M/S WRITERS AND PUBLISHER PVT LTD vs. A.K. MISHRA OFFICIAL

REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL ORIGINAL JURISDICTION CONMT. PET. (C) Nos. 1665-1666 of 2017 in IA Nos 102-103 of 2017 in SLP (C) Nos 8398-8399 of 2005 M/S Writers and Publishers Pvt. Ltd. ...Petitioner Versus Dr AK Mishra, Official Liquidator ...Respondent With M A Nos 1394-1395 of 2017 in IA No Nos 102-103 of 2017 In Signature Not Verified Digitally signed by CHETAN KUMAR Date: 2020.03.05 18:01:40 IST Reason: SLP (C) Nos. 8398-8399 of 2005 With 1 MA Nos 677-678 of 2018 In SLP (C) Nos. 8398-8399 of 2005 With Contempt Petition (C) Nos 866-867 of 2018 in SLP (C) Nos 8398-8399 of 2005 With MA Nos 1862-1863 of 2018 in SLP (C) Nos 8398-8399 of 2005 And With Misc Appl Diary No. 25930 of 2019 in SLP (C) Nos. 8398-8399 of 2005 2 J U D G M E N T Dr Dhananjaya Y Chandrachud, J The Winding Up of Super Bazar 1 Super Bazar, which was envisaged to be a model of co-operation in the consumer movement fell on bad days. On 15 March 2002, an inquiry was conducted into the working and financial conditions of Super Bazar under Section 78 of the Multi-State Co-operative Societies Act 2002. The inquiry identified poor management and a rise in the wage bill of Super Bazar as the primary causes for the losses. 1 2 On 5 July 2002, the Central Registrar of Co-operative Societies passed an order for the winding up of Super Bazar. The order of winding up was upheld by the Appellate Authority on 5 November 2002. Finding that as a multi-state cooperative society, the institution had not sub-served the interest of the general public, the Appellate Authority held that the Central government was under no obligation to continue infusing funds to keep Super Bazar afloat without the prospect of any returns. The total loss of Super Bazar as on 31 March 2002 was 60.28 crore. The ₹ order of winding up was challenged before the High Court of Delhi in writ petitions instituted by the employees’ unions of Super Bazar. 1 “Central Registrar” 3 2 3 On 15 January 2003, the Official Liquidator issued a notice under Section 3 25F of the Industrial Disputes Act 1947 terminating the services of the regular employees with effect from 15 February 2003 on the ground that Super Bazar did not possess the necessary financial resources to meet its salary obligations. In a reply filed to one of the writ petitions before the High Court, the Central government expressed its inability to infuse funds for the rehabilitation of the enterprise. In a reply filed on 3 March 2003, the OL stated that upon the winding up of the enterprise, the services of the employees had come to an end by the operation of law. The writ petitions before the High Court were dismissed on 19 December 2003 as a consequence of which the order of liquidation was upheld. In a writ petition 4 titled RS Mudgal v Official Liquidator , notices issued by the OL on 15 January 2003 and 30 April 2003 under Section 25F and Section 25N of the Industrial Disputes Act were assailed. The High Court of Delhi by its order dated 17 May 2004 dismissed the petition, holding: “Legal position, not disputed by any of the counsel appearing for the parties that with the winding up of Super Bazar, by operation of law, Super Bazar closed down. Employer- employee relationship between the employees of Super Bazar snapped, the winding up order being deemed to be a notice of discharge of the officers and employees of Super Bazar.” 4 The judgment of the High Court of Delhi dated 19 December 2003 dismissing the petitions challenging the order of winding up was challenged before this Court in proceedings under Article 136 of the Constitution titled Super Bazar Karamchari 2 “OL” 3 “Industrial Disputes Act” 4 2004 (74) DRJ 694 4 5 Dalit Sangh v Union of India . Between August and December 2004, this Court granted opportunities to the workers to bring forth an entity with whose assistance Super Bazar could be revived. Bids for Revival 5 On 4 February 2005, the Indian Labour Co-Operative Society and the Indian Potash Limited made a proposal for taking over the assets and liabilities of Super Bazar, and in pursuance of a direction of this Court, an amount of 50 lakh was ₹ deposited. Subsequently, the amount came to be refunded. By an order dated 28 February 2006, this Court was of the view that the entrustment of Super Bazar to a professionally managed entity was essential. Based on this view, an Evaluation 6 Committee was constituted to prepare a comprehensive scheme for the revival of Super Bazar. This Court by its order dated 12 February 2008 noted that as a result of the co-operative society having become defunct, the livelihood of about 1,030 workers had been affected. The court further noted that three bids had been received for the revival of Super Bazar from (i) Indian Potash Limited; (ii) Writers and 7 Publishers Limited ; and (iii) National Consumer Cooperative Federation, together with Pantaloons Retail India Limited. The court observed that, before the bids could be considered, it would be appropriate to examine the demand of the workers with regard to wages, including dearness allowance and any other allowances which were expected to be paid by the future management for at least three years after 5 SLP (C) Nos 8398-99 of 2005 and SLP (C) No 12145 of 2005 6 “EC” 7 “WPL” 5 taking over Super Bazar. The court expressed the hope that once the demand was worked out category-wise, it would facilitate the acceptance of bids as well as the working of the committee which was to evaluate them. The Workers’ Union filed an affidavit dated 14 March 2008 quantifying their demands at 54.31 crore as on 31 ₹ December 2007, noting that the Central government had waived an amount of 114 ₹ crore. This Court subsequently required the EC to complete the process of evaluating the three bids based on the net-worth of the bidders as on 31 March 2007 and their net-profits as on 31 March 2005, 31 March 2006 and 31 March 2007. In the course of its order dated 7 May 2008, this Court observed: “…Under the recommendations dated 3rd August, 2007 made by the Evaluation Committee, the successful bidder is required to get the by-laws of Super Bazar amended. That amendment can be made only by the Official Liquidator. However, it appears that as a result of the said amendment, the share capital of Super Bazar might have to be enhanced. Therefore, the highest bidder should undertake that in such eventuality, it will stand by the enhancement of the share capital and reconstitution of the new Board of Super Bazar to be done in accordance with the provisions of Multi-State Cooperative Societies Act, 2002.” The court issued directions for the evaluation of the three bids by the EC. The court stated that its order was in exercise of the power conferred by Article 142 of the Constitution of India, with the object of ensuring the revival of Super Bazar. 6 On 6 August 2008, WPL submitted a revised bid together with a business plan in terms of the recommendations of the EC. The bid submitted by WPL envisaged an investment by it of 504 crore to be made in the following manner: ₹ 6 “

