SUMAN CHADHA & ANR. versus CENTRAL BANK OF INDIA on 9 August 2021

370

SUPREME COURT REPORTS

[2021] 8 S.C.R.

SUMAN CHADHA & ANR.

A

v.

CENTRAL BANK OF INDIA

(Special Leave Petition (C) No. 28592 of 2018)

BAugust 09, 2021

[INDIRA BANERJEE AND V. RAMASUBRAMANIAN, JJ.]

Contempt of Courts Act, 1971: ss. 2(b), 19 – Contempt ofcourt – Wilful breach of the undertaking given to the Court – Onfacts, bank filed a petition u/ss. 10 and 12 for punishing theCpetitioners for wilful and deliberate breach of their undertaking –Petitioners case that breach of an undertaking made with a view tosecure a conditional order of stay may not tantamount to contempt,especially when the consequences of breach of such undertakingare spelt out in the Court order itself – Single judge of the HighDCourt held the petitioners guilty of contempt and sentenced to simpleimprisonment for three months with fine – Division Bench upheldthe said order – On appeal, held: Held: Wilful breach of theundertaking given to the Court amounts to contempt of Courtu/s. 2(b) – However, the Court has to see, the nature of theundertaking made; the benefit if any, reaped by the party givingEthe undertaking; and whether the filing of the undertaking waswith a view to play fraud upon the court or to mislead the oppositeparty – Series of acts committed by the petitioners, subsequent tothe undertaking given by the petitioners, convinced the High Courtto believe that the undertaking given was not based upon goodFfaith but intended to mislead the Court – Subsequent conduct ofthe petitioners seems to have tilted the balance against them –Thus, the Single Judge as well as the Division Bench of the HighCourt rightly held the petitioners guilty of contempt of court,however, the period of sentence is reduced from three months to theperiod of imprisonment already suffered/undergone by theGpetitioners.

Disposing of the SLP, the Court

HELD: 1.1 The undertaking dated 08.04.15 given by thefirst petitioner was also accompanied by an affidavit sworn to byHthe second petitioner. On the basis of the undertaking filed, the370

High Court passed an order in the Writ Petition on the same day,namely, 08.04.2015. It is seen from the portion of the order ofthe High Court that it was not an order passed on the basis of anaffidavit/undertaking. It was on the basis of an offer made by thepetitioners, the first of whom was actually present in Court. Theoffer so made was accepted by the Bank and hence the order wasactually based upon the consent of parties. [Para 13-15][379-G-H; 380-G-H]

1.2 This Court has held that the wilful breach of theundertaking given to the Court amounts to contempt of Courtunder Section 2(b) of the Contempts of Courts Act, 1971. Butthe Court has always seen (i) the nature of the undertakingmade; (ii) the benefit if any, reaped by the party giving theundertaking; and (iii) whether the filing of the undertaking waswith a view to play fraud upon the court or to hoodwink theopposite party. [Para 16][381-D-E]

1.3 It is true that an undertaking given by a party should beseen in the context in which it was made and (i) the benefits thataccrued to the undertaking party; and (ii) the detriment/injurysuffered by the counter party. It is also true that normally thequestion whether a party is guilty of contempt is to be seen inthe specific context of the disobedience and the wilful nature ofthe same and not on the basis of the conduct subsequent thereto.While it is open to the court to see whether the subsequentconduct of the alleged contemnor would tantamount to anaggravation of the contempt already committed, the verydetermination of an act of contempt cannot simply be based uponthe subsequent conduct. But the subsequent conduct of the partymay throw light upon one important aspect namely whether itwas just the inability of the party to honour the commitment or itwas part of a larger design to hoodwink the court. [Para 25-26][384-A-D]

1.4 The subsequent conduct of the petitioners after the orderdated 08.04.2015, seems to have tilted the balance against thepetitioners. All the events that happened after 08.04.2015,convinced the High Court to come to the conclusion that thepetitioners had actually played a fraud upon the Court. This is AB

