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Judgment
H.L. Gokhale, J.—This contempt petition arises out of the interim orders passed by the Division Bench from time-to-time on July 6, 1999; July 7, 1999; and July 15, 1999 in Writ Petition No. 862 of 1999. The grievance of the petitioner is that those orders are wilfully violated by the respondents and, therefore, appropriate action is necessary against them.
The aforesaid writ petition which is pending for admission before the Division Bench, is on behalf of the workmen working under respondent No. 1 - Matulya Mills Ltd. The petitioner is a trade union representing these workmen. This textile mill is in difficulty for quite some time. From the papers which have been made available to me, it appears that this textile mill was taken over some time in the year 1979 by Mihir Textiles Ltd., a company belonging to Sun-Grace Mafatlal Group and this group continues to be the controlling group and is in management thereof. It appears that from 1989 onwards, the textile mill went into considerable difficulties and subsequently the matter was taken up for consideration before the BIFR where a scheme for revival came to be framed some time in the year 1996.
It is the further case of the petitioner that since about December, 1998, the mill/ company is not physically working and the wages of the workers are not paid since October, 1998. It is for getting the wages that they have filed the above-referred Writ Petition No. 862 of 1999 wherein prayer (a) is to direct the respondent-company to comply with the sanctioned modified scheme dated February 13, 1996, and prayer (b) is to direct the respondent/ company to pay the wages of the workers from October, 1998, onwards. One of the interim prayers in that petition is to direct the respondent-company to pay the wages of the workers from October, 1998, onwards.
That petition came up before my brothers Sarvashri Ghodeswar and Srikrishna, JJ. for admission from time-to-time. The order dated July 6, 1999, passed by the Division Bench records in para 1 thereof that the matter needed urgent attention since the wages of about 650 workmen have not been paid on the ground of financial difficulties. Thereafter, the order records in para 2 that on behalf of respondent No. 1, it was pointed out by Mr. Cama, their Counsel, that an amount of Rs. 73,48,000/- was deposited by the mill/company in Bank of Maharashtra and that the fixed deposit receipt issued by Bank of Maharashtra had been handed over to the Reserve Bank of India (RBI). There was a contract between the RBI and respondent No. 1 to construct some 45 flats for the RBI on the land belonging to respondent No. 1 and the handing over of the FDR was by way of giving a performance guarantee. It was stated on behalf of respondent No. 1 by their Counsel that the company did not have any other. corporate deposit or any monies and hence they were not in a position to pay the wages claimed by the workers. It was at this stage that Mr. Gonsalves, learned Counsel appearing for the petitioner, had pointed out that a month''s wages of the workmen would come to around Rs. 30,00,000/-. Thereupon, it is recorded in para 3 of that order as follows :
"Mr. Cama states that if the Court makes an order the first respondent would be willing to encash the fixed deposit receipt lying with the RBI and distribute at least two months wages to the workmen."
Thereafter in para 4, the Court recorded that it appeared that the only monies in the hands of respondent No. 1 were the amounts lying in fixed deposit with the Bank of Maharashtra, the original receipt whereof was with the RBI. The matter was thereafter adjourned to July 7, 1999, to hear the RBI.
The order passed on the next date i.e., on July 7,1999, records that the petitioner made a grievance that the monies collected by development of the property under the terms of the BIFR were not utilised for the purposes for which they were meant. The Court had already called for a report from the operating agency (IDBI) to enable the Court to decide whether the petition should be admitted. Thereafter in para. 1 of the order, the Court records, "in the meanwhile, some relief is immediately due to the workmen who have remained unpaid from December, 1998", In this connection what is relevant to note is that learned Counsel appearing for respondent No. 1-mill/company has made a statement (and which appears to be a correct one) that the wages for October and November, 1998 have been paid and, therefore, the Division Bench recorded that the wages have remained unpaid from December, 1998. Thereafter, in para 2 it is recorded that Dr. Ghandrachud, learned Counsel appearing for the RBI pointed out that the RBI was not holding any such fixed deposit receipt whereupon Mr. Cama, learned Counsel appearing for respondent No. I/company immediately owned that the statement on the earlier date was a mistake on the part of the company. The amount is lying factually in a fixed deposit in Bank of Maharashtra on the strength of which and at the instance of respondent No. 1, Bank of Maharashtra had given a Bank guarantee in the sum of Rs. 73,48,000 to the RBI. Thereafter, in para 3 of the order, it is recorded as follows :
"Mr. Cama made a fervent appeal to the Court that the Court should persuade Reserve Bank of India to waive, or at least defer, the enforcement of the Bank guarantee in their favour for some time so as to allow encashment of the fixed deposit in the Bank of Maharashtra and disbursement of the said amount of Rs. 73,48,000 towards arrears of wages of the workmen at least for two months."