” The above extract indicates that WPL was to infuse an amount of ₹ 504 crore divided into: (i) An amount of 102 crore towards issued and subscribed paid up share ₹ capital (before withdrawal of the liquidation order to make the net-worth positive); (ii) An amount of 276 crore towards working capital (as and when required ₹ after the withdrawal of the liquidation order); and (iii) An amount of 126 crore for the revival and revamping of the business of ₹ Super Bazar (as and when required). 7 On 26 February 2009, this Court accepted the recommendation of the EC dated 5 November 2008 by which it had recommended the acceptance of WPL’s bid. The three trade unions which were represented before this Court stated that they had no objection to the recommendations of the EC. Hence, by the order of the court the OL and the Central Registrar were directed to take steps to revive Super 7 Bazar in terms of the orders passed from time to time. The court ordered that, pending the revival of Super Bazar, the order of winding up was to remain suspended. Moreover, as and when the scheme of revival came into force, it would substitute the order of winding up. The special leave petitions were disposed of in the above terms. Period under WPL Management 8 On 8 October 2009, Super Bazar, now under the management of WPL, issued a notice for the re-employment of 1,030 workers with effect from 5 October 2009. In Super Bazar Karamchari Hiteshi Sangthan v Ramesh Chander 8 Agarwal , a contempt petition was filed seeking the disbursement of the sum of ₹ 54.31 crore to the employees immediately. A direction was also sought for the deposit of the employees’ share of provident fund contributions by WPL. By an order dated 13 August 2010, this Court directed that out of the amount of 55 crore which ₹ had been deposited by the highest bidder (WPL), an amount of ₹ 20 crore be disbursed to employees by the OL and a nominee of the Central Registrar, in the presence of a representative of each of the unions within four weeks. Insofar as the balance was concerned, the order directed WPL to file an undertaking that within a period of eight weeks from the date of the constitution of a new Board of Directors, the remaining amount would be disbursed to the workers. The general body was to

