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TMI Blog2007 (9) TMI 403X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 per month. The petitioner herein shall deposit a sum of ₹ 5,000 in the High Court Registry, within one month from the date of receipt of a copy of this order, towards subsistence allowance for the two month period the fifth respondent is required to be kept in civil prison. The amount so deposited shall be defrayed towards the subsistence allowance payable to the fifth respondent. The contempt case is allowed with costs quantified at ₹ 3,500 to be paid by the fifth respondent to the petitioner herein. - CONTEMPT CASE NO. 1370 OF 2005 AND C.A. NO. 84 OF 2005 IN CP NO. 24 OF 2004 - - - Dated:- 21-9-2007 - RAMESH RANGANATHAN, J. K. Vasudeva Reddy for the Petitioner. K. Satyanarayana Murthy, D. Srinivas, B. Chandrasen Reddy and S.A. Razzaq for the Respondent. ORDER 1. Seeking to have respondents 1, 2, 4 to 9, punished under the Contempt of Courts Act, for wilful disobedience and gross violation of the orders of the Company Law Board, Additional Principal Bench, Chennai dated 18-7-2005, this contempt case is filed. 2. Facts, to the extent relevant, are that C.P. No. 24 of 2004 was filed by the petitioner herein, before the Company Law Bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the site, that steel rods were still found lying, that the structure, located at the entrance of the disputed site adjoining the main road, had already been demolished, that only some pillars were visible and it appeared as if the entire debris had just been shifted, that he found tyre/wheel marks of some heavy vehicles on the ground, that he had taken photographs of persons present at the site including Mr. Reddy and Mr. Umamaheswara Rao, that his overall observation was that demolition was in progress, that one structure was completely and the other partially demolished and that the debris was being removed. 4. The Company Law Board, in its order dated 4-10-2005, noted the respondents contention that 90 per cent of the structures were demolished prior to the filing of the application in C.A. No. 84 of 2005 i.e., before 18-7-2005 and that, on receipt of written complaints, and to save the lives of children and others living in the vicinity, the remaining structures, with slabs which had become weak on account of continuous rains, were demolished on 29-7-2005. After referring to its order sheets the Company Law Board observed that the respondents had not chosen to mention bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crete evidence. The Bench held that it was evident from their own statements that the respondents had demolished a part of the disputed structure in spite of the restraint orders of the Bench, that though the respondents had adequate time at their disposal between 18-7-2005 and 29-7-2005 to seek leave of the Bench they had failed to take the initiative and that the respondents must, therefore, be held to have acted in gross violation of the orders in demolishing the entire disputed structures. 5. The Company Law Board held that, by virtue of Regulation 44, every Bench of the Company Law Board had the inherent power to make such orders as may be necessary to meet the ends of justice or to prevent abuse of process of Court, that by demolishing the structures the respondents had violated the orders of the Court and had abused the process of the Bench, that there could not be any embargo on exercise of inherent powers to secure the ends of justice and that, under Regulation 47, a Bench shall be deemed to be a "Court" for the purpose of prosecution or punishment of a person who wilfully disobeyed any of its directions or orders. 5A. While recognizing that there was no specific p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r had they tendered any apology, that the apology tendered by the Company was only an afterthought with a view to avoid punishment for wilful disobedience of the orders of the Bench and could not be accepted. The Company Law Board observed that, in view of these conclusions, the petitioner was at liberty to move the High Court invoking its jurisdiction under section 10 of the Contempt of Courts Act so as to prosecute the respondents for having wilfully disobeyed the orders of the Bench dated 18-7-2005. 8. In his counter affidavit filed before this Court, while referring in detail to the merits of the Company Petition filed before the Company Law Board, and on the conduct of the petitioner, the fifth respondent would state that, in C.A. No. 84 of 2005 filed before the Company Law Board, allegations were made only against the Managing Director and not against any of the other Directors of the company. He would state that the orders passed by the Company Law Board would itself reveal that the counter affidavit, in C.A. No. 87 of 2005, was filed by the then Managing Director Sri Y. Subbarayudu and, since the Managing Director is the authority to look after the company affairs, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the other Directors and that he, with three others, was removed on 23-4-2004 and in their place respon-dents 2, 5 and 6 and Sri T. Satya Ravi Raju were appointed as Directors. According to the 8th respondent he ceased to be a Director with effect from 29-9-2003 much prior to the order of status quo dated 18-7-2005 and as such the question of his wilful disobedience, or of having acted in gross violation, of the order of the Company Law Board did not arise. 