2023 (8) TMI 553 - AT - Companies Law

Contempt petition - Alleged wilful breach of orders of this Appellate Tribunal - Complainants alleged that Contemnors have been trying to start a competing jewellery business using deceptively similar names in order to take benefit of the trade mark and goodwill of CKC Sons - whether there have been specific and clear orders for doing or not doing any stipulated action by the Contemnors or not - whether there could be one and only one interpretation without any ambiguity, whatsoever, to any party to the said order? - Section 2(b) of the Contempt of Court Act, 1971. HELD THAT - Section 2(b) of the Contempt of Court Act, 1971, Civil Contempt means disobedience to any judgment, decree, directions, orders or other process of Court or wilful breach of an undertaking given to Court. From this it becomes clear that in order to prove contempt, two elements are required to be established i.e., (i) Disobedience of any judgment, decree, directions, orders or other process of Court; (ii) Disobedience or breach must be wilful, deliberate and intentional. Similarly, mere disobedience or breach of the Tribunal s order by the Contemnor may not be sufficient to convert into contempt unless it is proven beyond doubt that such disobedience or breach was wilful. While doing so, we are duty bound to take into consideration whether if any alleged breach was of trivial or in nature of technical breach or it was gross and substantial breach with clear intention to take advantage over the other party/ complainants for seeking undue benefits for the Contemnors. After conjoint readings of the contents of the order, relief sought and direction of the Tribunal not to precipitate of the matter, we are not in position to agree to the submissions of the Complainants regarding any violation of the orders of this Appellate Tribunal; leave aside wilful disobedience amounting to contempt. No specific directions can be read from this order except general restrain to both the parties by this Appellate Tribunal, that too at the best, in the context of the main appeal No. 65 of 2019. Permission to hold Board Meeting in accordance with Section 173 of the Companies Act, 2013 r/w Section 8 of Companies (Meeting of Board and its Power) Rule, 2014 - HELD THAT - This Appellate Tribunal gave direction to Respondent No. 9 therein- Mr. C. Ganesh Narayan therein/ Contemnor No. 1 herein not to take any coercive action against the matter concerned. This makes quite clear that the order dated 25.11.2021 by this Tribunal was only for Mr. C. Ganesh Narayan and not to any other (Complainants/ Contemnors) and this restrain order is required to be read with prayer made in I.A. No. 1075 of 2021 (I.A. filed by the Complainants herein), which was specifically in relation to holding Board Meeting in terms of Section 173 of the Companies Act, 2013. In this order, neither there has been any discussion regarding non operation of existing business or opening new store as brought out in present Contempt Case or any specific directions by this Appellate Tribunal on any other matter other than relating to Board Meeting only to Mr. C. Ganesh Narayan - we are not able to appreciate the case being made out by the Complainants regarding alleged violations or breach by Contemnors w.r.t order dated 25.11.2021 passed by this Appellate Tribunal. There are no alleged contempt - the contempt case devoid of any merit(s) is dismissed.

Issues Involved:
1. Alleged willful breach of orders by the Contemnors.
2. Disputes between shareholders of CKC & Sons and CKC & Co.
3. Allegations of starting a competing business and other actions by the Contemnors.
4. Interpretation and application of previous orders by the Appellate Tribunal.
5. Validity and impact of Family Settlement Agreement (FSA).

Summary:

1. Alleged Willful Breach of Orders:
The Complainants filed Contempt Case (AT) No. 13 of 2023 alleging willful breach of the Appellate Tribunal's orders dated 08.07.2021, 25.11.2021, and 24.02.2022 by the Contemnors. They argued that these orders contained directions to both parties not to precipitate the matter and not to take any coercive actions. The Complainants alleged that the Contemnors violated these orders by starting a competing business and taking other actions that jeopardized CKC & Sons.

2. Disputes Between Shareholders:
The Complainants and Contemnors are 50% shareholders in CKC & Sons Pvt. Ltd. and belong to different branches of the same family. The disputes between them have been ongoing for years, involving various legal fora. The Complainants argued that the Contemnors have been trying to benefit from the trade mark and goodwill of CKC & Sons by starting a competing business under a similar name.

3. Allegations of Competing Business and Other Actions:
The Complainants alleged that the Contemnors have taken several actions to harm the business of CKC & Sons, including:
- Sending threatening emails to employees.
- Poaching clients.
- Threatening security personnel.
- Using CKC & Sons' address for tax invoices.
- Using social media to promote a competing business.
- Advertising vacancies for the competing business.
- Claiming their company CKC & Co. to be legal and running since 1982.

4. Interpretation and Application of Previous Orders:
The Appellate Tribunal examined the three orders in question to determine if there was any specific and clear direction that was violated. The Tribunal found that the orders were general in nature and did not contain specific directions regarding the non-operation of existing business or opening new stores. The Tribunal concluded that there was no willful disobedience of its orders by the Contemnors.

5. Validity and Impact of Family Settlement Agreement (FSA):
The Complainants refuted the validity of the FSA, arguing that it was not a binding agreement. The Contemnors, on the other hand, argued that the FSA allowed them to start a new store/business and use the name "C. Krishniah Chetty & Co." The Tribunal noted that the FSA was a significant point of dispute and that its validity would be determined in the main appeal and other pending litigations.

Conclusion:
The Appellate Tribunal dismissed the Contempt Case No. 13 of 2023, finding no willful disobedience of its orders by the Contemnors. The Tribunal emphasized that the findings were limited to the contempt case and did not express any opinion on the merits of the main appeal CA (AT) No. 65 of 2019, which would be dealt with separately.

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