C

D

E

F

G

H

Awhy the Single Judge as well as the Division Bench of the HighCourt held the petitioners guilty of contempt of court. [Para 19,24][382-F; 383-G-H; 384-A]

1.5 In the instant case, the series of acts committed by thepetitioners (i) in issuing post-dated cheques, which were datedBbeyond the date within which they had agreed to make payment;(ii) in allowing those cheques to be dishonoured; (iii) in notappearing before the Court on the first date of hearing with anexcuse that was found to be false; (iv) in coming up with anexplanation about their own debtors committing default; and (v)in getting exposed through the report of the SFIO, convincedCthe High Court to believe that the undertaking given by thepetitioners on 08.04.2015 was not based upon good faith butintended to hoodwink the Court. Therefore, there is no fault withthe High Court holding the petitioners guilty of contempt. [Para27][384-D-F]D1.6 The submission that the failure to honour a commitmentmade while securing a conditional order of stay, cannot be treatedas wilful disobedience, could have been accepted, but for the factthat the petitioners issued post-dated cheques purportedly incompliance of the undertaking, but allowed them to beEdishonoured. The story cooked up for the dishonor of the chequeshaving been found to be false, it is not open to the petitioners toraise the submission that there was no wilful disobedience. [Para28][384-G-H]

1.7 The submission based upon the language ofFSection 13(a) of the Act also does not appeal in the light of whathad happened after 08.04.2015. The fact that the order dated08.04.2015 also indicated certain other consequences to follow,may not take away the contempt jurisdiction of the Court. Inappropriate cases where a party had acted bonafide while givingan undertaking, but could not honour the undertaking on accountGof reasons that are reasonable and genuine, the Court couldcertainly withhold its stick from being wielded. But in this casethere are findings of fact to the effect that the petitioners didnot act bonafide. Therefore, the submission is also unsustainable.[Para 29][385-A-C]

H

1.8 The submission that if the order dated 08.04.2015 iscapable of being interpreted and understood in more than oneway as to the consequences flowing out of the same, the partyunderstanding and interpreting the said order in one particularmanner must be allowed the benefit, is perfectly correct, as apure and simple proposition of law. But in the instant case, thesame cannot be permitted to be used, tocover up whatever thepetitioners have done. On the submission was that thedisobedience, if any, was not wilful and intentional, less said thebetter. [Para 30][385-C-D]

1.9 The finding of the High Court that the petitioners areguilty of contempt, does not call for interference underArticle 136. It is not disputed that the mortgaged propertieshave now been sold and with extraordinary efforts, the Bank hasalso taken possession. The petitioners have also spent 11 daysin custody out of the total period of imprisonment of three monthsimposed by the High Court. In such circumstances, it is sufficientpunishment for the petitioners. The finding of the Single Judgeand the Division Bench of the High Court that the petitionersare guilty of contempt of court is upheld, but the period ofsentence is reduced from three months to the period ofimprisonment already suffered/undergone by the petitioners.[Para 31, 33, 34][385-E; 385-F-H; 386-A]

Narain Singh v. Lala Rajendra Lal & Ors. (1976) SCCOnline All 425; Indian Overseas Bank v. Lalit KumarAggarwal & Anr. (2000) SCC Online Del 710;K.Saravankumar v. Sheela & Ors. 2008 (3) CTC 669;National Agricultural Cor.Marketing v. ReliancePolycrete Ltd. (2009) 163 DLT 441; Dinesh KumarGupta v. United India Insurance Company Limited(2010) 12 SCC 770 : [2010] 13 SCR 599; NiazMohammad v. State of Haryana (1994) 6 SCC 332 :[1994] 3 Suppl. SCR 720; Bank of Baroda v. SadruddinHasan Daya & Anr. (2004) 1 SCC 360 : [2003] 6 Suppl.SCR 764; Rama Narang v. Ramesh Narang & Another(2006) 11 SCC 114 : [2006] 3 SCR 1068; RamaNarang v. Ramesh Narang and Another (2009) 16 SCC126 : [2007] 3 SCR 1099; Babu Ram Gupta v. Sudhir AB

C

D

E

F

G

H

ABhasin 10, (1980) 3 SCC 47 : [1979] 3 SCR 685 –referred to.