12. The averments in the counter affidavit filed before this Court by the 9th respondent are similar to that of the 8th respondent. The 9th respondent would contend that he ceased to be a Director with effect from30-12-1995, that he was re-appointed as a Director on 23-9-2002, that he again ceased to be a Director of the 1st respondent with effect from 23-4-2004 and to this effect Form-32 was also filed before the competent authority. According to the ninth respondent, from 29-9-2003 onwards, he had no connection with the affairs of the 1st respondent company. He would further state that, on account of old age and ill-health, he is not able to move out of his residence, that he was not in touch with any of the activities o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the majesty of law. Learned Counsel would place reliance on Advocate General, Andhra Pradesh, Hyderabad v. V. Ramana Rao AIR 1967 AP 299, Nuclear Power Corpn. of India Ltd. s case ( supra ), Pallav Sheth v. Custodian AIR 2001 SC 2763 1 , Advocate General, AP., Hyderabad v. Sri R. Subba Rao 1889 (1) APLJ 222, Advocate General of Andhra Pradesh, Hyderabad v. Chennamsetty Chakrapani, C.I. of Police, C.C.S. Guntur 1997 (3) ALT 328 (DB), Arun Paswan, S.I. v. State of Bihar AIR 2004 SC 721 and Daroga Singh v. B.K. Pandey [2004] 5 SCC 26. 14. Sri D. Srinivas, learned Counsel appearing on behalf of respondents 5 and 6, would submit that the Contempt Case as filed was barred by limitation. Learned Counsel would submit that, while this Court had ordered notice before admission on 13-7-2006, it had not taken cognizance of contempt till date and, since more than one year has elapsed from 18-7-2005 when the order of "status quo" was passed by the C.L.B, the Contempt Case as filed is barred by limitation. Learned Counsel would submit that the sixth respondent had resigned as a Director of the first respondent company in February, 2004, that except for investing s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was removed as a Director on 29-9-2003 and that Form-32 was filed before the Registrar of Companies, Hyderabad on 23-4-2004 vide document No. 32. Learned Counsel would place reliance on the certified true copy of Form-32 issued by the Registrar of Companies, Andhra Pradesh, Hyderabad, in support of his contention that the eighth respondent was removed as a Director much prior to 18-7-2005 the date on which the order of status quo was passed by the Company Law Board. 17. Sri S.A. Razaq, learned counsel appearing on behalf of ninth respondent, would submit that, like the eighth respondent, the ninth respondent was also removed as a Director on 29-9-2003 and that the very same Form-32, placed before this Court on behalf of the eighth respondent, would also reflect the name of the ninth respondent. Learned Counsel would submit that, since he had resigned as a Director of the company, much prior to the order of "status quo" passed by the Company Law Board, the ninth respondent cannot be said to have violated the orders of the Company Law Board, much less wilfully and deliberately. Is the Company Law Board a "Court" under the Contempt of Courts Act? 18. The Contempt of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20. Regulation 44, which relates to saving of inherent power of the Bench, and Regulation 47, under which the Bench is deemed to be a "Court" for certain purposes, read as under: "44. Nothing in these rules shall be deemed to limit or otherwise affect the inherent power of the Bench to make such orders as may be necessary for the ends of justice or to prevent abuse of the process of the Bench. 47. A Bench shall be deemed to be a Court or lawful authority for the purpose of prosecution or punishment of a person who wilfully disobeys any direction or order of such Bench." 