Thereafter, again in para 5, the order records :
"At the moment, our primary concern is how to generate some monies so that the workers, who are not being paid wages from the month of December, 1998, till today, can be paid some wages."
Thereafter the order contains different directions, though they are worded in a little different manner. In para 5 of the order, the Court observed :
"(a) It appears to us that it is in the interest of justice that the amount of Rs. 73,48,000/- held as fixed deposit in the Bank of Maharashtra, Fort Branch, Mumbai, should be encashed and the said amount be disbursed to the concerned workers towards the arrears of wages from December, 1998.
(b) Thereafter in paras 5 and 6 it is noted that there is separate amount of about Rs. 9,00,000/- to their credit in the "No lien account" in Punjab National Bank and the Court directed that Punjab National-Bank may accept deposits in the "No lien account" of respondent No. 1, but until further orders they shall not make any disbursement without the leave of the Court :
(c) thereafter the Court directs as follows :
''Respondent No. 1 shall within a period of one week from today, encash the fixed deposit of Rs. 73,48,000/- held in the Bank of Maharashtra, Fort Branch, Mumbai and deposit the said amount in this Court. Liberty to the petitioner to apply for disbursement of the amount to the concerned workmen after the deposit is made''.
(d) paragraph 7 of the order thereafter directed the Bank of Maharashtra as follows :
''The encashment of the aforesaid fixed deposit shall be without prejudice to the rights of Reserve Bank of India to insist that the Bank guarantee be continued and shall not exempt the liability of respondent No. 1 to back up the other source, if so required by the Bank of Maharashtra.''
(e) Lastly, in para 10, the order stated as follows :
''Until arrears of wages of the workmen from December, 1998 to June, 1999, are cleared, it would be in the fitness of things that respondent No. 1 shall not dispose of any of its assets without leave of this Court''."
Thereafter, the matter came up before the Division Bench on July 15, 1999, when Mr. Cama learned Counsel appearing for respondent No. 1, requested for further two weeks'' time on the ground that respondent No. 1 intended to pay the concerned workmen their arrears of wages and respondent No. 1 was attempting to raise money. That statement of Mr. Cama was recorded and the time was extended by two weeks.
This contempt petition is filed on August 30, 1999. It refers to these three orders of 6th, 7th and 15th July, 1999, and thereafter stated that the respondents have wilfully not encashed or permitted to be encashed the said fixed deposit, and therefore, the same has not been deposited in this Court. The petition prays that, (a) the respondents be held guilty for having committed contempt of these orders; and (b) that they be punished for this contempt. This petition thereafter prays for an interim order; (c) that pending the hearing and disposal of the petition, appropriate orders ensuring the encashment of fixed deposit amount of Rs. 73,48,000/- and their distribution among the workers be passed; and (d) for further appropriate orders as may be deemed necessary.
As far as the respondents to this contempt petition are concerned, the concerned textile mill is respondent No. 1. Respondent Nos. 2 and 3 are the directors of this mill. Respondent No. 2 is a respondent, in the main Petition No. 862 of 1999 which is pending. Respondent No. 4 is the Bank of Maharashtra. Respondent No. 5 is the Reserve Bank of India. Thereafter, Mr. Gonsalves sought leave to add the other directors of respondent No. 1 as additional respondent Nos. 6 to 121 and one additional paragraph No. 4, (a) concerning the directors. Leave to amend is granted and this amendment is carried out forthwith. Inasmuch as there are in all 12 respondents, I asked Mr. Gonsalves as to whether he is pressing this contempt petition against all of them and he has answered in the affirmative.
This petition came up before me earlier on September 2, 1999, when an adjournment was sought on behalf of respondent Nos. 1 to 3. On adjournment, an affidavit in reply has been filed on behalf of respondent No. 1 by their Company Secretary Mr. Hemant Kapadia. Respondent No. 3 has filed an affidavit in his personal capacity opposing admission of this petition to the extent he is concerned. One Mr. Arvind Sattur, the Chief Manager of the Fort Branch of Bank of Maharashtra respondent No. 4 has also filed an affidavit opposing admission of the petition to the extent it concerns respondent No. 4.
