secured and unsecured credi-
tors was also held on April 20, 2005 wherein secured and un-
B secured creditors of the first rel;)pondent-Company agreed to
share sale proceeds of Rs.46.65 crores by accepting and final-
izing One Time Settlement (OTS). Final decision was taken on
the basis of the agreement arrived at earlier on March 8, 2005.
It was decided to sell the property to ·respondent No. 7 for
c Rs.46.65 crores. The amount which was to be paid as per the
final agreement came as under;
1nstitutions/Banks/ Principal O/S On Rs. (in Crore
Labour 31.3.1999 Proposed Share)
SBI 28.05 14.02

D IDBI 4.08 2.04 +
ICICI 1.24 0.61

IFCI 1.28 0.63

1181 1.54 0.76
E .Labour 22.21

Bank of 1.50 0.50
Maharashtra

MSEB· 5.37 4.00

F Sales Tax 0.99
Solapur 0.89
Municipal
Corporation
and Octroi
G GRAND TOTAL 46.65
19. On October 6, 2005, an order was passed by Recov- ~-,..
ery Officer, ORT-I, Mumbai in which all the above facts had been
stated. The Recovery Officer referred to tripartite agreement
and payment of amount to creditors and workers. The order
H also recited that as per the direction of the High Court, the work-
SHIVANANO GAURISHANKAR BASWANTI v. LAXMI 801
VISHNU TEXTILES MILLS & ORS. [C.K. THAKKER, J.]
"'~ ers' claim was to be adjudicated by ORT. The applicant Bank A
,. was, therefore, directed to issue advertisement and invite work-
....... men as per the guidelines formulated by ORT. All the workers
were directed to lodge their claims in appropriate format in the
Tribunal and all such claims were ordered to be placed before
the Presiding Officer for adjudication. B
--..,.
20. Regarding valuation of property, it was stated;
"Since the valuation was done in the year 2002, before
considering the proposal, the property was valued again
from the approved valuer from the panel of ORT. According c
to the valuation report, offer of the purchaser is above the
distress valuation price".
21. It was mentioned that the Tribunal accepted the offer
of Mis Trans Asia Global Trade for purchasing movable and
~+
immovable property of the Company in the custody of Receiver D
appointed by ORT for an amount' of Rs.47.82 crores. The auc-
tion-purchaser had deposited the amount of Rs.47,81,57,777
towards sale consideration and other expenses. The recovery
officer directed the purchaser to pay balance amount. The mat-
ter was adjourned for confirmation of sale. An order was passed
E
to send report to BIFR after confirmation of sale. The above
order has not been challenged by the appellant in accordance
with the provisions of 1993 Act.
22. On December 6, 2005, again, the matter was placed
before the Recovery Officer, DRT-1, Mumbai. Reference was F
~.J:-
made to all proceedings, settlement arrived at between the
parties and sale of property for Rs.47.82 crores. It wes noted
that no objection had been received from any person under Rule
60, 61 or 62 of the Second Schedule to the Income Tax Act,
1961 for setting aside sale and the sale was required to be
confirmed. Accordingly, the sale was confirmed. Even this or- G
der was not challenged under the Act.
"'· -f
23. On January 20, 2006, the Recovery Officer, DRT-1,
Mumbai issued a sale certificate for immovable property for
Rs.45 crores in favour of respondent No.7-Purcha.ser. Another
H
802 SUPREME COURT REPORTS [2008] 10 S.C.R.

A certificate of sale for movable properties for Rs.2.82 crores was '"'~
..._
issued by ORT. Those orders have remained unchallenged ex- .......
cept in the present proceedings.
21 The learned counsel for the appellant strenuously urged
that on Kpril 28, 1994, BIFR had issued interim order restrain-
B ing the first respondent-Company from alienating, transferring
t-~