8 Contempt Petitions Nos (C) 353-355 of 2009 in SLP (C) Nos 8398-8399 of 2005 and SLP (C) No 12145 of 2005 8 premises of Super Bazar, which had been valued at ₹ 117.52 crore, shall not be

9 By a subsequent order dated 14 March 2011, this Court directed WPL to deposit an amount of ₹ 14.84 crore with the Registry of this Court, clarifying that this was a part of the total amount of ₹ 54.31 crore owed to employees of Super Bazar. WPL was ordered to comply with such directions as may be issued from time to time by the Central Registrar, including with regard to the inspection of Super Bazar’s accounts. 10 WPL claims that in compliance of the orders passed by this Court, it effected the following payments:

9 IA Nos 28-30 of 2011 9 10 11 On 22 March 2013, the Employees’ Provident Fund Organization issued a summons to Super Bazar under Section 7A of the Employees’ Provident Funds and 11 12 Miscellaneous Provisions Act 1952 . WPL disputed this by instituting IAs seeking a direction to the EPFO to withdraw the summons. 12 On 16 October 2014, this Court constituted a committee, being of the opinion that certain issues in regard to the implementation of the revival scheme were required to be addressed. The committee was to comprise of: (i) Shri L Nageswara Rao, Additional Solicitor General of India (as he then was); (ii) Mr P Sampath, Director, Department of Agriculture & Co-operation, Ministry of Agriculture, Government of India; (iii) Mr Kesav Dasiraju, Secretary to Government of India, Department of Consumer Affairs; (iv) Mr Harin P Raval, Senior Advocate (representing the OL); (v) Mr CA Sundaram, Senior Advocate (representing WPL). The committee submitted its report on 22 June 2015. The committee noted that out of the proposed infusion of ₹ 504 crore under the revival plan, WPL had brought in an amount of ₹ 102 crore towards share capital but the status of the infusion under the other two heads (working capital and revival funds) was unknown. As regards 10 “EPFO” 11 “EPF Act” 12 IA Nos 87-88 of 2013 10

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13 The report of the committee appointed by this Court indicated that there was a serious impasse arising out of the non-implementation of the revival plan. In March 2016, the Union of India filed an affidavit stating that despite the lapse of seven years, Super Bazar had not been revived. The Central government drew attention to the fact that in the intervening years WPL had not submitted a revival plan before the Central Registrar of Co-operative Societies, despite reminders. It was alleged that instead of reviving Super Bazar, WPL had outsourced the shops and properties of Super Bazar to third parties on a rental basis, earning huge rental incomes in the process. The Central government submitted that the infusion of funds by WPL was for the revival of Super Bazar and even if it were to withdraw from the revival process, there could be no stipulation for a refund. The Central government submitted that if WPL were to withdraw from the revival process, Super Bazar ought to be placed under liquidation and all claims would be duly investigated by the Central Registrar. 14 Eventually, by an order dated 29 March 2016, this Court observed that: “Admittedly, the infusion of funds by the bidder was for the revival of the Super Bazar, and there was no stipulation for 12

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15 The OL was directed to bring to sale all the properties of Super Bazar and to deposit the proceeds in an escrow account. Apart from the direction, the court directed that on the filing of an application, WPL would be entitled to withdraw: 13 “CAG” 14

16 The workmen instituted a review petition against the order dated 29 March 2016 which was dismissed on 28 September 2016. A curative petition filed by the 14 workmen was dismissed on 15 December 2016. The OL instituted IAs in March 2017 seeking an extension of time for the completion of the audit and for permission to conduct the sale of properties in order to effect payment to WPL. On 30 June 15 2017, WPL moved contempt proceedings seeking the disbursement of the consideration amounting to ₹ 28.80 crore received from the sale of immovable properties of Super Bazar. The CAG Report 17 The OL filed the report of the CAG on an affidavit on 4 September 2017. Some of the salient features which emerged from the CAG report are identified below: 14 IA Nos 102-103 of 2017 in SLP (C) Nos 8398-8399 of 2005 15 Contempt Petition Nos. 1665-1666 of 2017 in IA Nos. 102-103 of 2017 in SLP (C) Nos 8398-8399 of 2005 15