Mr. Gonsalves has appeared for the petitioner, Mr. Cama has appeared for respondent No. 1, Mr. Kapadia has appeared for respondent Nos. 2 and 3, Mr. Puranik has appeared for respondent No. 4 and Dr. Chandrachud has appeared for respondent No. 5. All learned Counsel have presented their views with their usual ability with the assistance of a number of judgments.
Mr. Gonsalves, learned Counsel appearing for the petitioner, submitted that the order is passed by the Division Bench on these three dates are clear enough. In his view, although these orders were interim orders and although they were passed due to the anxiety of the Court that some appropriate payment ought to be made to the workmen, there were five directions as stated above in this order. Mr. Gonsalves submitted that these directions were invited by Mr. Cama, learned Counsel appearing for respondent No. 1 by indicating that the mill/ company, in fact, had felt that the workers could be paid their dues for at least two months by encashing the FDR. These two orders passed on July 6 and 7 of 1999, were accepted by Mr.Cama on July 15, 1999, when he sought time and made it clear that respondent No. 1 had the intention of paying the concerned workmen their-arrears of wages for which respondent No. 1 was attempting to raise money. Mr. Gonsalves submitted that these directions coupled with acceptance implied some kind of statement/assurance amounting to an undertaking on behalf of respondent No. 1 that they intended to comply with the directions. These orders stipulated a certain time-frame within which the amount was to be released by the Bank of Maharashtra on respondent No. 1 backing up the requirement of the Bank of Maharashtra, when required by it. Mr. Gonsalves submitted that whatever may be the controversy between the Bank of Maharashtra and respondent No. 1, under the Court''s direction the FDR was to be encashed and the amount was to be disbursed to the workers. If the directions were clearly understood and accepted and time was sought to comply with them, the failure to comply with the same will have to be construed as the wilful disobedience to these orders and implied undertaking to the Court. In his view, therefore, this is a civil contempt u/s 2(b) read with Sections 12(4) and (5) of the Contempt of Courts Act, 1971.
Mr. Gonsalves referred to various provisions of the Sick Industrial Companies (Special Provisions) Act, 1985, and the scheme framed thereunder concerning respondent No. 1. He pointed out to me that under Clause 5.3 of the general terms and conditions of the scheme, any financial shortfall/arising out of the delayed implementation of the schedule or for any other reason shall be met by the company/promoters without any recourse to financial institutions/Banks or seeking any further reliefs. In his view, the directors of the company were liable for this breach and in their capacity as directors, they ought to be dealt with individually in accordance with law. He maintained that the principal liability of respondent No. 1, Bank of Maharashtra, and the directors of respondent No. 1, was under the Industrial Law, under the Payment of Wages Act, under the Sick Industrial Companies (Special Provisions) Act, 1985 and under the orders passed by this Court and in any case they were liable u/s 5 read with Section 633(1) of the Companies Act, 1956.
Mr. Gonsalves, therefore, submitted that a prima facie case was available for action and in his view an appropriate interim order was also necessary. He submitted that the intention behind framing the scheme or for that matter selling apart of the assets of the mill was to rehabilitate the mill/company and/or to see to it that work force does not suffer. He submitted that for last about six months, no wages are paid to such a large work force and in spite of all cooperation from the workers, the mill was not working whatever may be the reasons with respect to market or financial difficulties faced by respondent No. 1, the liability of respondent No. 1 as the employer remained and it was accepted by them before the Division Bench and, therefore, the interim orders were passed. Mr. Gonsalves pointed out that admittedly an amount of Rs. 34,58,00,000/- was received by respondent No. 1 from the Reserve Bank of India for these 45 flats. No explanation was coming forward as to where all this money had gone and as to why the amount as directed was not deposited in the Court, nor had respondent No. 1 given any back-up security to Bank of Maharashtra to encash the FDR as directed by the Division Bench. The Bank of Maharashtra had been protected under the order of the Division Bench though they were not party before it. Assuming that, they wanted to point out anything to the Division Bench, they had also not cared to move the Division Bench all these days though they were fully aware of the Orders passed. He, therefore, submitted that the interim directions to encash and distribute fixed deposit amount was necessary to be acted upon either with or without the back-up security from respondent No. 1 to Bank of Maharashtra.