or disposing the property of the Company without prior permis-
sion of the Board. It was stated that if any action would be taken
in violation of the said order, it would be punishable under Sec-
tion 33 of SICA. In view of the said order, neither the property
c could have been sold without the prior permission of BIFR nor
such sale could have been confirmed. It was also urged that
even under 1993 Act, Recovery Officer could not have permit-
ted or. confirmed sale and it could have been done only by the
Debt Recovery Tribunal. Hence, all proceedings were non est
D and are required. to be ignored altogether. +
· 25. The learned counsel for the contesting respondents,
on the other hand, submitted that the order passed by BIFR
was merely an interim order and in 1996, it directed winding up
of the Company and forwarded its opinion to the High Court.
E Moreover, no such point had been taken by the appellant ear-
lier. As discussed above, even prior to the present petition which
had been filed by the appellant-herein in the High Court under
Article 226 of the Constitution, he had submitted a representa-
tion to the Chief Justice which was registered as PIL Writ Peti-
F tion. No such contention was taken in that petition. Even in the ;.l_,,~

present proceedings, what was contended by the appellant
before the High Court was as regards a transaction under which
property was sold by Chairman of the first respondent-Com-
pany Mr. M.L. Apte through his constituted Attorney Kantilal
G Shankarlal Shah. Nothing was stated as to other properties.
J
.
26. But even on merits, the impugned action calls for no ~- ...
interference. The order dated April 28, 1994 passed by BIFR
reads as under;

H "Whereas a draft scheme for rehabilitation of M/s Laxmi

>.
SHIVANAND GAURISHANKAR BASWANTI v. LAX.Ml 803
VISHNU TEXTILES MILLS & ORS. [C.K. THAKKER, J.]
.... ~
Vishnu Textile Mills has been prepared, circulated and A
published by the Board under Section 18 of the Sick
Industrial Companies (Special Provisions) Act, 1935 in
pursuance of its proceedings held/orders face in the case
on 14.2.1994.
--+ And whereas, the Board is of the opinion that in the interest B
of rehabilitation of the sick industrial company; creditors,
shareholders as also in public interest, it is necessary to
direct the existing promoters/management of sick industrial
company; Mis Laxmi Vishnu Textile Mills not to disposed
of, except with the consent of the Board, any of its fixed C'
and other assets charged/hypothecated to the financial
institutions, banks and other creditors, the board, in
exercise of powers conferred on it by Section 22A of the
Sick Industrial Companies (Special Provisions) Act, 1985
~- hereby directs the existing promoters/ management is D
invited to the provisions of Section 33, where under
violation of any of the orders of the Board is punishable in
the manner laid down therein".
27. Plain reading of the order makes it clear that the Board
was of the opinion that in the interest of rehabilitation of the sick E
industrial company, its creditors, shareholders as also in public
interest, certain directions were necessary. The Company was,
therefore, restrained from disposing the property which was
charged /hypothecated to financial institutions. The submission
"..l: of the learned counsel for the contesting respondents is that there F
was no question of revival of the Company in view of order passed
by BIFR in 1996 and its recommendation for winding up of the
Company. Regarding interests of creditors and other persons, it
was stated that in March, 2005, tripartite agreement had been
arrived at wherein representatives of labour Union, first respon- G
dent-Mill Company and the purchaser were present and the
"'.,,I.
agreement was signed by all of them. Likewise, in April, 2005,
joint meeting of secured and unsecured creditors, representa-
tives of Union and vendor and vendee was held and all of them
agreed for OTS and expressed their willingness to accept lesser H

_L
804 SUPREME COURT REPORTS [2008] 10 S.C.R.

A amount. In the circumstances, charge imposed and prohibition
issued by BIFR on the Company no more remained operative.
On October 6, 2005, therefore, it was observed by the Recovery
Officer of ORT-I, Mumbai to send information to BIFR after confir-
mation of sale. Consequential action of confirmation of sale was
B thereafter taken on December 6, 2005 and sale certificate was
also issued on January 20, 2006. All the actions were taken only
after March/April 2005. They, therefore, could not be said to be
contrary to law or in violation of the order passed by BIFR.
28. Even otherwise, on the facts and in the circumstances
C of the case, we are fully satisfied that had the agreements in
question not been arrived at, all parties including workers for
whom great concern had been shown by the appellant would
have suffered. In fact, in an affidavit filed on behalf of the State
Bank of India, it was stated that in the light of the decree passed
D in favour of State Bank of India by ORT-I, Mumbai, the Bank
would be entitled to Rs.222.34 crores. Similarly, other institu-
tions were also entitled to substantial amount. It was because
of conjoint and combined efforts of all the parties that agree-
ments could be arrived at. It was stated that a Cabinet Minister
E used his good offices and One Time Settlement (OTS) had been
arrived with Banks and financial institutions and workmen were
able to get the amount which had not been paid to them for
many years. The contention that secured and unsecured credi-
tors and workers have not received their dues has no force.
F 29. Again, who has approached this Court? Neither a se-
cured nor an unsecured creditor. Nor a representative of a labour
union. Nor even a person acting pto bono publico. As already
adverted to earlier, PIL Writ Petition at the instance of the ap-
pellant was dismissed by the High Court and the said decision
G was never challenged by him. Here is an employee who is also
one of the workers, who has been paid his dues. He accepted
the amount of Rs.62,555/- and issued 'No Objection Certificate'
(No Dues Certificate) -no doubt by putting an endorsement
"Accepted under Protest". He has urged that the workmen have
H not been paid their dues and injustice had been done to them.
SHIVANAND GAURISHANKAR BASWANTI v. LAXMI 805
..,.;.- ~ VISHNU TEXTILES MILLS & ORS. [C.K. THAKKER, J.]