CaseLawReference

CIVIL APPELLATE JURISDICTION: Special Leave PetitionD(C) No. 28592 of 2018.

From the Judgment and Order dated 27.09.2018 of the High Courtof Delhi at New Delhi in Cont. App. (C) No. 3 of 2017.

Santosh Kumar - I, Adv. for the Petitioners.

Anuj Jain, Mukesh Verma, Anurag Agarwal, Yash Pal Dhingra,EAdvs. for the Respondent.

The Judgment of the Court was delivered by

V. RAMASUBRAMANIAN, J.

1. Upon being found guilty of committing contempt of Court, theFpetitioners who are husband and wife respectively, were sentenced tosimple imprisonment for three months along with a fine of Rs.2000/-each, by a learned Judge of the Delhi High Court. The said Orderhaving been confirmed by the Division Bench of the High Court in anappeal under Section 19 of the Contempt of Courts Act, 1971 (‘Act’ forGshort), the petitioners have come up with the above Special LeavePetition.

2. We have heard Mr. Santosh Kumar, learned counsel appearingfor the petitioners and Mr. Anuj Jain, learned counsel appearing for therespondent-Bank.

H

3. The background facts which led to the petitioners being heldguilty of contempt of Court, are lucidly recorded in the Order dated18.07.2017 of the learned Judge. They are as follows:

(i) The petitioners were Directors of a company by name ParulPolymers Private Limited, which availed loan/credit facilities from therespondent Bank. The petitioners guaranteed the repayment of the loanand had also offered immovable properties as security.

(ii) On 24[th] July, 2014, the loan of the respondents was categorizedas a Non Performing Asset due to defaults in repayment. On 18[th] August,2014, a notice under Section 13(2) of SARFAESI Act was issued forrecovery of Rs. 28,82,25,942.24 plus interest. It was followed by apossession notice under section 13(4) in respect of two properties.

(iii) Aggrieved by the same, the petitioners filed S.A. No. 367/2014 before the Debts Recovery Tribunal-III, New Delhi (‘DRT-III’for short), under Section 17 of the SARFAESI Act. However, theDRT-III declined to grant any interim relief against the physicalpossession of the aforesaid properties.

(iv) The petitioners filed an appeal but could not deposit Rs. 7crores being 25% of the amount demanded in the notice underSection 13(2). Eventually the appeal was dismissed as withdrawn on31.03.2015.

(v) However, on 01[st] April, 2015, the petitioners secured aconditional order of stay from DRT-III, New Delhi in S.A. No. 367/2014 whereby the petitioners were required to deposit a sum of Rs. 5crores within thirty days. The order also stipulated that Rs. 2 croreswould be deposited by 03[rd] April, 2015.

(vi) On 03[rd] April, 2015, the petitioners gave a letter to SHO,Police Station Katju Marg, Rohini, Delhi showing their intention todeposit the amount of Rs. 2 crores by way of four cheques. Therefore,the Receiver was unable to take possession of the properties.

(vii) Thereafter, the petitioners challenged the conditional orderof stay passed by DRT-III on 01[st] April, 2015 before the High Courtby way of W.P. (C) No. 3406/2015 stating that the Bank and DRT-IIIwere acting unfairly and unjustly in not accepting their cheques totallingto Rs. 2 crores.

(viii) When the writ petition came for admission and interim orderson 8[th] April, 2015, the petitioners admitted liability and offered, by way A

B

C

D

E

F

G

H

Aof a statement under oath, to deposit Rs. 7 crores, i.e. 25% of the noticeamount in three instalments on or before 30[th] June, 2015. The Bankgave its assent and thereafter the Court ordered that the possession ofthe properties of the petitioners shall not be disturbed subject to thepetitioners depositing Rs. 7 crores on or before 30[th] June, 2015, i.e.Rs. 2 crores on 30[th] April, 2015, Rs. 2.5 crores each on 31[st] May, 2015B& 30[th] June, 2015.