21. In order to constitute a "Court", in the strict sense of the term, an essential condition is that the Court should have, apart from some of the trappings of a judicial Tribunal, the power to give a decision or a definitive judgment which has finality and authoritativeness which are the essential tests of a judicial pronouncement. ( Brajnandan Sinha v. Jyoti Narain AIR 1956 SC 66. To decide in a judicial manner involves that the parties are entitled, as a matter of right, to be heard in support of their claim and to adduce evidence in proof of it. It also imports an obligation on the part of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer to ascertain disputed question of fact and law on consideration of the legal arguments both oral and written and the evidence adduced by the contesting parties, that the authority should have the power to enforce attendance of witnesses, production of documents, to decide disputes in a judicial manner, the end-result or product of the exercise of such power by the authority must result in a binding decision between the contesting parties concluding the lis between them and that the decision of such authority disposing the whole matter, both on questions of fact and law, must be definitive and must have finality and authoritativeness. 25. Since all the aforesaid tests are satisfied, the Company Law Board rightly held, in its order in C.A. No. 87/2005 dated 4-10-2005, that it was a "Court" within the meaning of section 10 of the Contempt of Courts Act. Is the Company Law Board a Subordinate Court under section 10 of the Contempt of Courts Act? 26. Under section 2 of the Contempt of Courts Act, 1926 High Courts of Judicature were empowered to exercise the same jurisdiction, power and authority, in accordance with the same procedure and practice in respect of contempt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e control over them, under article 235 of the Constitution of India, does not vest in the High Court. ( S.K. Sarkar, Member, Board of Revenue, U.P., Lucknow v. Vinay Chandra Misra AIR 1981 SC 723). 29. Under section 10(F) of the Companies Act, 1956, any person aggrieved by any decision or order of the Company Law Board may file an appeal to the High Court, within sixty days from the date of communication of the decision or order of the Company Law Board, on any question of law arising out of such an order. The Company Law Board is thus judicially subordinate to the High Court and, even if its administrative control is held not to vest in the High Court under article 235 of the Constitution of India, it would nonetheless be a Court subordinate to the High Court under section 10 of the Contempt of Courts Act. Can the High Court exercise its jurisdiction under section 10 of the Contempt of Courts Act even in the absence of a reference to it by the Company Law Board? 30. It is true that the Company Law Board, while holding that the respondents were guilty of gross violation of its restraint order dated 18-7-2005 in demolishing the entire structure in dispute, that the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aking cognizance of contempt, or in taking action, either suo motu or on a petition made by any person. 33. A case of contempt of court is not stricto sensu a cause or a matter between parties inter se. It is a matter between the court and the contemnor. It is not, strictly speaking, tried as an adversorial litigation. The party, which brings the contumacious conduct of the contemnor to the notice of the court, whether a private person or the subordinate court, is only an informant and does not have the status of a litigant in the contempt of court case. ( Supreme Court Bar Association v. Union of India [1998] 4 SCC 409, Jaipur Municipal Corpn. v. C.L. Misra [2005] 8 SCC 423). 34. Section 10 of the Contempt of Courts Act makes the powers of the High Court, to punish for contempt of a subordinate court, coextensive and congruent with its power to punish for contempt of itself not only in regard to the quantum or prerequisites for punishment, but also in the matter of procedure and practice. If the High Court is prima facie satisfied that the information received by it regarding the commission of contempt of a subordinate court is not frivolous, and the contemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany Law Board has the power to take action for contempt, under Regulations 44 and 47 of the Company Law Board Regulations, this Court is barred from taking action for contempt of the orders of the Company Law Board, under section 10 of the Contempt of Courts Act, 1971. 37. In Rudraiah s case ( supra ), on which reliance is placed by the respondents, the Karnataka High Court observed: "In cases of disobedience or breach of injunction order issued temporarily during the pendency of a suit, either under Rule 1 or 2 of Order 39, C.P.C. action is contemplated by the very court which issues the injunction order under Rule 2A of Order 39, C.P.C. It contemplates the forfeiture of property as also putting of the person who commits breach into civil prison for a period not exceeding three months. The provision thereunder is obviously based on the principle of contempt of Court. That being so, the general provisions made under the Contempt of Courts Act cannot be invoked by the decree-holder, for forcing the party to obey the injunction order. It is a well-settled principle of law that when there is special law and general law, the provisions of the special law prevail over the