Mr. Gonsalves relied upon a judgment of a Single Judge of this Court in Rashtriya Mill Mazdoor Sangh v. Khatau Makhanji Spg. and Weaving Co. Ltd., (1997)2 CLR 1119, wherein the learned Judge has held that the financial difficulty cannot be permitted to be set up as a defence for disobeying the direction of this Court particularly when it related to. the payment of wages to the workers. Mr. Gonsalves submitted that the directors are personally liable under the Sick Industrial Companies (Special Provisions) Act, 1985, and if necessary the wages of workers due under the orders of the Court be secured by attaching the personal properties of the directors and/or by recovering the amount from them.
In the light of these submissions, three points arise for my consideration : firstly, whether any prima facie case is made out for admission of this petition. Secondly, whether any interim order as sought can be and should be passed, and thirdly, if not, what appropriate orders ought to be passed.
Inasmuch as a direction is sought against the Bank of Maharashtra to release the amount from the fixed deposit with them, I heard Mr. Puranik, learned Counsel appearing for Bank of Maharashtra first. Mr. Puranik pointed out that the orders which were obtained from the Division Bench were sought behind the back of Bank of Maharashtra. He accepted that it is true that the Division Bench did protect the Bank of Maharashtra to some extent, but at the same time in his submission unless respondent No. 1 gave an alternative security to the satisfaction of the Bank of Maharashtra or unless the Reserve Bank of India reduced the liability of Bank of Maharashtra under the Bank guarantee, Bank of Maharashtra would be in difficulty. If Bank of Maharashtra complies with these orders it will mean that it would release this amount as directed by the Division Bench. However it will continue to be answerable to the Reserve Bank of India, though there is no back-up finance coming up from respondent No. 1. He also drew my attention to the counter guarantee given by respondent No. 1 to Bank of Maharashtra on Februarys, 1999. In Clause 1 of this document, respondent No. 1 has undertaken to keep Bank of Maharashtra fully indemnified and saved harmless in respect of each and every payment made or to be made and obligation, liability, loss, damage, etc. undertaken, incurred or suffered or to be sustained by the Bank of Maharashtra directly or indirectly under or in connection with the said Bank guarantee. He submitted that respondent No. 1 owed a duty to the Bank of Maharashtra to point out this counter guarantee to the Division Bench when the matter was heard before the Division Bench. In any event, he submitted that under the law of contract, Bank of Maharashtra had a pledge over this deposit and any inroad into its authority would create financial difficulties for the Bank unsupported by any legal provisions. He submitted that Bank of Maharashtra has no difficulty in releasing the amount as directed by the Division Bench provided either respondent No. 1 made available a back-up security to the satisfaction of Bank of Maharashtra or RBI either reduced or relinquished Bank of Maharashtra of its liability to RBI. In the absence of either of them, Bank of Maharashtra should not be held to be in wilful breach or disobedience of the orders passed by the Division Bench. He drew my attention to the correspondence which showed that Bank of Maharashtra had called upon respondent No. 1 to give adequate and appropriate security to enable it to break the FDR but respondent No. 1 had failed in that.
Mr. Cama, learned Counsel appearing for respondent No. 1 referred me to a number of steps that respondent No. 1 took after and during the course of passing of the three orders. He referred me to various letters which were written on behalf of respondent No. 1 to its sister concerns, to financial institutions, to the Banks and even to the RBI and Bank of Maharashtra to make necessary finance available on the basis of which respondent No. 1 would meet the obligation under the order. Mr. Cama pointed out that the sister concerns as well as financial institutions and the Banks expressed their inability to help respondent No : 1, in all probabilities because of the crises through which respondent No. 1 is passing, but he submitted that the fact remains that respondent No. 1 had made every effort possible to arrange the necessary finance. He, therefore, submitted that it cannot be said that respondent No. 1 or its directors had committed any breach or disobedience of the orders that the Court has passed.
Mr. Cama took me through a number of judgments in this behalf. He referred me firstly to a judgment of the Apex Court in Kapildeo Prasad v. State of Bihar, VII (1999) SLT 215 : JT (1999) 6 SC 216, wherein the Apex Court has held in para 11 thereof that wilful defiance will exclude casual, accidental, bona fide or unintentional acts or genuine inability to comply with the terms of the order. He referred to me another judgment of the Apex Court in Rabindra Chamria and others Vs. The Registrar of Companies, West Bengal and others, , wherein the Court held in para 26 of the judgment that Section 633 of the Companies Act cannot be invoked for offences u/s 32 of the Industrial Disputes Act, 1947. The Apex Court held that may be that Section 32 of the Industrial Disputes Act contains a stringent provision, but that is no answer to hold that Section 633 of the Companies Act could be invoked for offences u/s 32 of the Industrial Disputes Act. A similar view has been taken by a Single Judge of this Court in the case of Bharatiya Ramgal Sena v. New Palghar Industries, (1999) II CLR 1056.