(ix) On 29[th] April, 2015, the petitioners gave a letter along withfour cheques for Rs. 50 lakhs each dated 06[th] May, 2015 purportedlyin compliance of the order dated 08[th] April, 2015.

C(x) Accordingly, the possession proceedings for one propertyscheduled for 30[th] April, 2015 were deferred by the Bank. But on 08[th]May, 2015, all the four cheques bounced.

4. Therefore, the respondent-Bank filed a petition under Sections10 and 12 of the Contempt of Courts Act, 1971 for punishing theDpetitioners for wilful and deliberate breach of their undertaking dated08.04.2015. Though the petitioners resisted the contempt petition onthe ground that breach of an undertaking, made with a view to securea conditional order of stay may not tantamount to contempt, especiallywhen the consequences of breach of such undertaking are spelt out inthe order of the Court itself, the learned Judge was not convinced.ETherefore, by an Order dated 18.07.2017, the learned Judge of the HighCourt held the petitioners guilty of contempt and sentenced them simpleimprisonment for three months with a fine of Rs. 2000 each. The DivisionBench upheld the said order and the petitioners are before us.

5. Before we proceed further we should record certainFdevelopments which have taken place after the order of single Judgedated 18.07.2017. They are as follows:-

(i) The learned Judge himself granted suspension of the sentenceof imprisonment till 26.07.2017, to enable the petitioners to move anintra-court appeal;G

(ii) The petitioners moved an intra-court appeal, which came upbefore the Division Bench on 25.07.2017. The Division Bench wantedthe petitioners to comply at least with a part of their undertaking beforethe sentence could be suspended. But the petitioners could not. Therefore,the Division Bench did not grant suspension of sentence on 25.07.2017; H

(iii) The petitioners filed a Special Leave Petition along with anapplication for exemption from surrendering. But the said applicationwas dismissed by an order in Chamber dated 31.07.2017;

(iv) On 03.08.2017, the Division Bench of the High Court dismissedthe miscellaneous application seeking suspension of sentence;

(v) Challenging the said order dated 03.08.2017, the petitionersmoved a Special Leave Petition along with an application seekingexemption from surrendering. This application was dismissed vide orderin Chamber dated 18.08.2017.

(vi) On a subsequent application seeking extension of time, thisCourt granted three weeks’ time vide order dated 11.09.2017;

(vii) Eventually, the petitioners surrendered and were taken intocustody on 06.11.2017. After being in custody for 11 days, the petitionerswere released on interim bail by Order dated 16.11.2017;

(viii) The contempt appeal was thereafter dismissed by the DivisionBench of the High Court by an Order dated 27.09.2018, with a directionto the petitioners to surrender within 10 days. However on 01.11.2018,this Court ordered notice in the present SLP and also granted stay ofthe impugned order.

6. The reason why we have noted certain events post the orderof the learned single Judge is to bring on record the fact that the petitionershave already served simple imprisonment for a period of 11 days, outof the penalty of simple imprisonment for three months. They have alsopaid the fine.

7. The main grounds of attack of the petitioners to the impugnedorder, as articulated by Mr. Santosh Kumar, learned counsel for thepetitioners, are: (i) that the failure of a party to comply with anundertaking, on the basis of which a conditional order of stay wasgranted, cannot be treated as a wilful disobedience warranting theinvocation of the contempt jurisdiction; (ii) that the failure of the petitionersto honour the undertaking cannot be taken to substantially interfere withthe due course of justice and, hence, the case would fall underSection 13(a) of the Act; (iii) that when an order indicates theconsequences of the failure of a party to comply with a condition orhonour the undertaking, the invocation of the contempt jurisdiction maynot be appropriate; and (iv) that in any case if the defaulting party hasrelied upon an interpretation of the order that the consequences of failure A

B

C

D

E

F

G

H

Aare already inbuilt in the order, such an understanding of the order is tobe treated as reasonable and rational and he cannot be held guilty ofcontempt.

