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TMI Blog2007 (10) TMI 394X X X X Extracts X X X X X X X X Extracts X X X X ..... ivan, T.K. Ganju, T. Sudhakar Reddy, S. Udaya Kumar Sagar, Ms. Bina Madhavan, Ms. Nupur, Pramod Dayal, A.K. Thakur and Nikunj Dayal for the Appellant. Gopal Subramanium, Manoj Saxena, Rajnish Kumar Singh, Rahul Shukla, T.V. George, Raghenth Bansant, Balaji and Asheesh Jain for the Respondent. JUDGMENT S.B. Sinha, J. This contempt petition arises in a somewhat peculiar circumstance. The petitioner herein is a manufacturer of cars. The alleged contemnors were directors of a company krown as M/s Mahalaxmi Motors Ltd. ("the company"). The company obtained various advances from customers on behalf of the petitioner. It however, did not pay the amount to the petitioner herein. The respondents admitted their liability to the petitioner to the extent of Rs. 7.63 crores in respect of supply of vehicles made by it as would appear from the minutes of the meeting dated April 5, 1997, which is as under : "7. MML also provided a letter No. 021/MML/97 dated April 5, 1997, wherein they admitted that there was a shortfall of Rs. 7.63 crores." The respondents also by an affidavit filed before the Andhra Pradesh High Court admitted their liability stating : "15. In this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e judge of the Delhi High Court rejected the said application. An appeal was preferred there against before a Division Bench which was also dismissed. A special leave petition was filed before this court. The petitioner herein agreed for reference of the disputes and difference between the parries to arbitration inter alia on the condition that the respondents shall deposit the amount or furnish security and/or comply with the directions of the learned arbitrator in case such directions and/or interim orders are passed by the learned arbitrator in the following terms : "4. All the parties to this S.L.P. shall by way of affidavit give undertaking to this hon'ble court to furnish the security and/or comply with the directions of learned arbitrator in case the learned arbitrator directs any of the parties to furnish the security and/or comply with any other interim order of the learned arbitrator." The proposed term of reference was also agreed to by the respondents. On the basis of the said representations, this court by an order dated September 6, 2006 referred the subject-matter of the dispute to the arbitration of justice A. M. Ahmadi, a former Chief Justice of this court. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rator by the respondents in their reply to application under section 17 of the Act filed by the petitioner and the same was reiterated in the affidavit affirmed by respondent No. 1 herein on July 7, 2004. On or about July 23, 2004, this court directed the alleged contemnors to file affidavit disclosing details of their present assets as also that of the company ; pursuant whereto, an affidavit was filed by respondent No. 1 stating : ( i )The property of M/s. Mahalaxmi Motors Ltd., at Secunderabad was encumbered. ( ii )He had a flat at D-1, Maya Apartments, admeasuring 800 sq. ft. at Ashoka Road, Bangalore, which was sold on February 3, 2004, for Rs. 8,00,700. ( iii )He was the manager of Hyderabad Auto Services and drawing a salary of Rs. 15,000 per month. The petitioner in its reply denied and disputed the said statement and contended that by reason of sale of property at Bangalore, a further contempt has been committed. It was urged that the affidavit of respondent No. 1 not only amounted to suppression of facts but also perjury. An award was made on April 10, 2005, as against the company for a sum of Rs. 7.63 crores with interest at the rate of 8 per cent, in favour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a writ petition bearing No. 15920 of 2004 is pending before the High Court of Andhra Pradesh in regard to the said property, we request the Chief Justice of the High Court to consider the desirability of placing the said writ petition before an appropriate Bench for its very early disposal." In furtherance of the said order, the Collector of the Hyderabad district held a meeting. In the said meeting, it transpired that the property in question, which is in dispute, belonged to the State of Andhra Pradesh and it claiming right, title and interest therein had initiated a proceeding against the respondents in respect thereof under the provisions of the Andhra Pradesh Land Grabbing (Prohibition) Act, 1982. The said proceeding was decided in favour of the State of Andhra Pradesh. The respondents filed a writ petition before the High Court there against being Writ Petition No. 15920 of 2004. The said writ petition having been dismissed, the appeal of the respondents and the company preferred there against was taken up for hearing along with this matter and by reason of a judgment and order of this date, we are disposing of the same also. The Collector filed a status report, inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the contemnors herein tendering unconditional apology. We would refer to only one of them filed by respondent No. 1. It was averred therein : "1. I unconditionally apologize to this hon'ble court with respect to the contempt which is the subject-matter of the contempt petition. I have highest respect for the judiciary and for the judges of this hon'ble court as well as the learned arbitrator. 