2021 (8) TMI 1392 - SC - Indian Laws

Contempt of Court - Wilful Disobedience or not - failure of a party to comply with an undertaking, on the basis of which a conditional order of stay was granted - HELD THAT - It is true that this Court has held in a series of decisions that the wilful breach of the undertaking given to the Court amounts to contempt of Court under Section 2(b) of the Act. But the Court has always seen (i) the nature of the undertaking made; (ii) the benefit if any, reaped by the party giving the undertaking; and (iii) whether the filing of the undertaking was with a view to play fraud upon the court or to hoodwink the opposite party. The distinction between an order passed on consent terms and an order passed solely on the basis of an undertaking given to court and the distinction between a person playing fraud on the court thereby obstructing the course of justice and a person playing fraud on one of the parties, was brought out by this Court in BABU RAM GUPTA VERSUS SUDHIR BHASIN 1979 (4) TMI 164 - SUPREME COURT where it was held that In the instant case, we have already held that there is neither any written undertaking filed by the appellant nor was any such undertaking impliedly or expressly incorporated in the order impugned. Thus, there being no undertaking at all the question of breach of such an undertaking does not arise. There is no dispute on facts that the mortgaged properties have now been sold and with extraordinary efforts, the Bank has also taken possession. The petitioners have also spent 11 days in custody out of the total period of imprisonment of three months imposed by the High Court. In such circumstances, we think that it is sufficient punishment for the petitioners. Therefore, the SLP is disposed of upholding the finding of the learned Single Judge and the Division Bench of the High Court that the petitioners are guilty of contempt of court, but reducing the period of sentence from three months to the period of imprisonment already suffered/undergone by the petitioners - application disposed off.

Summary

Issues Involved:
1. Whether the failure to comply with an undertaking given to the court constitutes contempt of court.
2. Whether the petitioners' conduct amounted to wilful disobedience.
3. Whether the subsequent conduct of the petitioners aggravated the contempt.
4. Whether the punishment imposed was appropriate.

Detailed Analysis:

1. Whether the failure to comply with an undertaking given to the court constitutes contempt of court:

The petitioners, husband and wife, were found guilty of contempt by the Delhi High Court for failing to comply with an undertaking given to the court. They were sentenced to three months of simple imprisonment and fined Rs. 2000 each. The petitioners argued that the failure to comply with an undertaking, which was the basis for a conditional order of stay, should not be considered wilful disobedience warranting contempt jurisdiction. They relied on various High Court decisions to support their contention that non-compliance with an undertaking does not automatically amount to contempt. However, the Supreme Court noted that the undertaking was given in court, and the failure to comply was seen as a breach of a solemn promise made to the court.

2. Whether the petitioners' conduct amounted to wilful disobedience:

The petitioners issued postdated cheques to the respondent Bank, which were dishonoured. The Court found that the petitioners' act of issuing postdated cheques and allowing them to bounce indicated a lack of bona fides. The petitioners also failed to appear in court on the first date of hearing, providing an excuse that was found to be false. The Court noted that the petitioners' subsequent conduct, including providing false explanations and being exposed by the Serious Fraud Investigation Office (SFIO) report, showed that the petitioners had acted in bad faith and intended to hoodwink the court.

3. Whether the subsequent conduct of the petitioners aggravated the contempt:

The Court observed that while the determination of contempt should be based on the specific context of disobedience, the subsequent conduct of the petitioners could shed light on their intentions. The petitioners' actions, including issuing postdated cheques, allowing them to bounce, and providing false explanations, convinced the Court that the petitioners' undertaking was not made in good faith. The SFIO report further revealed that the petitioners' alleged debtors were shell entities, indicating a larger design to deceive the court.

4. Whether the punishment imposed was appropriate:

The Supreme Court upheld the High Court's finding that the petitioners were guilty of contempt but reduced the sentence from three months to the period already served by the petitioners, which was 11 days. The Court considered the fact that the petitioners' mortgaged properties had been sold, and the Bank had taken possession. Given these circumstances, the Court deemed the period of imprisonment already undergone by the petitioners as sufficient punishment.

Conclusion:

The Supreme Court disposed of the Special Leave Petition (SLP) by upholding the High Court's finding of contempt but reducing the sentence to the period of imprisonment already undergone by the petitioners. The Court emphasized that the petitioners' conduct, including issuing postdated cheques and providing false explanations, demonstrated a lack of bona fides and an intention to deceive the court. The Court also noted that the petitioners had already suffered the consequences of their actions, including the sale of their mortgaged properties. Therefore, the reduced sentence was deemed appropriate. There was no order as to costs, and any pending applications were disposed of.