8. In support of his first contention, the learned counsel for thepetitioners, relies upon the decisions of a few High Courts. They are: (a)BNarain Singh vs. Lala Rajendra Lal & Ors.[1]; (b) Indian OverseasBank vs. Lalit Kumar Aggarwal & Anr.[2]; (c) K. Saravankumar vs.Sheela & Ors.[3]; and (d) National Agricultural Cor. Marketing vs.Reliance Polycrete Ltd.[4].

9. In support of his third contention, the learned counsel reliesCupon the decision of this Court in Dinesh Kumar Gupta vs. UnitedIndia Insurance Company Limited[5]. In addition, the learned counselalso submitted that in the light of the decision of this Court in NiazMohammad vs. State of Haryana[6], the disobedience should be wilfuland intentional, to tantamount to contempt.

D10. In response to the aforesaid, Shri Anuj Jain, learned counselfor the respondent submitted that the petitioners had several opportunitiesto honour their commitments, but they repeatedly adopted dilatory tactics.The learned counsel took us through various orders passed by the HighCourt and the orders passed in various proceedings before other forumsincluding the DRT and the Chief Metropolitan Magistrate and sought toEimpress upon us that the conduct of the petitioners throughout, has beenone of deceit and that such persons do not deserve any leniency. Invitingour attention to the decisions in (i) Bank of Baroda vs. SadruddinHasan Daya & Anr[7].; (ii) Rama Narang vs. Ramesh Narang &Another[8]and (iii) Rama Narang(5) vs. Ramesh Narang andFAnother[9], the learned counsel contended that the availability of othermodes of enforcementneed not deter the Court from invoking its contemptjurisdiction and that the deliberate failure to comply with a solemnundertaking given to a Court has always been frowned upon by Courts.

1 1976 SCC Online All 425G2 2000 SCC Online Del 7103 2008 (3) CTC 6694 (2009) 163 DLT 4415 (2010) 12 SCC 7706 (1994) 6 SCC 332

7 (2004) 1 SCC 360

8 (2006) 11 SCC 114H9 (2009) 16 SCC 126

11. We have carefully considered the rival submissions.

12. Before we analyze the rival contentions, it will be useful firstto see the actual undertaking given by the petitioners on 08.04.2015,which led to the contempt proceedings. The undertaking given by thefirst petitioner on 08.04.2015 reads as follows:- “Statementof Mr. Suman Chadha S/oJangiLal Chadha R/oH-3/50 Sector-18, Rohini, Delhi I am the petitioner and the director of the third petitionerin this case. I am duly authorised to make a statement on itsbehalf. I have also filed an affidavit in support of the petitionand have taken advice from my lawyer who is present withme in Court.

I hereby state and confirm that the sum ofRs.28,82,25,942.24 (Twenty Eight Crores Two Lakh TwentyFive thousand Nine Hundred Forty Two and Paise TwentyFour only) as on 18.8.2014 is due and payable to therespondent i.e. the Central Bank of India as per noticeu/s 13(2) of SARFAESI Act. I request that in view of the demandI may be granted relief of some deferment with regard to therepayment of the loan liability. I hereby agree on behalf ofself and other petitioners to deposit a total amount ofRs.7 (seven) crores with respondent –Bank on or before30.6.2015. An amount of Rs. 2 (two) crores of the said amountshall be paid on or before 30.04.2015; the balance would bepaid in equal instalments i.e. Rs. 2.5 (Two and a half) croreson or before 31.5.2015 and 30.06.2015.

I also agree and affirm that in the event of default, theBank is free to initiate any such proceedings and avail oflegal remedies as are available.”

13. The above undertaking given by the first petitioner was alsoaccompanied by an affidavit sworn to by the second petitioner. In thesaid affidavit, it was stated by the second petitioner that her husband hasmade a statement before the Court which she had understood from himand that she and her husband undertake to abide by the same.