To us, even there, the appellant is not right. A Representative A
Union has taken a decision which is binding on all employees.
That aspect, however, we will deal with at a later stage.

30. The learned counsel strongly relied upon a decision of
this Court in NGEF Ltd. v. Chandra Developers (P) Ltd., (2005)
-+ B
8 SCC 219. In that case, this Court held that the provisions of
SICA would prevail over the provisions of the Companies Act
since it is a special statute and a 'complete code' in itself. The
Court also held that the jurisdiction of the Company Court in the
matters relating to winding up of a sick Company would arise
only when BIFR or AAIFR exercises its jurisdiction under Sec- c
tion 20 of SICA recommending the winding up of the Company
upon arriving at a finding that there does not exist any chance of
revival of the Company. Referring to Gray's Inn Construction
Co. Ltd., Re, (1980) 1 All ER 814: (1980) 1WLR711 and Pankaj
~· Mehra v. State of Maharashtra, (2000) 2 SCC 756, however, D
the Court observed that "disposition of assets during the inter-
regnum may not be irretrievably void but the courts are required
to exercise power with caution and circumspection".

STATUS ANO POSITION OF REPRESENTATIVE
UNION E

31. The learned counsel for the appellant contended that
respondent No. 8 could not have agreed to accept a meager
amount of Rs.22 crores when the outstanding dues were more
~x than Rs.130 crores. It was also stated that majority of workers F
are with the appellant and they are opposed to the settlement.
Thousands of workers have so stated in writing and informed
the appellant that the grievance raised by the appellant is well-
founded and they are entitled to much more amount than what
had been paid under the settlement.
G
... ,.: 32. Even this contention has no force. The learned coun-
sel for the Union, in our opinion, is right in submitting that under
the Bombay Industrial Relations Act, 1946, it is the 'Represen-
tative Union' which has all powers to enter into a settlement on
behalf of workers in the industry and it is only that Union which H

...
'
806 SUPREME COURT REPORTS [2008] 10 S.C.R.
.~ ~ ....
A can fake a decision under 1946 Act. The said decision would
bind not only the members of the Union, but also to those work-
ers who are not members of such Union.
33. ·The learned counsel, in this connection, invited our
attention to various provisions of 1946.Act. As the Preamble of :;. -
B the Act declares, the Act has been enacted "to regulate the re-
lations of employers and employees, to make provision for settle-
ment of industrial disputes and to provide for certain other pur-
poses". The Act contains elaborate provisions for registration
of Unions and their powers.
c
34. Section 2 defines various terms. Chapter II deals with
Authorities constituted or appointed under the Act. Chapter Ill
provides .for registration of Unions. Chapter IV relates to Ap-
proved Unions. Chapter V titles "Representatives of Employ-
ers and Employees, and appearance on their behalf'.
D
35. Section 27 enables the State Government to recog-
+
nize any combination of employers as Association of Employ-
ers in an industry in any local area and to represent an em-
player in any proceeding under the Act. Section 27A correspond-
ingly provides for appearance on behalf of employees. It is,
E
however, in negative terms and enacts that save as provided in
certain cases (Sections 32 and 33), "no employee shall be al-
lowed to appear or act in any proceeding under this Act except
through the representative of employees". The section thus puts
an embargo on appearance of any employee except through
;.1..,...
F the representative of employees.
36. Section 14 empowers Registrar to register a 'Repre-
sentative Union' for any 'Industry' in ariy 'Local Area'. It is thus
clear that there can be only one Representative Union for one
Industry in one Local Area. Section 30 enumerates representa-
G tives of employees and provides for order of preference in which
such representatives are allowed to appear or act in any 'Indus- ~,....