Mr. Cama, however, suggested an alternative arrangement so that some payment can be arranged to workers with the co-operation of all concerned. As far as this suggestion is concerned, I will deal with it a little latter.
Mr. Kapadia, learned Counsel appearing for respondent Nos. 2 and 3, submitted that today this petition is still at the admission stage. Not only the present petition but Writ Petition No. 862 of 1999 is also not admitted as yet, and what is complained of is a breach of interim orders passed in that petition, Mr. Kapadia contended that there is every possibility that the writ petition may still be rejected, but that apart, at an interim stage, this Court ought not to pass orders in a contempt petition causing grave prejudice to the directors whom he was representing. He submitted that any order which would affect the properties of the directors either by way of attachment or any injunction against them, is not expected to be passed at this stage inasmuch as they have not been held in contempt as of now. No particulars of their properties are available before the Court and even in civil jurisdiction the Court is always careful while passing the orders of attachment under Order 38 Rule 5 of CPC or even granting injunction whenever it is sought in similar circumstances. He submitted that the present proceeding is of a quasi- criminal nature and that being so the Court has to be far more careful while passing orders at an interlocutory stage. In his submission, the orders passed by the Division Bench were directed against respondent No. 1 and Bank of Maharashtra only. Respondent No. 2 was very much a respondent in the main petition and yet the Court has not passed any order against respondent No. 2 and this being so, in his submission respondent No. 2 could not be said to be in breach or disobedience of a direction which is passed against the other respondents. He submitted that as far as respondent Nos. 2 and 3 are concerned, even in their capacity as directors, they cannot be held to be responsible u/s 12(4) and (5) of the Contempt of Courts Act unless their roles and responsibilities are examined. He, therefore, opposed the admission of the petition and passing of interim orders against the directors.
Dr. Chandrachud, learned Counsel appearing for the Reserve Bank of India submitted that though the RBI has been joined as a respondent, certainly there can be no case against the RBI. The RBI has not flouted any orders of this Court and in fact it was the RBI which was expected to make some fund available for these employees. He however supported the contention of the petitioner, vis-a-vis respondent No. land its directors. He submitted that powers of the High Court are not confined merely to the provisions of the Contempt of Courts Act. It has the powers under Article 215 of the Constitution of India and they ought to be seen in that perspective. He drew my attention to the judgment of the Supreme Court in the case of Supreme Court Bar Association Vs. Union of India and Another, , particularly in the context of the Court being the Court of record and having inherent jurisdiction to punish for contempt. He drew my attention to paras 21, 29 and 34 of that judgment and submitted that an element of public policy was involved in punishing for civil contempt and under such circumstances compliance with the order may be secured without resort to coercion, through the contempt power. He submitted that Section 12(4) and (5) of the Contempt of Courts Act, 1971, dealing with breach of undertaking by the company and connivance of its directors may not perhaps be strictly available, yet analogous principles can certainly be applied to them in view of the powers of this Court as a Court of record under the Constitution.
Dr. Chandrachud then referred to me another judgment of Apex Court in J.K. Industries Ltd. and Others Vs. Chief Inspector of Factories and Boilers and Others, , and submitted that ultimate liability on behalf of the company was that of the directors. They were the "alter ego" of the company and which is why in that case the Supreme Court did not restrict the liability to the occupier (i.e., manager) of the factory. In the present case, as far as the breach of the orders is concerned, one will have to find out as to who is in the ultimate control over the affairs of the company including this litigation. He lastly referred me to a judgment of the Apex Court in Delhi Development Authority Vs. Skiper Construction Company (P) Ltd. and another, , wherein the Supreme Court has laid down the circumstances wherein the Court is expected to lift the corporate veil to find out as to who is responsible for the alleged breach or disobedience by the company. That is necessary from the point of view of protection of public interest and to see to it that the company does not evade the obligations imposed by law. He relied upon an unreported judgment of a Division Bench of our Court in Writ Petition No. 1337 of 1998 decided on October 6, 1998, wherein in the case of Libra Plantation Ltd. necessary directions were given following upon the proposition in DDA case, it is, however, relevant to note that cases of Libra Plantation and Skipper Construction were cases of diversion of property of the company. Mr. Kapadia, therefore, submitted that the lifting of the veil in those cases was on such a background to find out as to who was the real owner. In the present case diversion of funds is yet to be established. As far as appropriate directions are concerned, this Court has sufficient power. It has been laid down way back in the case of Noorali Babul Thanewala Vs. Sh. K.M.M. Shetty and others, , that the directions to a contemnor can be to purge the contempt or to sentence him to imprisonment or fine or all of them.