14. On the basis of the undertaking filed as aforesaid on 08.04.2015,the High Court passed an order in W.P (C) No. 3406 of 2015 on the A

B

CDEF

G

H

Asame day, namely, 08.04.2015. Paragraphs 6 to 8 of the said order of theHigh Court dated 08.04.2015 read as follows:- “6. In view of the submission of the parties, it is orderedthat the possession of the petitioners over the property inquestion shall not be disturbed subject to their complianceBwith the following conditions:

(1) Deposit by the petitioners on or before 30.04.2015 – thesum of Rs. 2 crores with the respondent Bank and thereafterdeposit of Rs.2.5 crores each on or before 31.05.2015 and30.06.2015.

C

(2) The second petitioner shall file an affidavit/ undertaking,to comply with the above said arrangement.

(3) In the event of default, the respondent Bank shall be atliberty to take recourse to law including the enforcement offurther action in follow up order of appointment of the receiverDby the Chief Metropolitan Magistrate (CMM). The order tosuch effect passed by CMM shall be kept in abeyance toensure compliance in the meanwhile till 30.6.2015.

7. Petitioners’ counsel requests that after compliance of theabove order, any application for relief to the Bank includingEthe restructuring of the account may be consideredreasonably. The Bank shall consider such application if madeon its merits independently having regard to its applicablepolicy. This will not in any way preclude the rights of theBank for recovering the amounts due.

F

8. Subject to the petitioner filing the necessary affidavit/undertaking copy of which shall be provided to the counselfor the respondent within a week from today, the writ petitionis disposed of.”

15. It is seen from the portion of the order of the High CourtGdated 08.04.2015 that it was not an order passed on the basis of anaffidavit/undertaking. It was on the basis of an offer made by thepetitioners, the first of whom was actually present in Court. The offer somade was accepted by the Bank and hence the order was actually basedupon the consent of parties. This is made clear by what is recorded by H

SUMAN CHADHA & ANR. v. CENTRAL BANK OF INDIA[V. RAMASUBRAMANIAN, J.]

the Court in Paragraph 5 of its order dated 08.04.2015. Paragraph 5reads as follows:- “5. During the course of hearing counsel for the petitionerDr. Sharma stated that the petitioners are admitting the liabilityprovided some time is granted in order to settle the matterfinally. It was suggested by the counsel that the petitionersmay be afforded opportunity of depositing Rs. 7 (seven) croresi.e. 25% of the notice amount in three instalments on or before30.06.2015. The first petitioner is present in Court. He is adirector of the third petitioner and authorised to depose onits behalf. His statement to above effect has been recordedunder oath separately and has been kept on record. Thesecond petitioner is directed to file an affidavit/undertakingwithin one week confirming the statement of the first petitioner.The counsel for the respondent submitted his assent to thedisposal of the writ petition on terms offered.”

16. It is true that this Court has held in a series of decisions thatthe wilful breach of the undertaking given to the Court amounts tocontempt of Court under Section 2(b) of the Act. But the Court hasalways seen (i) the nature of the undertaking made; (ii) the benefit ifany, reaped by the party giving the undertaking; and (iii) whether thefiling of the undertaking was with a view to play fraud upon the court orto hoodwink the opposite party. The distinction between an order passedon consent terms and an order passed solely on the basis of an undertakinggiven to court and the distinction between a person playing fraud on thecourt thereby obstructing the course of justice and a person playingfraud on one of the parties, was brought out by this Court in Babu RamGupta vs. Sudhir Bhasin[10], in the following words:- “…Indeed, if we were to hold that non-compliance of acompromise decree or consent order amounts to contempt ofcourt, the provisions of the Code of Civil Procedure relatingto execution of decrees may not be resorted to at all. In fact,the reason why a breach of clear undertaking given to thecourt amounts to contempt of court is that the contemner bymaking a false representation to the court obtains a benefitfor himself and if he fails to honour the undertaking, he plays A

B

C

D

E

F

G

Aa serious fraud on the court itself and thereby obstructs thecourse of justice and brings into disrepute the judicialinstitution. The same cannot, however, be said of a consentorder or a compromise decree where the fraud, if any, ispractised by the person concerned not on the court but onone of the parties. Thus, the offence committed by the personBconcerned is qua the party not qua the court, and, therefore,the very foundation for proceeding for contempt of court iscompletely absent in such cases.”