try' in any 'Local Area'. It reads thus;
30. Representative of employees
H Subject to the provisions of section 33A, the following

•
'
SHIVANAND GAURISHANKAR BASWANTI v. LAXMI 807
VISHNU TEXTILES MILLS & ORS. [C.K. THAKKER, J.]
""""' )\
shall be entitled to appear or act] in the order of preference A
specified as the representative of employees in an industry
in any local area-
(i) a Representative Union for such industry;

--~ (ii) a Qualified or Primary union of which the majority of B
employees directly affected by the change concerned
are members;

(iii) any Qualified or Primary Union in respect of such
industry authorised in the prescribed manner in that
behalf by the employees concerned; c
(iv) the Labour Officer if authorised by the employees
concerned;
(v) the persons elected by the employees in accordance

·* with the provisions of section 28 or where the proviso
to sub-section (1) thereof applies, the employe~s
D

themselves;
(vi) the Labour Officer:
Provided - E
Firstly, that the persons entitled to appear or act under
clause (v) may authorise any Qualified or Primary Union
in respect of such industry to appear or act instead of
them;
·-Jc F
Secondly, that where the Labour Officer is the
representative of the employees, he shall not enter into
any agreement under section 44 or settlement under
section 58 unless the terms of such agreement or
settlement, as the case may be, are accepted by them in
G
the prescribed manner;
~ _._
Thirdly, where in any proceeding the persons entitled to
appear or act under clause (v) are more than five, the
prescribed number elected from amongst them in the
prescribed manner shall be entitled to appear or act H

--.:
808 SUPREME COURT REPORTS [2008] 10 S.C.R.
)t__ """

A instead.
~
37. It is thus clear that Representative Union is having pri-
ority and 'preference' over other Unions to appear on behalf of
employees of such industry in the area. Section 42 in Chapter
VIII provides for change and lays down procedure for such
B change. It reads; ."--
42. Notice· of change
(1) Any employer intending to effect any change in
respect of an industrial matter specified in Schedule
c II shall give notice of such intention in the prescribed
form to the representative of employees. He shall
send a copy of such notice to the Chief Conciliator,
the Conciliator for the industry concerned for the local
area, the Registrar, the Labour Officer and such other
D person as may be prescribed. He shall also affix
copy of such notice at a conspicuous place on the
+
premises where the employees affected by the
change are employed for work and at such other
place as may be directed by the Chief Conciliator in
E any particulars case.
(2) Any employee desiring a change in respect of an
industrial matter not specified in Schedule I or Ill give
a notice in the prescribed form to the employer
through the representatives of employees, who shall ·
F forward a copy of the notice to the Chief Conciliator, ).._~ ;

the Conciliator for the industry concerned for the local ,_
A-

area, the Registrar, the Labour Officer and such other
person as may be prescribed. I

~

G (3) When no settlement is arrived at in any conciliation
proceeding in regard to any industrial dispute which
has arisen in consequence of a notice relat_ing to any ~ ...
change given under sub-section (1) or sub-section
(2), no fresh notice with regard to the same change
or a change similar in all material particulars shall be
H

,.
SHIVANAND GAURISHANKAR BASWANTI v. LAXMI 809
..... ~ VISHNU TEXTILES MILLS & ORS. [C.K. THAKKER, J.]