Having considered these rival submissions, in my view, it is clear that the orders passed by the Division Bench on the aforesaid three dates were to see to it that the wages of the workers are paid. The Division Bench contemplated certain arrangement which was clearly understood by respondent No. 1. Respondent No. 1 was also told that if the Bank of Maharashtra requires adequate security, respondent No. 1 will have to arrange that. Obviously, respondent No. 1 has not done it so far though undoubtedly an explanation has been given that efforts were made to see to it that finance is arranged. Respondent No. 1 has also offered to give security by way of creating some kind of charge on their lands subject to sanction from High Court. The Bank of Maharashtra has declined to accept that suggestion inasmuch as for giving a Bank guarantee, they needed a liquid protection and they could not be satisfied by way of any such charge. Mr. Puranik also submitted that the same was also as per the terms of the contract.
From the narration above, it is also clear that on the one hand a scheme for rehabilitation of the mill/company is framed and the properties of the mill/company are sold to financial institutions and other parties. That was essentially meant for reviving the mill/ company and for the workmen to get their jobs and earn. This primary objective cannot be lost sight of in the present controversy. That objective was upper-most in the mind of the Division Bench when the three orders were passed and that has got to be squarely understood and was, in fact, understood by respondent No. 1 when a statement was made on July 15, 1999, before the Division Bench on their behalf that attempts were being made to raise money. Yet on the other hand, the amount has not been paid although the orders were passed quite some time back and sufficient time has gone since then. The orders were meant to be acted upon within a certain frame and if they are not so acted upon, the party in whose favour such orders are passed, cannot be denied access to the contempt Court wherein it would certainly like to agitate that there is a deliberate breach of the orders passed by this Court and this Court ought to look at this breach a little sternly. The claimed financial difficulties of respondent No. 1 cannot be pressed into service to dismiss the petition. A satisfactory explanation as to where the amount of over Rs. 34 crores has gone is yet to be provided. Having noted all these factors, in my view, this petition can certainly not be rejected and it will have to be admitted. The same is accordingly admitted hereby.
Now, turning to the respondents to this petition, as far as respondents No. 5 - RBI is concerned, by no stretch of imagination can it be said that it is in contempt. The RBI is not to release any amount under the directions of the Court and hence although this petition is admitted and the presence of the RBI (which is respondent No. 5) is expected to continue in this matter, that will only be to assist the Court and not as a contemnor. As far as the directors or the mill/company are concerned, along with them one Mr. Ramanujam, Special Director, BIFR has also been joined as respondent No. 2. He undoubtedly has certain responsibility under the scheme that has been framed. But as far as the orders passed by the Division Bench are concerned, it is difficult to say as to how he is in breach of those orders. He is a special director on the board of directors only as a nominee of the BIFR and as of now the petition does not indicate what role he has played in breach of the orders. In the circumstances, although the notice will go to respondent No. 12, that will also be only to assist the Court while making it clear that this Court does not treat him as a contemnor. As far as other directors of respondent No. 1 mill/company are concerned, only respondent No. 2 herein is a party to the main petition and respondent No. 3 is joined in this contempt petition right from the beginning. As far as other respondent Nos. 6 to 11 are concerned, they have been joined only today. Hence although this petition is admitted, as far as these respondents, i.e., respondent Nos. 6 to 11 are concerned, it would be open to them to point out when the petition is taken up for hearing that they ought to be discharged as respondents from this petition. They are, however, directed to state on oath their status in respondent No. 1 mill/company, as to how long they are associated with it and what is their shareholding in it and what they have received from it. It is also expected from them that they make a true and complete disclosure of their properties and assets on affidavit. They are also put to notice with respect to their dealings concerning their personal assets and that they could be made answerable for the liabilities of respondent No. 1 under the order of the Court.