17. But the decision in Babu Ram Gupta (supra) was clarifiedand held in part to be obiter by a three member Bench of this Court inCRama Narang vs. Ramesh Narang and Another[11]. In Rama Narang(supra), this Court pointed out the distinction between two categories ofcases covered by Section 2(b) of the Act namely (i) wilful disobedienceto a process of court; and (ii) wilful breach of an undertaking given to acourt.D

18. In fact, in Rama Narang (supra), this Court went to the extentof holding that it would neither be in consonance with the statute, judicialauthority, principle or logic to draw any distinction between the wilfulviolation of the terms of a consent decree and wilful violation of a decreepassed on adjudication. We have our own doubts whether the firstEcategory of cases covered by Section 2(b) can be stretched so far.Anyway, that question does not arise in this case and hence we leave itat that.

19. But what has happened in this case is that the subsequentconduct of the petitioners after the order dated 08.04.2015, seems toFhave tilted the balance against the petitioners. Purportedly in complianceof the undertaking given to Court on 08.04.2015 and the order passedthereon, the petitioners issued four cheques for Rs.50 lakhs each. Thesecheques were handed over to the Bank on 29.04.2015 along with acovering letter. But all the four cheques were post-dated, bearing thedate 06.05.2015, though the undertaking given to the Court was to depositGthe amount on or before 30.04.2015.

20. On 08.05.2015, all the four cheques bounced. The conduct ofthe petitioners first in issuing post-dated cheques and then in allowingthem to be dishonoured, showed the petitioners in poor light. The petitioners could have at least mend their ways thereafter. Howeverthey did not.

21. On 14.07.2015, the learned Single Judge seems to haveordered the issue of notice in the Contempt Petition. The notice wasmade returnable by 05.11.2015 and the petitioners were directed to bepresent personally in Court. But what happened on 05.11.2015, as broughton record by the learned Judge reads as follows:- “When the matter was taken up at first call, this Courtwas informed that none of the respondents were in Stationand even summons had been received by their daughter.

However, a perusal of the file reveals that notices/summons had been received by respondent No. 1 personallyand by respondent No. 2’s husband by dasti as well as byspeed post.

Though this Court was inclined to issue warrants againstthe respondents No. 1 and 2, yet as learned counsel forrespondents states that he would ensure that not only therespondents are personally present in Court on the next dateof hearing, but the matter is amicably resolved, matter isadjourned to 16[th] November, 2015.”

22. On the next date of hearing, the petitioners raised a defencethat they had issued post-dated cheques in the hope of receiving amountsdue to them from their debtors and that their debtors failed to makepayment. The petitioners also named three debtors from whom theywere expected to receive money.

23. Doubting the genuineness of the claim made by the petitioners,the learned Judge before whom the Contempt Petition came up, passedan order on 07.12.2015 directing an investigation by Serious FraudInvestigation Office (‘SFIO’ for short). To the misfortune of thepetitioners, SFIO submitted a report that the alleged debtors of thepetitioners are only shell entities of Parul Polymers Private Ltd., ofwhich the petitioners were Directors.

24. All the above events that happened after 08.04.2015, convincedthe High Court to come to the conclusion that the petitioners had actuallyplayed a fraud upon the Court. This is why the learned Single Judge as A

B

C

D

E

F

G

H

Awell as the Division Bench of the High Court held the petitioners guiltyof contempt of court.

