2021 (11) TMI 909 - AT - Companies Law

Oppression and mismanagement - breach and wilful disobedience - Sections 397, 398, 399, 402, 403, 406, 235, 237 and 247 read with Section 111 of the Companies Act, 1956 - HELD THAT - There is no dispute that the earlier interest @15% was being paid till 30.09.1998 and the above observations only indicate that the payments were earlier made @ 15% but that the observations cannot read to mean that even from 01.04.1999 the Respondents agreed to make the payment @ 15%. The expression at agreed rate as contained in paragraph 33 of the judgment of this Tribunal dated 20.08.2019 is capable of interpretation as put by the Respondents. When general body Resolution dated 25.09.1998 have expressly decided to pay interest @ 10% from 01.04.1999 and the general body Resolution is not denied or challenged by the Applicants, their insistence that the unsecured loan was to be paid @ 15% annually even after 01.04.1999 cannot be accepted. It is well settled that it is not permissible to the Court to examine the correctness of the earlier decision which has become final between the parties. However, when an order was reasonably capable of more than one interpretation a proceeding for contempt would not be maintainable. No case has been made out to punish the Respondents for contempt. The Respondents having themselves initiated proceedings for execution of the judgment dated 20.08.2019 and have expressed their willingness to deposit the entire amount with interest @ 15% till 30.09.1998 and thereafter @ 10% per annum annually compounded till the date payment is made, the Respondents are permitted to deposit the amount as above before the Executing Court within one month from today. Contempt Application is disposed off.

Issues Involved:
1. Breach and wilful disobedience of the final judgment dated 20.08.2019.
2. Determination of the interest rate applicable to the unsecured loan.
3. Execution of the judgment and order dated 20.08.2019.
4. Compliance with the Tribunal's orders.

Issue-wise Detailed Analysis:

1. Breach and Wilful Disobedience of the Final Judgment Dated 20.08.2019:
The contempt proceeding was initiated to punish the Contemnors for breach and wilful disobedience of the final judgment dated 20.08.2019, which upheld the order dated 06.11.2017 with specific directions. The Applicants contended that the Respondents failed to comply with the judgment, specifically regarding the payment of the balance of the unsecured loan with interest at the agreed rate.

2. Determination of the Interest Rate Applicable to the Unsecured Loan:
The core dispute revolved around the interest rate applicable to the unsecured loan. The Applicants argued that the Respondents were obliged to pay interest at 15% compounded annually as per the judgment dated 20.08.2019. However, the Respondents contended that the interest rate was modified by a resolution passed on 25.09.1998, which reduced the interest rate to 10% per annum compounded from 01.10.1998 to 31.03.1999 and thereafter no interest was payable. The Tribunal noted that the judgment dated 20.08.2019 did not specify an interest rate of 15% from 01.04.1999 and that the expression "at agreed rate" was open to interpretation. The Tribunal found that the agreed rate after 01.04.1999 was 10%, as per the resolution dated 25.09.1998, which was never challenged by the Applicants.

3. Execution of the Judgment and Order Dated 20.08.2019:
The Respondents had filed an application for the execution of the judgment and order dated 20.08.2019 before the NCLT, Cuttack Bench, seeking directions to accept the balance of the unsecured loan with interest and to transfer shares in favor of the Petitioner. The Respondents claimed to have sent cheques for the amounts calculated with interest at 10% compounded annually from 01.04.1999, which were not received by the Applicants. The Tribunal acknowledged the Respondents' efforts to comply with the judgment by filing the execution application and sending the cheques.

4. Compliance with the Tribunal's Orders:
The Tribunal had directed the Applicants to submit a proposal for the balance unsecured loan with interest at 10% compounded annually from 01.04.1999. The Applicants failed to submit the proposal as directed and insisted on 15% interest. The Tribunal found no wilful disobedience on the part of the Respondents, as they had calculated the amount based on the agreed rate of 10% and had initiated execution proceedings. The Tribunal permitted the Respondents to deposit the amount with interest at 15% till 30.09.1998 and thereafter at 10% per annum compounded till the date of payment before the Executing Court within one month. The Executing Court was directed to verify the amount and remit it to the Applicants, concluding the execution proceedings preferably within three months.

Conclusion:
The Tribunal concluded that no case was made out to punish the Respondents for contempt. The Respondents were found to have substantially complied with the judgment dated 20.08.2019 by calculating the interest as per the agreed rate and initiating execution proceedings. The Tribunal directed the Respondents to deposit the calculated amount with the Executing Court, which would verify and remit the amount to the Applicants, ensuring compliance with the judgment. The Contempt Application was disposed of accordingly.

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