As far as respondent No. 4-Bank of Maharashtra is concerned, Mr. Puranik requested that their Bank be also treated in the same manner as RBI. He submitted that respondent No. 4 could not deposit the amount in Court as directed by the Division Bench since there was no back-up support being given by respondent No. 1. There is some substance in his submission yet this petition will stand admitted against respondent No. 4 as the direction of the Division Bench was addressed to respondent No. 4 also and nothing prevented it from obtaining the necessary clarification from the Division Bench. Respondent No. 4 can still obtain it. Respondent No. 4 cannot, therefore, be discharged from this petition at this stage. Thus, this petition will stand admitted with clarification with respect to respondent Nos. 5 and 12, respondent No. 4 and respondent Nos. 6 to 11 as above.
Having dealt with the admission of the petition and with respect to the parties to the petition, as far as interim order is concerned, it is clear that as of now the Bank of Maharashtra has not been provided with necessary back-up security by respondent No. 1, nor has the RBI reduced its expectations under the guarantee in any manner whatsoever. In that view of the matter, in the event, the respondents or any of them being held guilty of contempt, necessary directions to recover the amounts from them will have to be passed which can be passed only when the petition is heard and decided. At this stage, by way of any interim direction, this amount of Rs. 78,00,000/- cannot be directed to be released by Bank of Maharashtra in the absence of adequate protection to it from respondent No. 1 or its directors or necessary reduction of their responsibility towards RBI. In the circumstances, the interim order as it sought in the petition, cannot be granted.
That takes me to the last prayer of Mr. Gonsalves, that this Court ought to pass appropriate orders as found justified in the circumstances of this case. Mr. Gonsalves pointed out that at least one month''s wage ought to be arranged considering the fact that more than six months have gone since the workers were last paid and since the Ganpati festival is round the corner, it will be celebrated in the mill area as usual. It is the time when the workers need their monies and their expectations are not much. Whereas on the one hand, mill/company and financial institutions are struggling to retain their control over the properties of the mill all that the workers are expecting are small amounts to make both ends meet. Mr. Cama, learned Counsel appearing for respondent No. I in this behalf pointed out that an additional amount of Rs. 15,00,000/- of respondent No. 1 is lying with the RBI (as disclosed in their letter dated September 6,1999, to respondent No. 1) and which the RBI has retained by way of security for certain works which are expected to be done in the flats/property purchased by the RBI. He submitted that this is an amount in excess of the Bank guarantee of Rs. 73,48,000/-. In his submission such huge amount is certainly not required and the RBI may be called upon to release appropriate proportion thereof. Mr. Cama further pointed out that the fixed deposit of respondent No. 1 which was lying with respondent No. 4 is a substantial amount and good amount of interest has accumulated by now which can be the second component. Thirdly, he submitted that the amount of Rs. 900,000/- lying in "No-lien account", which the Division Bench has frozen can also be availed of by obtaining the leave of the Division Bench. These three amounts would come somewhere nearer to one month''s wage bill which is in the range of Rs. 31,00,000/-. Mr. Cama pointed out that wages paid to the workers on various counts (including statutory deductions and payments) for the month of December, 1998, came to Rs. 31.33 lakhs. Mr. Puranik was fair enough to point out that accrued interest on the fixed deposit with the Bank of Maharashtra as up to the end of August, 1999, was to the tune of Rs. 4,71,500/- and Dr. Chandrachud was equally gracious to obtain instruction from the RBI that it would have no objection to release the amount of Rs. 15,00,000/-, though not from the separate amount kept from respondent No. 1, but from the guarantee of Bank of Maharashtra with an understanding that the RBI''s rights vis-a-vis this Bank guarantee will stand reduced by Rs. 15,00,000/- and now to Rs. 58,48,000/- only. Thus, Rs. 15,00,000/- would be made available by the RBI, in this fashion. As stated above, if all concerned obtain the leave of the Division Bench, the amount of Rs. 9,00,000/- could be availed of for which all learned Counsel agree. Mr. Cama further states that this will add up to a little less than Rs. 31.33 lakhs and as far as that difference is concerned, respondent No. 1 will make up that gap to see to it that the total amount of Rs. 31.33 lakhs is arranged by way of an interim relief. Mr. Cama and Mr. Kapadia undertake on behalf of their clients to bridge the gap and their undertakings are accepted.
