Case BriefsSupreme Court

Supreme Court: B.R. Gavai, J., while addressing a contempt petition expressed that:

“…contempt proceeding is not like an execution proceeding under the Code of Civil Procedure.”

“…contempt proceedings are quasi-criminal in nature and the standard of proof required is in the same manner as in the other criminal cases.”

“A mere objection to jurisdiction does not instantly disable the Court from passing any interim orders.”

Contempt Petition | Father v. Sons

The instant contempt petition arose out of an unfortunate family dispute between a father and his two sons from his first wife.

Petitioner in the contempt petition Rama Narang was married to Smt. Motia. The respondent’s 1 and 2 i.e. Ramesh Narang and Rajesh Narang so also Rakesh Narang are sons of the petitioner and Smt. Motia. The petitioner and Smt. Motia divorced in 1963. The petitioner thereafter married Smt. Mona. Out of the said wedlock, two sons Rohit and Rahul, as well as a daughter Ramona, were born.

Family Settlement

In accordance with the family settlement, that insofar as ‘Narang International Hotel Limited’ and its subsidiaries were concerned, Rama Narang, Ramesh Narang and Rajesh Narang were to be the only Directors.

Further, it was added that any decision by the Board of Directors was to be taken by the mutual consent of Rama Narang on one hand and Ramesh and Rajesh, on the other hand. Though if the amount of any transaction was exceeding Rs 10 lakhs, then the same could be undertaken only through a cheque signed jointly by Rama Narang on one hand and Ramesh or Rajesh on the other hand.

Though the matter was settled in terms of minutes of Consent Order, there was no quietus to the dispute between the parties.

Allegations

Rama Narang alleged that Ramesh and Rajesh had violated the terms of Consent Order stipulated in clause 3 (c), (d), (e) and (f) of the Minutes of the Consent Order. Violation of the said order amounted to clear disobedience and thus punishable under the Contempt of Courts Act, 1971.

Contempt Proceedings against the Respondents

Court initiated contempt proceedings and requested Justice V.A. Mohta, retired Chief Justice of Orissa High Court to act as a Mediator for settlement of disputes between the parties. However, despite serious efforts made by the Mediator, the settlement could not be arrived at.

A three-Judge Bench of this Court in Rama Narang v. Ramesh Narang, (2006) 11 SCC 114, observed the following:

“32. The object of entering into consent terms and jointly filing the undertaking was to run the family business harmoniously with the active participation of all as a family business but the respondents had taken absolute control of the Company NIHL to the total exclusion of the petitioner.

 33.The respondents have erroneously submitted that joint management and control of the Company means giving veto power to the petitioner. According to the terms of undertaking the petitioner and the respondents were under an obligation to run the Company harmoniously with the active participation of all as a family business but unfortunately the respondents have taken absolute control to the total exclusion of the petitioner. This is contrary to the terms of the undertaking given to this Court.”

The Court in the earlier Order held the respondents guilty of contempt, taking into consideration the fact that immediately sending respondents to jail would create total chaos in the Company and it would also vitally affect the interest of large number of people including the employees of the Company the sentence of imprisonment imposed on the respondents was kept in abeyance.

Consequences

On account of non-cooperation by Rama, the functioning of the Company had come to a standstill. It was contended in the said company petition, that due to non-cooperation by Rama in signing cheques, the employees could not be paid their salaries from November 2007 onwards. It was also contended, that bills for payment to supplier could also not be paid, due to which, the entire functioning of the various units of the Company had been seriously affected.

Company Law Board

CLB noticed, that due to differences among the Directors, many operational issues like payment of salaries/wages, payment to supplier etc. were pending, leading to agitation by employees and irregularities in supply.

The CLB found it appropriate, that till the petition was disposed of, as an interim measure, in the interests of the Company and more than 3000 employees/workers, there should be a mechanism by which the day-to-day operations of the Company were carried on without any hitch.

Petitioner alleged that the CLB Order was violative of the order of the Supreme Court and nothing but an attempt to legalize their conduct of contempt but the petitioner approached the Court by the instant contempt petition.

Analysis

Section 2(b) of the Contempt of Courts Act, 1971:

2. Definitions. – …..
(b) “civil contempt” means wilful disobedience to any judgment, decree, direction, order, writ or other process of a court or wilful breach of an undertaking given to a court.”

Civil Contempt

It is clear that for bringing an action under the ambit of civil contempt, there has to be a wilful disobedience to any judgment, decree, direction, order, writ or other process of a court or wilful breach of an undertaking given to the Court.

