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2016 (11) TMI 1461 - SC - Indian LawsContempt Petition - invalidating the registration - Held that - In the present case the Company and its Directors/servants were certainly guilty of transgressing or violating the Order of 08.05.2014 but as found hereinabove the transferee and its Directors/servants have not violated the Order of 08.05.2014. The transferee and its Directors/servants were neither parties to the proceedings nor were they served with the Order of 08.05.2014. In para 38 of the judgment of this Court dated 13.11.2014 this Court had found the transfer in favour of the transferee to be questionable and had relegated the matter to the BIFR to consider the matter in the light of directions contained in said para 38. In the circumstances no further orders are called for invalidating the registration dated 02.07.2014. Further according to the record the transferee had parted with full consideration way back on 04.04.2013. In the totality of these circumstances we do not think it appropriate to exercise our power to invalidate the effect of registration of the document on 02.07.2014. We thus find the Company and its Directors/servants namely alleged Contemnor Nos.1 4 5 6 7 and 8 guilty of having violated the Order of 08.05.2014. In our view ends of justice would be met if fine is imposed on the Contemnors. We impose fine of 2, 000/- on the Company. Further fine of 2, 000/- each is imposed on Contemnor Nos.4 5 6 7 and 8. Fine shall be deposited with the Registry of this Court within four weeks from today. In case of failure by Contemnor Nos.4 5 6 7 and 8 to deposit the amount of fine within the time stipulated they shall undergo sentence of simple imprisonment for one month. With these observations we close Contempt Petition
Issues Involved:
1. Alleged disobedience of the Supreme Court's Order dated 08.05.2014. 2. Validity and timing of the sale of Katihar property. 3. Jurisdiction and authority of the Board for Industrial and Financial Reconstruction (BIFR). 4. Examination of the role and involvement of various contemnors. 5. Consequences of actions taken in violation of court orders. Detailed Analysis: 1. Alleged Disobedience of the Supreme Court's Order dated 08.05.2014: The contempt petitions were filed to highlight the alleged disobedience and violation of the Supreme Court's Order dated 08.05.2014, which directed that "capital assets of the Company shall not be disposed of without taking permission of this Court." It was alleged that the assets of J.K. Jute Mills Company Ltd., specifically the Katihar property, were sold via a Conveyance Deed dated 02.07.2014 in violation of this order. The petitioners sought punishment for the contemnors and the declaration of the Conveyance Deed as null and void. 2. Validity and Timing of the Sale of Katihar Property: The Company and its directors contended that the sale was completed on 04.04.2013, with the entire consideration received and possession handed over before the Supreme Court's order. However, the court noted that the actual registration of the sale deed occurred on 02.07.2014, after the order was passed. According to Section 54 of the Transfer of Property Act, 1882, the transfer of any tangible immovable property of the value of Rupees hundred and upwards can be made only by a registered instrument. Therefore, the court concluded that the transfer was effectuated only upon registration on 02.07.2014, thus violating the order dated 08.05.2014. 3. Jurisdiction and Authority of the BIFR: The Company had filed a reference before the BIFR under the Sick Industrial Companies (Special Provisions) Act, 1985, and various steps for its revival were being considered. The BIFR had directed that the Company would not encumber/alienate/lease/sell any property without its specific prior approval. The Supreme Court's judgment dated 13.11.2014 reiterated that BIFR alone is empowered to determine whether the net worth of the Company had turned positive, and any inquiry into such issues by anyone outside the Act would be against the express intent of the Act. 4. Examination of the Role and Involvement of Various Contemnors: The court examined the involvement of various contemnors, including the Company, its directors, and government officials. It found that the Company and its directors (Contemnor Nos. 1, 4, 5, 6, 7, and 8) were guilty of violating the order. The court noted that the actions were deliberate and designed to flout the order. However, the court granted the benefit of doubt to the government officials (Contemnor Nos. 9 to 13) and the transferee company and its directors (Contemnor Nos. 14 to 17), as there was no sufficient evidence to prove that they had knowledge of the order or were involved in the violation. 5. Consequences of Actions Taken in Violation of Court Orders: The court emphasized that legal consequences of actions taken in violation of court orders can be undone, and parties could be put back to the same position as they stood immediately prior to such orders. However, in this case, the court decided not to invalidate the registration of the document dated 02.07.2014, considering that the transferee had parted with full consideration way back on 04.04.2013. Instead, the court imposed fines on the Company and its directors for violating the order. Conclusion: The Supreme Court found the Company and its directors guilty of violating the order dated 08.05.2014 and imposed fines on them. The court granted the benefit of doubt to the government officials and the transferee company and its directors. The court decided not to invalidate the registration of the sale deed but imposed fines to meet the ends of justice. The contempt petitions were disposed of with these observations.
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