25. It is true that an undertaking given by a party should be seenin the context in which it was made and (i) the benefits that accrued tothe undertaking party; and (ii) the detriment/injury suffered by the counterBparty. It is also true that normally the question whether a party is guiltyof contempt is to be seen in the specific context of the disobedience andthe wilful nature of the same and not on the basis of the conductsubsequent thereto. While it is open to the court to see whether thesubsequent conduct of the alleged contemnor would tantamount to anaggravation of the contempt already committed, the very determinationCof an act of contempt cannot simply be based upon the subsequentconduct.

26. But the subsequent conduct of the party may throw lightupon one important aspect namely whether it was just the inability ofthe party to honour the commitment or it was part of a larger design toDhoodwink the court.

27. In this case, the series of acts committed by the petitioners (i)in issuing post-dated cheques, which were dated beyond the date withinwhich they had agreed to make payment; (ii) in allowing those chequesto be dishonoured; (iii) in not appearing before the Court on the firstEdate of hearing with an excuse that was found to be false; (iv) incoming up with an explanation about their own debtors committingdefault; and (v) in getting exposed through the report of the SFIO,convinced the High Court to believe that the undertaking given by thepetitioners on 08.04.2015 was not based upon good faith but intended toFhoodwink the Court. Therefore, we are unable to find fault with theHigh Court holding the petitioners guilty of contempt.

28. The 1[st] contention of Mr. Santosh Kumar, learned counsel forthe petitioners that the failure to honour a commitment made whilesecuring a conditional order of stay, cannot be treated as wilfulGdisobedience, could have been accepted by us, but for the fact that thepetitioners issued post-dated cheques purportedly in compliance of theundertaking, but allowed them to be dishonoured. The story cooked upfor the dishonor of the cheques having been found to be false, it is notopen to the petitioners to raise the contention that there was no wilfuldisobedience.H

29. The 2[nd] contention based upon the language of Section 13(a)of the Act also does not appeal to us, in the light of what had happenedafter 08.04.2015. The fact that the order dated 08.04.2015 also indicatedcertain other consequences to follow, may not take away the contemptjurisdiction of the Court. In appropriate cases where a party had actedbonafide while giving an undertaking, but could not honour theundertaking on account of reasons that are reasonable and genuine,the Court could certainly withhold its stick from being wielded. But inthis case there are findings of fact to the effect that the petitioners didnot act bonafide. Therefore, the 3[rd] contention is also unsustainable.

30. The last contention that if the order dated 08.04.2015 is capableof being interpreted and understood in more than one way as to theconsequences flowing out of the same, the party understanding andinterpreting the said order in one particular manner must be allowed thebenefit, is perfectly correct, as a pure and simple proposition of law.But in this case, the same cannot be permitted to be used, to cover upwhatever the petitioners have done. On the contention of the learnedcounsel for the petitioners that the disobedience, if any, was not wilfuland intentional, less said the better.

31. In the light of the above, we are clearly of the view that thefinding of the High Court that the petitioners are guilty of contempt,does not call for our interference under Article 136.

32. However, Mr. Santosh Kumar, learned counsel for thepetitioners, pleaded that the Court may show sympathy on the petitioners,in view of the fact that the immovable properties which the petitionersattempted to save, by approaching the DRT and the High Court, havealready been sold. All the attempts made by the petitioners from 2015onwards, to save the mortgaged properties have been in vain.

33. There is no dispute on facts that the mortgaged propertieshave now been sold and with extraordinary efforts, the Bank has alsotaken possession. The petitioners have also spent 11 days in custodyout of the total period of imprisonment of three months imposed by theHigh Court. In such circumstances, we think that it is sufficientpunishment for the petitioners.

34. Therefore, the SLP is disposed of upholding the finding ofthe learned Single Judge and the Division Bench of the High Court thatthe petitioners are guilty of contempt of court, but reducing the period AB

C

D

E

F

G

H

Aof sentence from three months to the period of imprisonment alreadysuffered/undergone by the petitioners. There will be no order as tocosts.

35. Pending application(s) if any, shall also stand disposed of.

B

Nidhi Jain

SLP disposed of.

C

D

E

F

G

H