gen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is the private rights of the parties. For defiance of the court s order the remedy is provided in the Code. It is attachment and detention in civil prison. For deliberate defiance of interim injunctions the court can send the contemner to prison. If the Subordinate Courts cannot enforce their injunction the order virtually would be worthless. It is the deterrent effect of an injunction plus the liability to imprisonment for its breach which is the remedy. The Subordinate Judge can punish the defendant if he finds her to be guilty in flagrantly defying the order which he had made. Contumacious disregard and contemptuous disobedience of the orders of the court have always been visited with committal to prison and attachment....." [Emphasis supplied] 39. Under section 2( b ) of the Contempt of Courts Act, wilful disobedience of a decree, order or other process of a Court would also constitute "civil contempt" and, in exercise of its jurisdiction under section 10 of the Contempt of Courts Act, the High Court can punish for wilful disobedience of a decree or order or other process issued by a subordinate Court. The inherent jurisdiction to punish for contempt, under article 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal wherever occurred in section 17 of the Administrative Tribunals Act, 1985 had disappeared in view of the judgment of the Supreme Court in L. Chandra Kumar s case ( supra ). But the said judgment has been reversed by the Supreme Court of Andhra Pradesh, 2000 (8) Scale 336, holding that regardless of the recognition of the power of judicial review of the High Court over the judicial decisions of the Administrative Tribunals, the power to punish for contempt still rests with the Administrative Tribunals and that it has not been divested and that the High Courts are not entitled for initiation of contempt proceedings for violation of the orders passed by the Administrative Tribunals and that the Administrative Tribunals alone have jurisdiction to entertain the contempt cases and any decision only appealable to Supreme Court......" [Emphasis supplied] 41. The observations of the Division Bench, in S.V. Surendra Rao s case ( supra ), are with reference to the powers of Administrative Tribunals to punish for contempt. Under section 17 of the Administrative Tribunals Act, 1985, which relates to the power to punish for contempt, the Tribunal shall have, and exercise, the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der of status quo was passed by the Company Law Board, is not in dispute. The contention, however, is that since this Court has not taking cognizance of contempt till date, and more than two years has elapsed from the date on which the order of status quo was passed, no proceedings for contempt can now be initiated as the contempt case is barred by limitation. The judgments of this Court, in A.V. Koteswara Rao s case ( supra ), and S.J.G.M. High School s case ( supra ), on which the respondents place reliance on, are no longer good law, in view of the subsequent judgment, in Pallav Sheth s case ( supra ), wherein the Supreme Court observed: "The decision in Om Prakash Jaiswal case (AIR 2000 SC 1136) to the effect that initiation of proceedings under section 20 can only be said to have occurred when the court formed the prima facie opinion that contempt has been committed and issued notice to the contemner to show cause why it should not be punished, is taking too narrow a view of section 20 which does not seem to be warranted and is not only going to cause hardship but would perpetrate injustice. A provision like section 20 has to be interpreted having regard to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he dignity of the Judges. Nothing could be further from the truth. The power exists to ensure that justice shall be done. The public at large, no less the individual litigant, have an interest, and a very real interest, in justice being effectively administered. Unless it is so administered, the rights, and indeed the liberty, of the individual shall perish. [ Jennison v. Baker 1972 (1) All ER 997]. 45. There are certain well-recognized principles which govern the exercise of power and jurisdiction to punish for contempt. A High Court will not exercise the summary jurisdiction except in a case beyond reasonable doubt. The power to commit for contempt will not also be used for the vindication of a Judge as a person but only with a view to protect the interests of the public for whose benefit and for the protection of whose rights and liberties the courts exist and function. Another factor which a High Court will take into consideration, in exercising its contempt jurisdiction, is to ascertain whether the Contempt is merely technical, slight or trifling in character. If it is so the Court will be satisfied with an expression of genuine regret and will not proceed to inflict pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal and that the contemnor knew of all the facts which made it a breach of the order. It is not necessary to prove that he appreciated that it did breach the order. [ St. Helen s Ltd. v. Transport General Workers Union [1972] 3 All ER 101; Adam Phones Ltd. v. Goldschmidt [1999] 4 All ER 486]. 