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20 (iv) The EC had been constituted by this Court for evaluating bids which had been received from three bidders for the revival of Super Bazar. The EC recommended the bid of WPL on the basis that it was to infuse funds to the extent of 504 crore, comprising of 102 crore towards share capital, ₹ ₹ ₹ 276 crore towards working capital and 126 crore towards revival and ₹ revamping the operations of Super Bazar. As against the above commitments, while WPL introduced ₹ 102 crore towards share capital, the maximum working capital infused by WPL over a period of six years was ₹ 28.79 crore as on 31 December 2015 which was subsequently withdrawn and reduced to 9.34 crore as on 31 March 2016. This resulted ₹ in a shortfall of 247.21 crore towards working capital. The amount of ₹ ₹ 126 crore towards revival and revamping of operations was never brought in by WPL. As a result of this, the total investment which was to be made under the revival plan was deficient to the extent of 373.21 crore. If this ₹ amount had been infused as committed there would have been an interest cost computed at nine per cent per annum over a period of six years from August 2009 to March 2016. WPL’s Claim 19 Pursuant to the order dated 29 March 2016 which directed WPL be refunded its entire investment, the total claim for refund brought by WPL as of 31 March 2019 amounts to 142,51,65,978. The breakup of this amount is reflected in the following ₹ tabulation chart: 21

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(i) The investment made by WPL in the share capital of Super Bazar: ₹ 102,00,00,000 (Rupees 102 crore); (ii) Less net amount recoverable from WPL on account of payments received by it during the operation of Super Bazar after deducting the working capital brought in by WPL: 29,65,58,133 (Rupees 29.66 crore); ₹ (iii) Less net amount recoverable from WPL on account of third party claims: ₹ 24,49,19,323 (Rupees 24.49 crore); and (iv) Less the loss incurred by WPL since it had taken over the business of Super Bazar: 44,46,32,851 (Rupees 44.46 crore). ₹ After deducting the above amounts from the share capital brought in by WPL, the amount to be refunded works out to 3,38,89,693 (Rupees 3.39 crore). ₹ 22 The amount of ₹ 29,65,58,133 which is referred to in (ii) above has been computed in the following manner: 23

The amount of 12,73,77,255 referred to in the above table (amounts recoverable ₹ on account of discrepancies) has been computed under the following heads:

The amount of ₹ 24,49,19,323 which is reflected in (iii) above which has been deducted from the investment of 102 crore in share capital is computed as follows: ₹ 24

25 (ii) Between 2009-2016, WPL brought in 102 crore towards share capital and ₹ ₹ 9.34 crore towards working capital. Thus, the total moneys which were received by Super Bazar from WPL over this period stood at 111.34 crore. ₹ As against the aforesaid amount, the undisputed expenditure on Super Bazar between 2009-2016 was 54.31 crore towards the arrears of wages paid to ₹ workmen and a further sum of ₹ 31 crore paid to the workmen over three years between 2009-2012 besides ₹ 15 crore paid towards statutory dues including arrears of property tax and freehold charges. The undisputed expenditure of WPL on the Super Bazar concern would thus stand at ₹ 100.31 crore; (iii) The order dated 29 March 2016 makes it abundantly clear that WPL was entitled to the refund of the entire investment with interest at 6 per cent per annum and the only deduction that was permissible was on account of the profits which it had received. The order did not contemplate any deduction of losses; (iv) The CAG has proceeded on a misconceived assumption that (a) WPL was not entitled to interest on share capital since, as shareholders WPL would only be entitled to dividends and net interest; and (b) Dividends are only payable if a company has earned profits. 26