given before the expiry of two months from the date A
of the completion of the proceeding within the
meaning of section 63. If at any time after the expiry
of the said period of two months, any employer or
employee again desires the same change or a
-+ change similar in all material particulars, they shall B
give fresh notice in the manner provided in sub-
section (1) or (2), as the case may be.
(4) Any employee or a representative union] desiring a
change in respect of (i) any order passed by the
employer under standing orders, or (ii) any industrial c
matter arising out of the application or interpretation
of standing orders, or (iii) an industrial matter
specified in Schedule Ill, except item (5) thereof shall
make an application to the Labour Court and as
-~
respects change desired in any industrial matter D
specified in item 5 of Schedule Ill, to the Industrial
Court:
Provided that no such application shall lie unless the
employee or a representative union has in the prescribed
manner approached the employer with a request for the E
change and no agreement has been arrived at in respect
of the change within the prescribed period.
38. The aforesaid provisions came up for consideration
~ ~ before this Court in Girja Shankar Kashi Ram v. Gujarat Spin- F
ning & Weaving Co. Ltd., (1962) Supp 2 SCR 890. In that
case, 'G'closed its business and sold its assets to T. The old
~
company discharged all its workmen when it closed the busi-
_, ness. The new company re-started the business and employed
all the workmen of the old company. At the time of closure of
G
'G', a dispute was pending between the company and its work-
,,. men with respect to bonus. A 'Representative Union' of the Tex-
-4'
tile Workers in the city of Ahmedabad filed an application be-
fore the Labour Appell~te Tribunal wherein the dispute was pend-
ing and the matter was sub-judice. The matter was compro-
H

•
810 SUPREME COURT REPORTS [2008] 10 S.C.R.

A mised and 'G' consented to pay agreed bonus. The Represen-
" ......
tative Union accepted the amount and gave an undertaking not ,_,
to claim compensation in future. Later on, however, about 400
employees issued a notice and claimed compensation for clo-
sure. The Representative Union appeared before the Labour
B C'ourt and contended that the application was liable to be dis- -tr-
missed in view of the compromise arrived at between the Mill
Company and Representative Union. The Labour Court up-
held the objection and dismissed the application. The order was
con'firmed by Industrial Court in appeal as well as by the High
c Court in a petition under Article 227. The employees approached
this Court.

39. This Court considered the relevant provisions of the
1946 Act, the object underlying conferment of power on Repre-
sentative Union and the action taken by it and held that when a
D Representative Union appears in any proceeding under the Act, +-
none else can be allowed to appear not even the employee at
whose instance proceedings might have been started under
Section 42(4) of the Act. The Court held that if the Representa-
tive Union appears, the decision te1ken by that Union would be
E final and binding.
40. Explaining the scheme ·of the Act, the Court stated;
"It will be seen thats. 27A provides that no employee shall
- be allowed to appear or act in any proceeding under the
F Act, except through the representative of employees, the ~~
only exception to this being the provisions of Sections 32
and 33. Therefore, this section completely bans the
appearance of an employee or of any one on his behalf in )
any proceeding after it has once commenced except
G
through the representative of employees. The only i:
exceptions to this complete ban are to be found in Sections
32 and 33; to which we shall presently refer. But it is clear ,..
4-
that bona tides or mala tides, of tfie representative of
employees can have nothing tq_;~.P with the ban placed by
Section 27A on the appearance of any one else except
H
SHIVANAND GAURISHANKAR BASWANTI v. LAXMI 811
VISHNU TEXTILES MILLS & ORS. [C.K. THAKKER, J.]
..,, ~
the representative of employees as defined in Section 30 A
and that if anyone else can appear in any proceeding we
must find a provisions in that behalf in either Section 32
or Section 33 which are the only exception to Section
27A. It may be noticed that there is no exception in Section
27A in favour of the employee, who might have made an B
- "" application under Section 42(4), to appear on his own
behalf and the ban which is placed by Section 27 A will
apply equally to such an employee. In order however to
soften the rigour of the provisions of Section 27 A, for it
may well be that the representative of employees may not c
choose to appear in many proceedings started by an
employee under s. 42(4), exceptions are provided in ss.
32 and 33. The scheme of these three provisions clearly
is that if the Representative Union appears, no one else
can appear and carry on a proceeding, even if it be begun
D
·~ on an application under s. 42(4) but where the
Representative Union does not choose to appear there
are provisions in ss. 32 and 33 which permit others to
appear in proceedings under the Act.

Section 32 gives power to a conciliator, a board, a wage E
board, a labour court and the industrial court to permit an
individual, whether an employee or not, to appear in any
proceeding before him or it. This shows that the complete
ban imposed bys. 27A can be removed if the authorities
~· ..4..
under the Act think it expedient to permit another person F
to appear and that person may be an employee or not.
Thus the employee who has made an application under s.
42(4) may be permitted to appear before the authorities
under the Act; but this provision is subject to a proviso
namely that no such individual which would include an
G
employee who has himself made an application under s.
~ 42(4), shall be permitted to appear in any proceeding in
~
which the Representative Union has appeared as the
representative of employees. Reading therefore ss. 27 A,
30 and 32 together, it is clear that on one else can appear
H

,<t_
I
812 SUPREME COURT REPORTS [2008] 10 S.C.R.