In view of what is stated above, this petition is admitted with clarification with respect to some of the respondents as above. It is further made clear that although in the event of final disposal of the petition, there could be necessary directions against some of the respondents, the interim order is only to this extent that the statement of RBI in its letter dated September 9, 1999, to their attorneys as placed on record of this Court, is accepted. The Bank of Maharashtra is, therefore, directed to release an amount of Rs. 15,00,000/- and deposit it in this Court. The Bank of Maharashtra will also release the amount of Rs. 4,71,500/- as disclosed in their letter dated September 9, 1999, addressed to their attorneys and placed on the record of this Court. It is made clear in this behalf that the rights of the RBI against the Bank of Maharashtra in terms of the Bank guarantee dated February 5, 1999, will stand reduced from Rs. 73,43,000/- to Rs. 58,48,000/- and maturity value of the fixed, deposit receipt of respondent No. 1 will also stand reduced by Rs. 15,00,000/- as well as by Rs. 4,71,500/- with further consequential reduction in the amount of interest. All learned Counsels consent and the petitioner''s Counsel states that with the help of others he will move the Division Bench at the earliest to obtain the leave to withdraw the amount to Rs. 9,00,000/-- from "No-lien account" lying with the Punjab National Bank. Dr. Chandrachud, however, states that in this behalf that since he is appearing for the operating agency, he will leave it to the Division Bench to pass the appropriate orders.
Although this order will thus ensure the payment of one month''s wages, the liability of the respondents under the orders of the Division Bench (and for the breach thereof) is yet to be examined whereupon the appropriate orders will be passed. Respondent No. 4 (Bank of Maharashtra) will, therefore, not release any amount from the reduced amount of the FDR i.e., Rs. 58,48,000/- or the interest accrued thereon to respondent No. 1 except the leave of this Court or the Division Bench hearing the writ petition. Similarly, the RBI will also not release any amount from the amount of Rs. 15 lakhs separately withheld as per their letter dated September 6, 1999, to respondent No. 1 except with the leave of this Court or the Division Bench.
There was some controversy as to whom the amount is to be distributed. Mr. Gonsalves points out that the Division Bench orders provide for distribution of the amounts at the rate of approximately Rs. 30 lakhs per month to around 650 workmen. Mr. Cama on the other hand submits that the number of workmen could only be around 550 inasmuch as badali workers could not be paid since the mill has not worked and the number of their working days and consequent wages could not be ascertained. Mr. Gonsalves on the other hand states that the badali workers will also have to be paid and the number of workmen to be paid as per the Division Bench was around 650. This controversy need not detain us at this stage. It is not disputed by respondent No. 1 that the monthly wage bill for the months of October and November, was around Rs. 31.33 lakhs. The endeavour of the Division Bench was to arrange similar amount per month. The wage registers of respondent No. 1 are available with them and the payment is to be made in accordance with them. It is, therefore, directed that all those employees who were paid their wages for the months of October and November, 1998, will be paid one more month''s (December) wages.
Mr. Gonsalves and Mr. Cama further state that after obtaining leave from the Division Bench, they will see to it that the amount is brought in this Court from Punjab National Bank at the earliest. Mr. Puranik also states that the amount of Rs. 15 lakhs and Rs. 4,71,500/- will be deposited in this Court within two days after receiving a copy of this order. The prothonotary and senior master will see to it that this amount is disbursed to the employees concerned on the basis of pay musters within 48 hours of receipt of the entire amount in the High Court. It will be for the prothonotary and senior master to decide as to whether the disbursement ought to be made in his office or at respondent No. 1 mill/ company''s office. When the amounts are disbursed, a representative of RMMS, the recognised union (one Mr. Sampat Kurne who is workers'' representative pn monetary committee set up by the BIFR) will remain present to identify the workers along with the officers of respondent No. 1. One Mr. Panmati Singh representing the petitioner-committee is also at liberty to remain present at the time of disbursement of the amount. Any amount remaining after disbursement from the above amounts will be retained by the prothonotary and senior master, High Court. He will file a statement within one week thereafter in the present petition giving details of the disbursement made and balance (if any) remaining.
The petition to come up for final hearing on October 7, 1999, at 2.45 p.m. The respondents will file their replies four days in advance. Necessary notice will be issued to the respondents.
Certified copy of this order is expedited. All parties to act on an ordinary copy of this order duly authenticated by the personal secretary of this Court.