Respondents submitted that the petitioner was attempting to use the consent terms as a veto to stall the functioning of the Company.

Bench referred to Sections 397, 398 and 403 of the Companies Act, 1956.

Respondents legitimately invoked the jurisdiction of Company Law Board invoking the powers under Sections 397, 398 and 403 of the Companies Act, to which they were entitled to in law and were not restrained to do so by any competent Court/forum.

 CLB had passed interim orders in exercise of its powers under Section 403 of the Companies Act. Petitioner had approached the Court immediately after the order dated 10-04-2008, was passed by the CLB by way of present contempt petition.

Main Contention

Petitioner’s primary contention was that invoking the jurisdiction of the CLB and entertaining the said proceedings by the CLB, itself amounts to contempt.

 Observation

Court referred to the observations of in Pratap Singh v. Gurbaksh Singh, 1962 Supp (2) SCR 838:

“The principle behind all these cases is that such action of the person which he takes in pursuance of his right to take legal action in a Court of law or in just making a demand on the other to make amends for his acts will not amount to interfering with the course of justice, even though that may require some action on the part of the other party in connection with his own judicial proceeding, as a party is free to take action to enforce his legal rights.”

 Supreme Court stated that in the present case, the respondents were entitled to invoke the jurisdiction of the CLB under Sections 397, 398 and 403 of the Companies Act. Respondents had to take recourse to that remedy in compelling circumstances to safeguard the interest of the Company and its stakeholders.

Further, the Court added that merely taking recourse to the statutory remedy available to the respondents would not amount to contempt.

“…for bringing an action for civil contempt, the petitioner has to satisfy the court that there has been a willful disobedience of any judgment, decree, direction, order, writ or other processes of the Court.”

Requisite in a contempt proceeding

In a contempt proceeding, before a contemnor is held guilty and punished, the Court has to record a finding, that such disobedience was wilful and intentional.

Adding to the above, it has also been stated that if from the circumstances of a particular case, though the Court is satisfied that there has been disobedience, but such disobedience is the result of some compelling circumstances, under which it is not possible for the contemnor to comply with the same, the Court may not punish the alleged contemnor.

Bench also referred to the decision of Supreme Court in Kanwar Singh Saini v. High Court of Delhi, (2012) 4 SCC 307.

Situation in the present case

Court held that the petitioner failed to make out a case of wilful, deliberate and intentional disobedience of any of the directions given by the Court or acting in breach of an undertaking given to the Court.

“…where an objection is taken to the jurisdiction to entertain a suit and to pass any interim orders therein, the Court should decide the question of jurisdiction in the first instance. However, that does not mean that pending the decision on the question of jurisdiction, the Court has no jurisdiction to pass interim orders as may be called for in the facts and circumstances of the case.”

Further, the Bench expressed in light of jurisdiction that,

“…question of jurisdiction should be decided at the earliest possible time, the interim orders so passed are orders within jurisdiction, when passed and effective till the court decides that it has no jurisdiction, to entertain the suit. It has been held, that those interim orders would undoubtedly come to an end with the decision that the Court had no jurisdiction.”

 Violation of Interim Orders

 While in force, the interim orders passed by such Court have to be obeyed and their violation can be punished even after the question of jurisdiction is decided against the plaintiff, provided violation is committed before the decision of the Court on the question of jurisdiction.

 Another Observation made by the Court was that in the present case, the petitioner qualified under Section 399 of Companies Act and that the Company Law Board had jurisdiction to deal with the petition under Sections 397 and 398 of the Companies Act.

“…in the proceedings under Sections 397/398, it is the interest of the Company which is paramount.”

Bench expressing no more opinion in the present matter held that the contempt petition deserves to be dismissed and added that parties may invoke the jurisdiction of NCLT for seeking orders as deemed fit in the facts and circumstances. [Rama Narang v. Ramesh Narang, 2021 SCC OnLine SC 29, decided on 19-01-2021]

Case BriefsHigh Courts

Madras High Court: N. Anand Venkatesh, J., while addressing the contempt petition held that,

“The doctrine of merger does not make a distinction between an order of reversal, modification or an order of confirmation.”

Petitioners Counsel, N.G.R Prasad and Sathish Parasaran, Senior Counsel on behalf of the respondent, represented the parties in the present matter.

Maintainability of Contempt Petition

Court’s view in the present matter was that the Court need not venture into rendering its findings on the contentions raised on either side since the very maintainability of the Contempt Petition is in question.