- ;..__ ~.
!-

A in any proceeding under the Act except a representative
of employees; but the authorities are empowered to permit
anyone to appear whether he be an employee or not, if '
they consider it expedient for the ends of justice (and we
have no doubt that where representative of employees
B does not choose to appear the authorities will generally
~-
permit the employee who has made the application under
s. 42(4) to appear), but this power is subject to the proviso,
namely, that on one will be allowed to appear if the
Representative Union has made an appearance. It will be
c seen that the proviso puts the Representative Union in a
special positiori out of the six classes mentioned as
representatives of employees in s. 30. Thus s. 32 makes
f..
it clear that where the Representative Union of the six
classes s. 30, appears no one else can appear, including
the persons who might have made an application under s.
D
42(4). If the other five classes which are mentioned ins. +
30 as representatives of employees appear, the authorities
have the power to allow the employee or any other person
to appear along with them.

E Then we come to s. 33, which starts with a non-obstante
clause and deals with the appearance of an employee or
a representative union through any person. Section 33
thus is a exception to s. 27A and authorises an employees
who could not appear in any proceeding under the Act
F except through the representative of employees under s.
;l_ ....
27A, to appear through any person in certain proceedings
mentioned in s. 33, but this again is subject to provisos,
with the first of which we are not concerned here. The ,-
~
second proviso lays down that no employee shall be
entitled to appear through any person in any proceeding
G
under the Act in which the Representative Union has
appeared as the representative of employees. This proviso
~.·"'
again gives a special position to the Representative Union
out of the six classes of representatives of employees
provided in s. 30 and makes it clear that though an
H
SHIVANAND GAURISHANKAR BASWANTI v. LAXMI 813
.. J VISHNU TEXTILES MILLS & ORS. [C.K. THAKKER, J.]

employee may appear in certain proceedings specified A
ins. 33 through any person in spite of s. 27A, he cannot
do so where a Representative Union has appeared as
the representative of employees. Here again the position
is the same as ins. 32; if a representative of employees
~~ other than a Representative Union has appeared in the B
proceeding the employee can also appear through any
person in the proceedings mentioned ins. 33; but he cannot
did so where the representative of employees which has
appeared even in proceedings under s. 33 is the
Representative Union". c
41. The Court also held that bona fides or mala fides of
the representative Union has nothing to do with the complete
ban imposed by the Act on the appearance of any one else
except the representative of employees under Section 30 of
~-t the Act. D
42. It was argued that if such interpretation is accepted,
there would be tyranny of the Representative Union. This Court,
however, negatived even that argument and observed that the
so-called tyranny or motive of Representative Union cannot
change the legal position and it has no relevance if the intention E
of the Legislature is clear and unambiguous.
43. The Court, therefore, concluded;

... _...._ "The result therefore of taking ss. 27A, 32 and 33 together
is that s. 27 A first places a complete ban on the F
appearance of an employee in proceedings under the Act
once it has commenced except through the representative
of employees. But there are two exceptions to this ban
contained in ss. 32 and 33. Section 32 is concerned with
all proceedings before the authorities and gives power to G
_;> ....
the authorities under the Act to permit an employee himself
to appears even though a representative of employees
may have appeared but his permission cannot be granted
where the representative Union has appeared as a
representative of employees. Section 33 which is the other H

;
814 SUPREME COURT REPORTS [2008] 10 S.C.R.
..
A exception allows an employee to appear through any
person in certain proceedings only even though a
representative of employees might have appeared; but
here again it is subjectt_o this that no one else, not even
the employee who might have made the application, will
B have the right to appear if a Representative Union has put
in ap.pearance as the representative of employees. It is
quite clear therefore that the scheme of the Act is that
where a Representative Union appears in any proceeding
.under the Act, no one else can be allowed to appear n.ot
c even the employee at whose instance the proceedings
might have begun under s. 42(4). But where the
appearance is by any representative of. employees other
than a Representative Union authorities under s. 32 can
permit the employee to appear himself in all proceedings
before them and further the employee is entitled to appear
by any person in certain proceedings specified in s. 33.
· But whenever the Representative Union has made an
appearance, even the employee cannot appear in any
proceeding under the a.ct and the representation must be
confined only to the representative Union. The complete
E ·ban therefore laid by s. 27A on representation otherwise
than through a representative of employees remains
complete where the representative of employees is the
Representative Union that has appeared; but if the
· representative of employees that has appeared is other
F 'than the Representative Union then ss. 32 and 33 provide
for exceptions with which we have already dealt. There .
\