49. The Court exercising contempt jurisdiction cannot take upon itself the task of deciding the original proceedings in a manner not dealt with by the court passing the judgment or order. Right or wrong, the order has to be obeyed. Flouting an order of the Court would render the party liable for contempt. The Court cannot test the correctness or otherwise of the order or give additional directions or delete any direction. [ Director of Education, Uttaranchal v. Ved Prakash Joshi 2005 (6) SCC 98, Union of India v. Subedar Devassy PV 2006 (1) SCC 613, Prithawi Nath Ram v. State of Jharkhand 2004 (7) SCC 261]. 50. Proceedings under the Contempt of Courts Act are quasi-criminal and, as such, the standard of proof required is that of a criminal proceeding and the breach shall have to be established beyond all reasonable doubt. [ Chhotu Ram v. Urvashi Gulati 2001 (7) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de in complying with the provisions of sub-section (2A), the company and every officer of the company who is in default, shall be punishable with fine which may extend to five thousand rupees, and where repayment is not made within six months from the expiry of the eighth day, also with imprisonment for a term which may extend to one year. Under section 113(2), if default is made in complying with sub-section (1), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five hundred rupees for every day during which the default continues. Section 5 of the Companies Act defines the expression Officer who is in default and, among the categories mentioned therein, is the Managing Director, the Whole-Time Director, the Manager, the Secretary, etc. 53. It is in this context that this Court, in G. Vijayalakshmi s case ( supra ) observed that under section 5 of the Companies Act, criminal liability of ordinary directors would arise only in respect of a company which has no Managing Director or a Whole-Time Director or a Manager and where particular directors are not specified to be liable by the company and, since the secon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liberately. 57. The very same Form No. 32, placed before this Court, would show that the sixth respondent was reappointed in the General Meeting as a Director on 29-9-2003. While the sixth respondent, in her counter affidavit, would contend that she had resigned from the Company on 10-2-2004 and that her resignation was approved by the Board of Directors, no evidence has placed in support of such a plea. It is her case that she filed C.A. No. 99 of 2006 before the Company Law Board to delete her name from the array of respondents in C.P. No. 24 of 2004. Sri D. Srinivas, learned counsel for the sixth respondent, would submit that the application, in C.A. No. 99 of 2006, was made in March, 2006. The application made to the Company Law Board in March, 2006, several months after the status quo order dated 18-7-2005 was passed, is of no assistance to the sixth respondent. Her self-serving plea, in the absence of any evidence in support thereof, does not merit acceptance. What is, however, of relevance is that the Advocate Commissioner s report makes no mention of her presence at the site of the demolished structure, when he made his visit. Since the degree of proof required, to es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o thousand rupees, or with both. Under sub-section (3), notwithstanding anything contained in section 12, where a person is found guilty of civil contempt, the Court, if it considers that a fine will not meet the ends of justice and that a sentence of imprisonment is necessary shall, instead of sentencing him to simple imprisonment, direct that he be detained in civil prison for such period not exceeding six months as it may think fit. Under section 13( a ), notwithstanding anything contained in any law for the time being in force, no court shall impose a sentence for contempt, under the Contempt of Courts Act, unless it is satisfied that the contempt is of such a nature that it substantially interferes, or tends substantially to interfere, with the due course of justice. Under rule 31 of the Contempt of Courts Rules, 1980, where a person charged with contempt is adjudged guilty and is sentenced to suffer imprisonment, a warrant of commitment and detention shall be made out in Form IV. Rule 32(1) requires the Court to fix the subsistence allowance, in accordance with the status of the contemnor, when he is committed to civil prison. Under sub-rule (3), where the petitioner is a pri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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