Final orders were passed in the petition on 06-02-2020, respondent took the matter on appeal in W.A. No. 252 of 2020 and Division Bench dealt with the case on merits and partly allowed the Writ Appeal.

Once an order has been passed in the Writ Appeal and the order passed by the Single Judge is modified and the Writ Appeal is partly allowed, the order of the Single Judge merges with the order passed in the Writ Appeal.

The doctrine of merger does not make a distinction between an order of reversal, modification or an order of confirmation.

Reference to the Supreme Court decisions in Kunhayammed v. State of Kerala, (2000) 6 SCC 359 and Shanthi v. T.D. Vishwanathan, (2019) 11 SCC 419, was made.

Bench in view of the above decisions held that the contempt petition filed before the Single judge is not maintainable since the order of the Single judge has merged with the order passed by the Division Bench in the writ appeal.

Adding to the above, Court also stated that if the petitioner feels that the order has been violated or disobeyed, a Contempt Petition can be maintained only before the Division Bench and not before the Single Judge.

Hence, the Contempt Petition was closed.[All India Union Bank Officer v. Brajeshwar Sharma, Contempt Petition No. 570 of 2020, decided on 31-08-2020]

Case BriefsSupreme Court

Supreme Court: A Division Bench of A.M. Khanwilkar and Dinesh Maheshwari, JJ., while addressing a contempt petition held that,

“…to constitute civil contempt, it must be established that disobedience of the order is wilful, deliberate and with full knowledge of consequences.”

Grievance

Non compliance of direction to Food Corporation of India to regularise and departmentalise workers concerned who had initiated industrial disputes before Industrial Tribunal, Chennai under Section 10(1)(d) of Industrial Disputes Act.

The employees concerned were employed as daily-rated labour or casual labour and had been working for some time with some cases of 15 to 20 years.

Contempt Petition against FCI

FCI contended that it had already regularised the eligible employees who were under Direct Payment System (DPS) and nothing further was required to be done.

Further the Corporation stated that claim was restricted to regularisation of the employees concerned after abolition of the contract labour system. There was no prayer for absorbing the concerned employees under any specific system of regular labour prevailing in the Corporation. The Corporation has four systems of labour engagement, namely, (i) Departmental Labour System, (ii) Direct Payment System, (iii) No­-Work-­No-­Pay System and (iv) Mate System.

Corporation’s Stand

In the decision of SAIL v. National Union Waterfront Workers, (2001) 7 SCC 1 (Constitution Bench), it was held that, contract labour need not be absorbed after abolition of contract labour system.

Taking reference from the above, Corporation stated that the provision of FCI and its primary duty is to undertake purchase, storage, movement, transport, distribution and sale of food grains and other food stuff.

Continuing its’ contention, Corporation stated that, If all the regular workers in the Corporation are brought under the Departmental Labour System, there will be recurring liability on public exchequer to the tune of Rs 3,000 crore per annum and if arrears are also given with effect from 2003, there will be additional financial burden of more than Rs 40,000 crore.

As per the extant policy, the respondent could have regularised the workers concerned only under theDirect Payment System and therefore, it is certainly not a case of disobedience, much less wilful or deliberate disobedience of the order passed by this Court.

Decision of the Court

Bench adverted to the exposition of Supreme Court’s decision in Ram Kishan v. Tarun Bajaj, (2014) 16 SCC 204, wherein the Court had delineated the contours for initiating civil contempt action.

Excerpts from the referred SC decision:

“…in order to punish a contemnor, it has to be established that disobedience of the order is “wilful”. The word “wilful” introduces a mental element and hence, requires looking into the mind of a person/contemnor by gauging his actions, which is an indication of one’s state of mind.”

“Even if there is a disobedience of an order, but such disobedience is the result of some compelling circumstances under which it was not possible for the contemnor to comply with the order, the contemnor cannot be punished.”

Court in the present case observed that, neither the relief in the References was specific for regularisation in Departmental Labour System only nor the Tribunal, the Madras High Court/Kerala High Court or this Court was called upon to deal with that issue specifically.

Subject References, as well as, the direction issued by the Tribunal, which has been upheld upto this Court is silent about the system in which the concerned workers have to be regularised and departmentalised, therefore, it is incomprehensible as to how it would be a case of disobedience.

Therefore, Court held that, no specific direction had been given to the Corporation to regularise the workmen concerned only in the Departmental Labour System.

Furthermore, the Departmental Labour System is now a dying cadre and the policy of the Corporation at the relevant time entailed regularisation of such workmen only under the Direct Payment System (DPS).