2. I was unable to arrange for bank guarantee of Rs. 763.22 lakhs since the company was not in a position to mobilize resources. Moreover, I did not have personal resources to raise funds and to ensure that the bank guarantee is provided. 3. I request this hon'ble court to accept the unconditional apology tendered by me." A further reply has also been filed by the respondents stating : "6. That the district Collector has needlessly and unwarrantly traced earlier rejection of the regularization of proposals by the Government by cryptic and non-speaking order and consequent filing of Writ Petition No. 15 of 2000 by the respondent when the matter was remitted back to the Government to pass appropriate orders taking into account the recommendations of the district Collector and the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nship between M/s. Mahalaxmi Motors Ltd., and Hyundai Lakshmi Motors. The latter has no right, claim, title or interest over the workshop of M/s. Mahalaxmi Motors Ltd., and no financial transaction took place between these two companies. M/s. Mahalaxmi Motors Ltd., ever executed any GPA either registered or unregistered in favour of anybody much less in favour of R. Praveen Kumar, s/o. Vijaya Kumar Rao." Our attention was drawn to an affidavit affirmed by the alleged contemnor No. 3 wherein he stated that he was only an employee of the company and he was made director of the company only because of his experience in the sale and service of automobiles. He has allegedly tendered his resignation as director in 1997 and the company has accepted the same. Our attention was further drawn to a counter-affidavit dated April 6, 2004, filed by respondent No. 2 wherein it was stated that he was not a signatory to the original dealership agreement and was not involved in any of the day-to-day affairs of Mahalaxmi Motors Ltd. Our attention was also drawn to a counter-affidavit dated February 16, 2004, and further affidavits dated August 1, 2004, August 5, 2005, and October 4, 2005, where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt the property at Secunderabad is sold, the price whereof is about 11 crores and, thus, from the sale proceeds the dues of the debtors would be satisfied. Such a claim was evidently made, as would now appear, that an application for regularization was pending before the State. The alleged contemnors did not have any subsisting right, title and interest in or over the said property. They could not have made a proposal before this court for sale of the property only on the basis of a title which they could only derive on happening of a contingency, viz ., regularization thereof by the State. A proposal for sale of the property could be made only if the respondents had any subsisting title thereto and not otherwise. We, therefore, are of the opinion that the alleged contemnors have misled this court and have committed gross contempt of this court. In Bank of Baroda v. Sadruddin Hasan Daya [2004] 1 SCC 360 [[2004] 118 Comp. Cas. 241 (SC)], even in relation to a consent order, this court held : "10. A legal plea taken by a party that a decree passed by a court (including Supreme Court) is without jurisdiction and therefore a nullity, will not normally amount to a contemptuou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e very foundation for proceeding for contempt of court is completely absent in such cases. In these circumstances, we are satisfied that unless there is an express undertaking given in writing before the court by the contemnor or incorporated by the court in its order, there can be no question of wilful disobedience of such an undertaking. 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 undertaking does not arise." Mr. Divan, however, relied upon a decision of this court in R.N. Dey v. Bhagyabati Pramanik [2000] 4 SCC 400, wherein it has been held (page 404): "7. We may reiterate that the weapon of contempt is not to be used in abundance or misused. Normally, it cannot be used for execution of the decree or implementation of an order for which alternative remedy in law is provided for. Discretion given to the court is to be exercised for maintenance of the courts dignity and majesty of law. Further, an aggrieved party has no right to insist that the court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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