can therefore be no escape from the conclusion that the
Act plainly intends that where the Representative Union
appears in any proceeding under the Act even though that
G proceeding might have commenced by an employee under
s. 42(4) of the Act, the Representative Union alone can
represent the employee and the employee cannot appear
or act in such proceeding".
44. Again, in Textile Labour Association, Bhadra,
H
-.
816 SUPREME COURT REPORTS [2008] 10 S.C.R.
fl ,~.-(

A tire class of workmen in that industry in the concerned local area. ,,r
In the instant case in the local area of Solapur District, respon- ~
dent No. 8 is admittedly the only Union which has the status of
Representative Union in Textile Industry under the Act. In view
of the above fact, no other Union/Association of employees or
B individual employees have right to represent the workmen of ~-·
that industry in that area.
48. In the counter-affidavit, it was stated by the Represen-
tative Union that there were about 4500 employees in respon-
dent No.1 Mill when it was closed down in February, 1995. Within
c a period, of about a decade, 400 workmen had already died.
None of them, however, received any wages or other benefits
because of the pendency of several proceedings in different
courts. The Representative Union considered their legitimate
grievance and thought it proper to get the matter settled if rea-
0 sonable amount could be paid to them, keeping in view well-
known saying "one in hand is better than two on bush". They
considered the matter in its entirety, financial condition of the
first respondent-Company, claim of secured and unsecured
creditors, a number of decrees and orders passed by various
E Authorities under different laws and the properties of the Com-
)
pany. In the larger interest, the Union decided to accept the
amount of Rs.22.21 crores for workers towards full and final
settlement. By no stretch of imagination, such action could be
held improper; illegal or mala fide. We are of the view that the
F approach adopted and decision taken by the Representative ,i.._ ...
Union-respondent No.8 suffers from no infirmity and cannot be
regarded as illegal or otherwise unreasonable.
EQUITABLE JUR/SD/CT/Oiv UNDER ARTICLE 136
I
49. There is one more reason for not interfering with the I
G
order passed by the High Court and impugned in the present
appeal. The appellant has invoked Article 136 of the Constitu- ~ "'
tion. The said Article does not confer a right of appeal on any
party. It merely confers discretionary power on this Court to grant
special leave to appeal in suitable and appropriate cases. In
H

t.. I
SHIVANAND GAURISHANKAR BASWANTI v. LAXMI 817
VISHNU TEXTILES MILLS & ORS. [C.K. THAKKER, J.]
~
*
several cases, this Court has held that the provision confers A
4 right on a litigant merely to prefer an application seeking leave
to appeal and the discretion is vested in this Court to grant or
refuse such leave in its wisdom. In view of the language of Ar-
ticle 136, this Court is not expected to act as 'regular Court of
~..,
appeal' settling disputes by converting into a 'Court of Error. It B
interferes only when justice demands intervention by the high-
est Court of the country.
50. It is undoubtedly true that the power of this Court is
plenary, overriding and extensive and there are no words qua Ii-
tying, restricting or limiting that power. The very conferment of c
discretionary power defies any attempt at exhaustive definition
of that power. The power, however, has to be exercised for do-
ing full and complete justice. But wider the discretionary power,
the more sparing its exercise. Times out of number this Court
~~ has stressed that though parties promiscuously provoke this D
jurisdiction, the Court parsimoniously invokes the power [vide
Sadhanathan v. Arunachalam, (1980) 3 SCC 141).
51. While exercising power under Article 136 of the Con-
stitution, this Court not only acts as a Court of law but also as a
Court of equity and hence the power exercised by this Court E
under Article 136 must subserve ultimately the cause of justice.
The Court must decide all issues coming before it on the con-
siderations of justice, equity and good conscience. Legal for-
,......, mulations cannot be divorced from ground realities, fact-situa-
tions before the Court and the effect of laws on the human be- F
ings for whom they are meant. Discretionary jurisdiction under
Article 136, therefore, has to be tampered with equity. This Court
would be failing in its duty if it does not notice equitable consid-
erations.
G
52. We are reminded of the following pertinent and instruc-
> -k tive observations of Lord Watson in La Cite de Montreal v. Les
Eccelesiasticues, (1889) 14 AC 660.