Hence, no contempt action can be initiated on the basis of general direction to the respondents to regularise and departmentalise the concerned workmen.

Petition stands dismissed in the above view. [Workmen v. Ravuthar Dawood Naseem, 2020 SCC OnLine SC 461 , decided on 19-05-2020]

Case BriefsHigh Courts

Jammu & Kashmir High Court: A Division Bench of Ali Mohammad Magrey and Dhiraj Singh Thakur, JJ. disposed of the appeal after asking the Writ Court to hear the parties and decide the writ petition on merits, expeditiously.

An appeal was filed by the appellant (who is the respondent 7 in the connected writ petition), against the order dated 23-10-2019 passed by the learned Single Judge in the contempt petition arising out of Other Writ Petition (OWP) filed by the respondent’s 8 to 11.

The appellant stated that the respondents 8 to 11 had filed an OWP, wherein the learned Single Judge, in terms of order dated 10-01-2019, while issuing notice to the respondents, observed that pendency of the writ petition shall not come in the way of the official respondents in making further follow up under law in pursuance to NIT No. 64/02/EEP/R&B/2018-19 dated 27th of June, 2018. Thereafter, alleging non-compliance of the aforesaid order passed by the learned single Judge, the writ petitioners/ respondents 8 to 11 filed a contempt petition, wherein the learned single Judge, in terms of order dated 23-10-2019, i.e., directed that the Additional Deputy Commissioner, Pulwama, was to take immediate steps to provide security to the Executing Agency so that the execution work undertaken by the Executive Engineer, R&B, Division Pulwama, with respect to pathway in question went unhindered.

The appellant submitted that the contempt petition had arisen out of the ad-interim order passed in writ petition filed by the respondents 8 to 11 wherein the learned Single Judge has only made observation that pendency of the writ petition shall not come in the way of the official respondents in making further follow up under law, however, the learned Single Judge had gone beyond the scope of contempt jurisdiction by issuing further directions for providing security to the Executing Agency.

The Court found force in the submissions of the appellant and, therefore, ordered that the impugned order was set aside; since the consideration in the contempt petition was deferred. Accordingly, the appeal was disposed of along with the connected petitions. [Ghulam Hassan Rather v. UTof J&K, 2019 SCC OnLine J&K 913, decided on 02-12-2019]

Hot Off The PressNews

Supreme Court: The 3-judge bench of Ranjan Gogoi, CJ and SK Kaul and KM Joseph, JJ has closed the contempt petition filed by BJP lawmaker Meenakshi Lekhi against Congress leader Rahul Gandhi for wrongly attributing to the court, his “chowkidar chor hai” slogan against Prime Minister Narendra Modi in Rafale Deal case. The bench , however, said

“Rahul Gandhi needs to be more careful in future,”

Lekhi had accused Gandhi of misquoting the April 10 order of the Supreme court in which it had allowed additional leaked documents to be put on record as evidence in the Rafale case.Gandhi, who was then the president of the Congress party, allegedly said that the Court had accepted that ‘chowkidar’ (a reference to Prime Minister Modi), is a “chor’ (thief).
Pursuant to this, the Supreme Court issued a contempt notice against him.

Chief Justice Gogoi was categorical that Gandhi had to either offer a clear-cut apology or face criminal contempt. Subsequently, Gandhi tendered an unconditional apology to the Court and sought closure of the contempt proceedings against him.
During the course of proceedings, former Attorney General Mukul Rohatgi, who represented Lekhi, had argued that Gandhi’s apology should be rejected and
action must be taken against him.

“He (Gandhi) has only expressed regret. The law is clear in contempt cases that the line starts with an unconditional apology,”

The bench also dismissed the the petition seeking review of it’s 2018 order where the bench had dismissed the petition seeking probe in the much talked about Rafale Deal by holding that there was no reason for any intervention by this Court on the sensitive issue of purchase of 36 defence aircrafts by the Indian Government.

(Source: ANI)


Read more about the 3-judge bench verdict in Rafale Deal case here.

Case BriefsHigh Courts

Madhya Pradesh High Court: Prakash Shrivastava, J., dismissed the revision petition filed by the respondents under Section 115 CPC where they challenged the order of the Trial Court, whereby their application for rejection of plaint under Order 7 Rule 11 CPC was rejected.

