2015 (5) TMI 1153 - HC - Indian Laws

Maintainability of contempt proceedings - maintainability of the appeal was challenged on the ground that a special appeal will not lie against an order of the learned Single Judge in the exercise of the contempt jurisdiction and that only an appeal under Section 19 of the Contempt of Courts Act, 19716 would be maintainable - Held that - under Section 19 (1), an appeal lies as of right from any order or decision of the High Court in the exercise of its jurisdiction to punish for contempt. Under sub-section (2) of Section 19, the appellate court is empowered to direct that the execution of the punishment or the order appealed against be suspended; that the appellant, if he is in confinement, be released on bail; and that the appeal be heard, though the appellant has not purged his contempt. No appeal would be maintainable under Section 19 (1) (a) for the simple reason that the impugned order of the learned Single Judge has not been passed in the exercise of the jurisdiction to punish for contempt. A mediated settlement, upon the passing of a judicial order in terms of the settlement, has the effect of a decree of the Court. As a decree, the terms of the settlement are enforceable and executable in accordance with the process known to law. A decree for the payment of money is capable of being executed in the manner indicated by the provisions contained in Order XXI of CPC. Rules 1 and 2 of Order XXI provide for the mode of paying money under a decree and for the payment out of Court to a decree holder. Consequently, where a settlement agreement which has been arrived at between the parties is embodied in a final order or decree of the Court, the remedy of a party which is aggrieved by the non-payment of sums due and payable under it is to enforce and execute the decree in accordance with law. The learned Single Judge erred in rejecting the preliminary objection to the maintainability of the contempt petition. The contempt petition was not maintainable - appeal allowed.

Summary

Issues Involved:
1. Maintainability of contempt proceedings.
2. Jurisdiction of the High Court in contempt matters.
3. Execution of settlement agreements as decrees.
4. Applicability of Section 634 of the Companies Act, 1956.
5. Alternative remedies for enforcement of decrees.

Detailed Analysis:

1. Maintainability of Contempt Proceedings:
The special appeal was filed against an order dated 29 April 2015, where a learned Single Judge rejected an objection to the maintainability of contempt proceedings initiated by the respondents. The contempt proceedings were based on an alleged breach of an order by a Division Bench, which recorded the terms of a settlement from mediation proceedings.

2. Jurisdiction of the High Court in Contempt Matters:
The maintainability of the appeal was challenged on the grounds that a special appeal would not lie against an order of a learned Single Judge in the exercise of contempt jurisdiction. It was argued that only an appeal under Section 19 of the Contempt of Courts Act, 1971 would be maintainable. However, it was noted that under Section 19(1), an appeal lies as of right from any order or decision of the High Court in the exercise of its jurisdiction to punish for contempt. Since the impugned order was not passed in the exercise of jurisdiction to punish for contempt, a special appeal under Chapter VIII Rule 5 of the Allahabad High Court Rules, 1952 was considered maintainable.

3. Execution of Settlement Agreements as Decrees:
The Division Bench disposed of the company appeal in terms of the amicable settlement arrived at before the Mediation and Conciliation Centre. The settlement agreement quantified the dues of the workmen and creditors, which the management agreed to pay. The Division Bench's order, dated 4 January 2013, incorporated the settlement agreement and directed the payment of dues by 31 December 2013. The settlement was thus given the effect of a decree of the Court.

4. Applicability of Section 634 of the Companies Act, 1956:
Section 634 of the Companies Act, 1956 provides that any order made by a Court under the Act may be enforced in the same manner as a decree made by the Court in a suit pending therein. The learned Single Judge rejected the preliminary objection to the maintainability of the contempt petition, stating that the High Court was actively involved in resolving the matter and that the mediation center is part of the High Court. However, the Division Bench held that the essence of the matter is that the terms of the settlement agreement must be enforced as a decree of the Court.

5. Alternative Remedies for Enforcement of Decrees:
The Division Bench referenced the Supreme Court's ruling in *Kanwar Singh Saini Vs High Court of Delhi*, which held that the remedy for non-compliance with a decree is to approach the execution court under Order XXI Rule 32 CPC. This provides for elaborate proceedings, including the examination and cross-examination of witnesses, as opposed to the summary nature of contempt proceedings. The Gujarat High Court in *Jitesh Trading Co Vs Gita Fabrics P Ltd* also held that contempt proceedings are not a substitute for the process of execution under Section 634 of the Companies Act.

Conclusion:
The Division Bench concluded that the learned Single Judge erred in rejecting the preliminary objection to the maintainability of the contempt petition. The contempt petition was not maintainable, and the aggrieved parties were advised to pursue remedies available in law for enforcement of the settlement agreement as a decree. Consequently, the special appeal was allowed, setting aside the impugned judgment and order dated 29 April 2015, and the contempt petition was dismissed. The special appeal was disposed of with no order as to costs.