"Ca~es vary so widely in their circumstances that the
principle upon which an appeal ought to be allowed do not H
818 SUPREME COURT REPORTS [2008] 10 S.C.R.
1 -r
A admit of anything approaching to exhaustive definition.
No rule can be laid down which would not necessarily be t'-
subject to future qualification, and an attempt to formulate
any such rule might therefore prove misleading ... A case
may be of a substantial character, may involve matter of
B great public interest, and may raise an important question ~-
of law, yet the judgment from which leave to appeal is
sought may appear to be plainly right, or at least to be
unattended with sufficient doubt to justify."

53. As observed by this Court in Statesman Ltd. v. Work-
c men, (1976) 2 SCC 223, the very width of the power under Ar-
ticle 136 is a warning against its 'freewheeling exercise save in
grave situations'. Circumspection and circumscription must,
therefore, induce the Court to interfere with the decision under ~

challenge only if the extraordinary flaws or grave injustice or other
D. recognized grounds are made out.
-1-·
54. We have elaborately dealt with the facts of the present
case. Respondent No.1-Company was closed down in Feb-
ruary, 1995. It never started functioning thereafter. Financial Ii-
ability continued mounting up day by day. There were several
E secured and unsecured creditors and dues of workers. Pro-
ceedings under SICA had been initiated, decrees and orders
were passed against the Company and the property owned by
the Company was not sufficient to clear up all debts and liabili-
ties. Keeping in view the entire facts and circumstances that '
F initially, tripartite agreement was entered into between respon- ......
_

dent No.1-Company, Representative Union and intending pur-
chaser on March 8, 2005, a joint meeting was held between
secured and unsecured creditors, representatives of the Union,
the Company and the purchaser in April, 2005 and in that meet-
G ing, One Time Settlement (OTS) had been reached. Several
actions were taken in pursuance of the settlement. The amount
was deposited by the purchaser, dues of creditors were paid, ). ...
workers and laborers were informed and they were also paid
the amount. The property was sold by respondent No.1 to re-
H spondent No.7 on October 6, 2005, sale was confirmed on
... SHIVANAND GAURISHANKAR BASWANTI v. LAXMI 819
VISHNU TEXTILES MILLS & ORS. [C.K. THAKKER, J.]
l
,,.,.
'* December 6, 2005, possession of the property was given to A
respondent No.7 on December 14, 2005, sale certificate was
issued on January 20, 2006, respondent No. 7 got the property
registered in its name on January 30, 2006 by paying stamp
duty of Rs.2.25 crores, secured creditors gave discharge to re-
. _., spondent No.1-Company on March 30, 2007. By May 17, 2007, B
4054 workers were paid and the said figure, at the time of hear-
ing of this appeal reached to 4105. It was also stated by re-
spondent No. ?-purchaser that plant and machinery were removed
and sold as scrap materials.
55. If, at this stage, we set aside sale in favour of respon- c
dent No.7, serious prejudice will be caused not only to respon-
dent No.1 and-respondent No.7-vendor and vendee, respec-
tively, but also to others like banks, financial institutions, other
creditors and also to workers for whose benefit and welfare the
·-\ appellant is fighting. It is pertinent to note that no secured or D
unsecured creditor has come forward making grievance that
though he was entitled to more amount, he has not been paid
such amount. So far as workers are concerned, we have al-
ready dealt with rights of Representative-Union in detail and
have held that the Representative Union has preferential right E
to appear in the proceedings under the Act. Hence, taking any
view of the matter, in our opinion, this is not a fit case to exer-
cise discretionary and equitable jurisdiction under Article 136
of the Constitution.
FINAL ORDER F
"-"
56. For the forgoing reasons, in our opinion, the appeal
has no substance. It deserves to be dismissed and is hereby
dismissed. On the facts and in the circumstances of the case,
however, there shall be no order as to costs.
G
..__
K.K.T. Appeal dismissed .
_..
~