The purpose of the above direction of this Court in nominating an auditor was to ensure a proper verification of the income and expenditure incurred by WPL and the profits earned from the Super Bazar establishment. Underlying the above direction of this Court was the necessity that the auditor conduct a due verification of the actual and genuine income as well as the expenditure which was incurred by WPL. That was premised on the assumption that in pursuance of the revival plan, a genuine effort had been made by WPL to revive Super Bazar. This was however yet 27 to be verified. The facts which emerged in the course of the CAG report were subsequent to the order dated 29 March 2016. These facts were neither in the knowledge of the court nor could they have been factual considerations that were borne in mind when the order was passed. The circumstances which have come on the record as a result of the verification which has been carried out by the CAG upon the report of the auditor indicate several significant facets. Firstly, though in terms of the revival plan, a solemn commitment was made by WPL to bring in an investment of 504 crore comprising of 102 crore towards share capital, 276 crore towards ₹ ₹ ₹ working capital and 126 crore towards revival and revamping the operations of ₹ Super Bazar, WPL fell woefully short of this commitment. An amount of 102 crore ₹ was brought in towards share capital and 9.34 crore towards working capital. The ₹ commitment to bring in working capital of 276 crore and investment for reviving ₹ and revamping of 126 crore was plainly breached. Secondly, while bringing in the ₹ amount of 102 crore towards share capital, WPL by the ₹ modus operandi which it followed, ensured that it took over 98.89 per cent of the shareholding, ensuring it controlled the management and operations of Super Bazar. This, as the CAG report indicates, was achieved by requiring existing members of the cooperative society to subscribe to additional capital on the pain of forfeiture of their existing shareholdings. Additional members who were inducted by WPL were found by the CAG to be bogus. Thirdly, WPL while submitting its bid for the opportunity to revive Super Bazar had made a solemn representation that it possessed the necessary expertise to manage the Super Bazar stores. Instead, it entered into various MoUs with third parties for running and conducting the stores in breach of the restraining 28 covenants contained in the revival plan. Fourthly, large and unexplained advances were made by WPL during the period when it was in control of Super Bazar. Advances as high as 20 crore were not backed by any business rationale. It dealt ₹ with third parties on the basis of book entries without any real movement of goods or funds. Fifthly, during the period when it was in management and control of Super Bazar, the physical assets of the concern were stripped and the building at Connaught Place was deprived of all its essential fixtures. 27 The findings which have emerged in the course of the verification by the CAG leave no manner of doubt that WPL did not intend at any material time to embark upon the revival of Super Bazar. The business and affairs of Super Bazar were conducted in a manner that was sham and bogus. It dealt with related entities as explained in the report. The transactions and the modalities followed are indicative of a lack of bona fides on the part of the WPL in its operations. Statutory Scheme applicable to Super Bazar 28 Chapter X of the Multi-State Co-operative Societies Act 2002 deals with the winding up of multi-state co-operative societies. Under sub-section (1) of Section 86, the Central Registrar is empowered to direct the winding up of a multi-state co- operative society after an audit, special audit or an inquiry or, as the case may be, or an inspection under Sections 70, 77, 78 and 79 respectively. Sub-section 2(b) empowers the Central Registrar of his own motion to direct the winding up of a multi- state co-operative society which has ceased to function in accordance with co- 29 operative principles. Section 89 provides for the appointment of a liquidator while Section 90 provides for the powers of the liquidator. Under Section 90(1), all the assets of a multi-state co-operative society in respect of which an order of winding up has been passed, vest in the liquidator from the date on which the order takes effect. The liquidator is entrusted with the power to realise monies from the assets. Under clause (b) of sub-section 2 of Section 90, the liquidator is empowered to determine the contribution to be made or remaining to be made by the members or past members or by officers or former officers to the assets of the society. Under clause (c) of sub-Section (2) of Section 90, the liquidator is empowered to investigate all claims against the society and subject to the other provisions of the statute, to decide questions of priority between claimants. Under clause (d), the liquidator is empowered to pay claims against the society, including interest up to the date of winding up according to their respective priorities in full or rateably, as the assets of the society may permit. The surplus, if any that remains, has to be applied in the payment of interest from the date of the order of winding up. 29 Rule 28 of the Multi-State Co-operative Societies Rules 2002 lays down the procedure to be adopted by the liquidator. Rule 29 provides for the order of priority in accordance with which the assets of a multi-state co-operative society shall be applied in the payment of liabilities. Rule 29 provides as follows:

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31 Upon the auditor making a determination, the amounts were to be verified by the CAG whose determination was to be binding on all the parties including WPL. At the stage when the above order was passed by this Court, the Court did not have the benefit of the auditor’s investigation. Nor were the facts which emerged subsequently in the report of the CAG within the knowledge of the court. The order of the court envisaged a due and proper verification at two levels; first by the auditor and thereupon by the CAG. This verification was to underlie the ultimate computation of the profits earned by WPL. It is impossible to read the order of this Court as containing an implication that WPL was only liable to account for the actual profits earned by it during the period when it operated Super Bazar or that it was relieved of the responsibility of accounting for its dealings during the period when it was in management of the establishment. No part of the order of this Court contains a direction to the effect that WPL would not be held to account, upon a verification by the CAG, for the nature of its dealings during the period when it was in management. To accept the submission of WPL that no deduction could be made from the investment which it had brought in save and except for profits actually earned would be a simplistic reading of the order of this Court. The entire process of verification of the income and expenditure was designed not only for the purpose of deducing the profits which was earned by WPL. The Court was also conscious of the fact that in devising the terms for exit of WPL, it was not appraised at that stage of the nature and extent of the dealings of WPL in its management of Super Bazar. The order of this Court therefore can only be read to mean that WPL would be held 32 to account for the period when it was in management based on the result of the verification initially by the auditor and thereupon by the CAG. 31 The above view which we have taken of the interpretation of the order dated 29 March 2016 must also be juxtaposed in light of the statutory provisions which govern an order of winding up under Section 89 and other cognate provisions of the Multi-State Co-operative Societies Act 2002. The statute lays down the manner in which the liquidator has to function upon taking charge. The Multi-State Co- operative Societies Rules 2002, in particular, indicate the procedure to be adopted by the liquidator and the manner in which the assets are to be applied. The order of priority is spelt out. A pro-rata refund of share capital appears third in the order of priority. The last in the order of priorities is a pro-rata payment of dividend on share capital at a rate not exceeding 6.25 per cent for the period of liquidation. To allow the claim of WPL to be refunded its entire investment amount, the major part of which took place through the subscription of share capital, would essentially place it outside the purview of the winding up proceedings. Accepting the claim would enable it to take away moneys overriding the order of priorities laid down by the Multi-State Co-operative Societies Rules 2002. WPL was one of the three bidders invited to bid for the opportunity to take over the management of Super Bazar and revive its operations. WPL was under no legal obligation to submit a bid. It engaged in a free-standing market process, albeit one supervised by this Court, through which WPL sought to turnaround the business of Super Bazar and subsequently receive profits from the business. This is supported by the conduct of WPL in 33 squeezing out existing members and securing for itself 98.89 per cent of the share capital of Super Bazar. Having failed in its market endeavour to revive Super Bazar, it now seeks to exit its investment with a full refund and without having to account for the business which was carried on during the period when Super Bazar was under the management of WPL . Such a course of action would be contrary both to the first principles which govern winding up as well as the statutory scheme which is embodied in Sections 89 and 90 of the Multi-State Co-operative Societies Act 2002 and Rules 28 and 29 of the Multi-State Co-operative Societies Rules 2002. Dues owed to the EPFO 32 During the course of the hearing, the EPFO has appeared before this Court. Mr Siddharth, learned Counsel appearing on behalf of the EPFO has placed on record: (i) An order dated 13 July 2015 passed by the Regional Provident Fund Commissioner – II, Delhi (North), holding WPL liable for the payment of provident fund contributions in respect of all the employees to whom arrears of wages have been disbursed for the period from May 2003 to December 2007; and (ii) An order dated 25 July 2016 determining the dues payable to the EPFO at 8.43 crore for the period from May 2003 to December 2007. ₹ 33 In adjudicating the present matter, this Court must bear in mind the provisions of the EPF Act. Section 11 provides that where an order of winding up is made, dues 34 owed towards employees’ provident fund (or any other liability mentioned therein) shall be paid in priority to all other debts in the distribution of the property or the 16 assets of the entity which is being wound up . Interpreting the provisions of Section 11(2), a three judge Bench of this Court in Maharashtra State Cooperative Bank v 17 Assistant Provident Fund Commissioner has held:

16 11. Priority of payment of contributions over other debts.- [(1)] [Where any employer is adjudicated insolvent or, being a company, an order for winding up is made, the amount due- (a) From the employer in relation to [an establishment] to which any [Scheme or the Insurance Scheme] applies in respect of any contribution payable to the Fund [or, as the case may be, the Insurance Fund] damages recoverable under section 14B, accumulations required to be transferred under sub-section (2) of section 15 or any charges payable by him under any other provision of this Act or of any provision of the [Scheme or the insurance Scheme]; or (b) From the employer in relation to an exempted [establishment] in respect of any contribution to [the provident fund or any insurance fund] (in so far as it relates to exempted employees), under the rules of [the provident fund or any insurance fund], [any contribution payable by him towards the [Pension] Fund under sub—section (6) of section 17,] damages recoverable under section 14B or any charges payable by him to the appropriate Government under any provision of this Act or under any of the conditions specified under section 17, Shall where the liability thereof has accrued before the order of adjudication or winding up is made, be deemed to be included] among the debts which under section 49 of the Presidency Towns Insolvency Act, 1909 (3 of 1909) or under section 61 of the Provincial Insolvency Act, 1920 (5 of 1920) or under [section 530 of the Companies Act, 1956 (1 of 1956)], are to be paid in priority to all other debts in the distribution of the property of the insolvent or the assets of the company being wound up, as the case may be. [Explanation.- In this sub-section, and in section 17, “ insurance fund” means any fund established by an employer under any scheme for providing benefits in the nature of life insurance to employees, whether linked to their deposits in provident fund or not, without payment by the employees of any separate contribution or premium in that behalf.] [(2) Without prejudice to the provisions of sub-section (1), if any amount is due from an employer [,whether in respect of the employees’(deducted from the wages of the employees) or the employer’s contribution], the amount so due shall be deemed to be the first charge on the assets of the establishment, and shall, notwithstanding anything contained in any other law for the time being in force, be paid in priority to all other debts.] 17 (2009) 10 SCC 123 35

(Emphasis supplied) 34 In view of the above discussion, we have come to the conclusion that the plea of WPL to receive payments at the present stage would confer on it a preference and priority which would be in the teeth of the statutory provisions contained in the Multi-State Co-operative Societies Act 2002 and the EPF Act. We have found no substance in the challenge that has been preferred on behalf of the WPL to the determination which has been made in the audit report following which a verification has been carried out by the CAG. The claim of WPL to the extent set out in the verification report by the CAG will necessarily have to be dealt with by the liquidator upon the realization of the assets of Super Bazar in accordance with the statutory order of priorities contained in the Multi-State Co-operative Societies Rules 2002. The verification made by the CAG is final and binding and shall not be called into question before the OL or in any proceeding. 35 The liquidator shall evaluate the claim as determined by the verification report by the CAG in terms of the priorities for the payment of claims as envisaged in the Multi-State Co-operative Societies Act 2002 and the associated rules. The liquidator is also directed to treat the amount outstanding to the EPFO in terms of the first priority which is created by the provisions of Section 11(2) of the EPF Act. The 36 liquidator shall also consider the claim of the Union government. The liquidator is directed to consider the auditor and the CAG’s observations with respect to the 14,149 new members inducted during WPL’s management not being genuine. The liquidator shall, in the process of winding up, be at liberty to consider all other claims received and to make a determination in accordance with law. In the event any further judicial determinations are required to be made, parties shall be at liberty to approach the High Court of Delhi and we request the Chief Justice of the High Court to constitute an appropriate bench to hear any matters arising out of the liquidation of Super Bazar. 36 The contempt petitions shall stand dismissed. All miscellaneous applications are accordingly disposed of in the above terms. …………...…...….......………………........J. [Dr Dhananjaya Y Chandrachud] …..…..…....…........……………….…........J. [Ajay Rastogi] New Delhi; March 05, 2020. 37