The respondents had filed the suit for declaration and permanent injunction, wherein the petitioners had filed the application for rejection of plaint which has been dismissed by the impugned order. The petitioner argued that he was carrying his business on the suit property and earlier had filed a writ petition before the High Court. The Court issued directions relating to map and permission to construct Pakka shop and for non-compliance of the said contempt was also filed, therefore, the present suit was not maintainable and the trial court had committed an error in rejecting the application under Order 7 Rule 11 CPC.

The respondent submitted that post the passing of the order in Writ Petition and Contempt Petition, a lot of development has taken place and the order of the Trial Court does not suffer from any error.

The Court held that the plaint can be rejected under Order 7 Rule 11 CPC if the defendant is able to point out that any of the grounds which are mentioned in Rule 11 exists on the basis of the plaint averment. The petitioners could not point that there is any bar in entertaining the suit before the Trial Court. Merely on the basis of the order in the writ petition and in the contempt petition the plaint cannot be rejected on the ground that it does not disclose any cause of action, when otherwise in the plaint cause of action has been disclosed. The Trial court had rightly taken note of the fact that the materials on which the petitioners were placing reliance upon cannot be considered for rejection of plaint under Order 7 Rule 11 CPC. There was no illegality in the order passed by the Trial Court and the revision petition was found to be devoid of any merit and was dismissed. [Purshottam v. Murlidhar, 2019 SCC OnLine MP 2099, decided on 22-08-2019]

Case BriefsHigh Courts

Jammu and Kashmir High Court: The Bench of Tashi Rabstan, J., dismissed the application filed for seeking stay of contempt proceedings pending in the contempt petition on the ground that the applicants/respondents had already filed a review petition for review of judgment/order, implementation of which was sought by the writ petitioner by filing the contempt petition.

The facts of the case were that the Court had given direction to the applicants/respondents to consider the claim of writ petitioner as per the rules occupying the field and having regard to the judgments/orders passed in a prior case which was applicable to the case of writ petitioner. Against the said order, the applicants/respondents filed a review petition along with an application for condonation of delay; writ petitioner also filed a contempt petition seeking implementation of judgment/order. In the contempt petition, the Court vide an order directed the applicants either to comply with the judgment or produce before the Court the order, if any, passed in the review petition. Against the said order, the applicants/respondents filed the instant application in the review petition seeking to stay of contempt proceedings pending in the contempt petition.  The writ petitioner’s contention was that the application was to be dismissed simply on the ground that the applicants/respondents had already filed an independent motion in the contempt petition for deferment of contempt proceedings till the time the review petition was decided by the Court.

The High Court was of the opinion that the application could not be allowed. It was observed, “The present application deserves to be dismissed simply on the ground that on perusal of the application it reveals that the applicants/respondents have already filed an independent motion in the contempt petition for deferment of contempt proceedings till such time the review petition is decided by this Court. Further, the applicants/respondents have not stated that under which provision of law they have filed the instant application in the review petition thereby seeking staying of contempt proceedings”. Furthermore, the Court, noting the statements made by counsel for the applicants/respondents, held that they had already complied with the judgment/order. The application was thus dismissed. [Syed Mohammad Hafiz v. State of J&K, 2019 SCC OnLine J&K 176, Order dated 27-02-2019]

Case BriefsHigh Courts

Manipur High Court: A Single Judge Bench comprising of Ramalingam Sudhakar, CJ, dismissed a contempt petition filed against the Sub-Deputy Collector, Sawombung (Imphal East).

The matter related to a property suit between the parties. The suit was decreed by the learned Civil Judge against the defendants (petitioners herein), against which they preferred an appeal before the learned District Judge. The appeal was admitted; however, no interim order was passed. The plaintiffs moved to Sub-Deputy Collector for mutation of revenue records based on the decree passed. Recording that there was no stay on the decree passed by the Civil Judge, the Sub-Deputy Collector allowed the amendment to revenue records. The defendants alleged that the Sub-Deputy Collector committed contempt in terms of Section 2(b) of Contempt of Court Act 1971.

The High Court perused the record and found no merit in the contentions put forth by the defendants. The Court categorically observed, “in absence of stay or injunction in the appeal, the party who succeeds in the litigation should be entitled to enjoy the fruits of the decree unless there is a restraint order by the appellate forum”. The Court found that there was no stay order against the decree passed by the Civil Judge. As such, the Sub-Deputy Collector did not disobey any order of the Court. In such circumstances, the Court held the contempt petition to be sans merit. The petition was accordingly dismissed. [Huidrom Ningolakpa Singh v. Lunguiba Thangal, 2018 SCC OnLine Mani 53, dated 02-06-2018]