2021 (6) TMI 708 - Tri - Companies Law

Seeking initiation of contempt proceedings against the Respondents - violation of the status quo order to maintain status quo in regard to the share capital and alienation of the shares, assets, tangible as well as intangible - Sections 241 and 242 read with Section 166 of the Companies Act, 2013 - HELD THAT - Before a contemnor is punished for non-compliance of direction of a Court, the Court must not only be satisfied about the disobedience, but should also be satisfied that such disobedience was wilful and intentional. In order to hold a person guilty of civil contempt, it has to be established by the person alleging contempt that the alleged contemnor was guilty of a wilful breach or a wilful disobedience of an order or a direction, decree etc. of any Court. The emphasis, therefore, has to be on the word wilful . The word wilful‟ means an This Tribunal find force in the explanation offered by the Respondents that as per its bonafide understanding the decision to change the domain name and to collect ticket fees to the account owned by the Respondent No.1 Company herein, was done upon the unilateral termination of the Bipartite Agreement. Since the cancellation of the Agreement is still under dispute, the actions taken thereafter by the Respondents cannot be considered as a wilful disobedience of the status quo order of this Tribunal act or omission which is done voluntarily and with an intent to do something which is forbidden by law or failing to do something which the law requires to be done - There is no allegation in the Contempt Petition that the admitted asset was alienated by the Respondents. The status quo order passed by this Tribunal is still in operation and that all the contentions raised by the Petitioners will be considered while passing the final order in the Company Petition. This Tribunal is of the view that the petitioners failed to establish that there is any wilful disobedience of the orders passed by this Tribunal on 23.09.2020. In the absence of any wilful disobedience, this Court cannot grant the relief sought for by the petitioner - Contempt Petition is dismissed.

Summary

Issues Involved:
1. Alleged violation of status quo order regarding share capital and alienation of shares, assets, tangible and intangible.
2. Alleged mismanagement and diversion of shareholders' funds.
3. Alleged creation of a new domain name and diversion of ticket revenue.

Issue-wise Detailed Analysis:

1. Alleged Violation of Status Quo Order:
The Contempt Petition was filed under Section 12 of the Contempt of Courts Act, 1971, read with Section 425 of the Companies Act, 2013, by the Petitioners against the Respondents. The Petitioners alleged that the Respondents violated the status quo order dated 23rd September 2020, which directed the maintenance of the status quo regarding the share capital and the alienation of shares, assets, both tangible and intangible, of the Respondent companies until further orders. The Tribunal had initially granted an interim order on 20th August 2020, directing the status quo regarding the share capital of the Respondent companies, which was extended on 23rd September 2020.

2. Alleged Mismanagement and Diversion of Shareholders' Funds:
The Petitioners invoked the Tribunal's jurisdiction under Sections 241 and 242, read with Section 166 of the Companies Act, 2013, alleging acts of oppression and mismanagement by the Respondents. The Petitioners contended that Respondent No. 6 exercised undue influence over the board of Respondent No. 1 and other companies, leading to mismanagement and diversion of shareholders' funds to companies controlled by Respondent No. 2 and his allies. They sought various interim reliefs, including the seizure of passports, regulation of bank accounts, prohibition of transactions, and prevention of changes in management.

3. Alleged Creation of a New Domain Name and Diversion of Ticket Revenue:
The Petitioners claimed that Respondent No. 1 granted the exclusive right to operate the Jatayu Project for 30 years and marked the operational right as "Intangible Assets" in their financial statements. They alleged that Respondents Nos. 2, 3, 4, and 5 violated the status quo order by diverting ticket revenue to the account of Respondent No. 1 and creating a new domain name to accept online bookings, thereby diverting income from ticket sales.

Findings:
The Tribunal examined whether the Respondents' actions constituted "wilful disobedience" under Section 2(b) of the Contempt of Courts Act, 1971. The Tribunal referred to the Supreme Court's interpretation in Ashok Paper Kamgar Union vs. Dharam Dhoda & Others, emphasizing that "wilful" means voluntary and intentional disobedience with a bad motive or purpose. The Tribunal found that the Respondents' actions were based on a bona fide understanding that the Bipartite Agreement had been unilaterally terminated, and thus, their actions did not constitute wilful disobedience of the status quo order.

Conclusion:
The Tribunal concluded that the Petitioners failed to establish wilful disobedience by the Respondents. It observed that the actions taken by the Respondents, including changing the domain name and collecting ticket fees, were based on the understanding that the Bipartite Agreement had been terminated. The Tribunal noted that the status quo order was still in operation and that all contentions would be considered in the final order of the Company Petition. Consequently, the Contempt Petition was dismissed, and the notice of contempt was discharged.