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TMI Blog2016 (2) TMI 536X X X X Extracts X X X X X X X X Extracts X X X X ..... rpose is not to “execute” any order, for which purpose the aggrieved party shall have to take recourse to other proceedings known to law. - one cannot use contempt jurisdiction for enforcement of money decrees. The conduct of Respondent no.3 and Respondent no.4 actually makes a mockery of the judicial process. Their conduct extends beyond the parties to the action and affects the interest of the public in the administration of justice. Their conduct is specifically intended to impede and prejudice the administration of justice. Judiciary is the bed rock and hand maid of orderly life and civilized society. If the people could lose faith in justice imparted by this court or disobey orders of this court, woe to be to orderly life. The fragment of civilized society would get broken up and crumble down. Respondent nos.3 and 4 are held to be guilty of contempt of court for willful disobedience of the directions given by the court It should be remembered that when a party in whose favour an order has been made approaches the court to punish the disobedience of its order, he does not use those proceedings to get the order executed but merely brings to the notice of the court the objectiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formal notice or contempt petition was not served personally on the respondent. I was told such a defence will not be taken. 5 The angle of attack of the petitioner was primarily directed against respondent no.3. 6 The stand of the respondent nos.1 to 3 are in 5 parts, as under :- A(i) - Interim Order dated 21st October, 2013 has not been continued in the final Order dated 12th / 20th August, 2014; A(ii) - It is well settled that once a final order is passed, the Interim Order merges into the final Order and the Interim Order (including all directions thereunder) automatically cease to operate; A(iii) - Contempt Petition for an interim order is not maintainable once the interim order has ceased to exist / have any force in law; A(iv) - Ratio in Bagasarwalla has no application to the facts of the present case. It applies to a case where contempt petition was filed when, "order is in force" had been breached; A(v) - The Petitioners contention that Order dated 21st October, 2013 did not merge into the final Order dated 12th / 20th August, 2014 is contrary to settled law, as well as plain language of orders dated 12th / 20thAugust 2014; B(i) - Direction in paragraph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther to the proceedings which led to the Order dated 21st October, 2013 being passed or to the present proceedings ; (vi) The petitioner has failed to make out any case for holding Respondent No.4 responsible for any purported non-compliance by SPCPL. 8A Section 2(b) of the Contempt of courts Act defines civil contempt which means willful disobedience to any judgment, decree, Direction, order, writ or other process of a Court or willful breach of undertaking given to a Court. Neglect to do the act required to be done under the order of the Court within the time specified in the order can be said to be a civil contempt. In Halsbury's Laws of England IV edn., Vol.9, it is stated thus : 52. Disobedience to process - It is civil contempt of Court to refuse or neglect to do an act required by a judgment or order of the Court within the time specified in the judgment or order, or to disobey a judgment or order requiring a person to abstain from doing a specified act, or to act in breach of an undertaking given to the Court by a person, on the faith of which the Court sanctions a particular course of action or inaction. In such a case, a judgment or order against an individual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears from the various orders and judgments passed in matters involving the inter se disputes. 10 Following the restructuring and transfer agreement, the directors of the petitioner held Indian companies became employees of the entities controlled and held by respondent no.3. These directors of the petitioner's companies were not giving any information to the petitioner though he controlled over 99% shares because those directors were employed by the entities controlled and held by respondent no.3. They refused to divulge any information. This, in short, was the cause for the petitioner to file petition before the Company Law Board alleging oppression and mismanagement. There were applications filed by respondent no.3 also before the CLB. The CLB appointed an independent observer-cum-facilitator on the board of directors of the companies controlled by the petitioner and the 4 appeals in which the said order dated 21.10.2013 was passed, viz., Company Appeal No.15 of 2013, Company Appeal No.16 of 2013, Company Appeal No.17 of 2013 and Company Appeal No.18 of 2013 (the said for appeals) were filed assailing the CLB's order to the extent that it appointed an observer-cum-facili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 crores which according to the applicant comes to respondent no.1 Vidyut, but has not been paid. During the course of hearing, the learned counsel for the respondent, on instructions, made a statement that the said amount of ₹ 67.5 crores is not utilised by the respondent but it has been kept in a Fixed Deposit and the interest thereof is being paid to respondent no.1. The matter was kept in the afternoon session for respondent to give details of the Fixed Deposit accounts. In the afternoon session when the matter was called out, the learned counsel for the applicant stated that there has been a mistake and the amount of ₹ 67.5 crores has not been kept aside in Fixed Deposit but in view of supplementary BTA was entered into on 18 March 2011 which modified the earlier BTA dated 30 December 2010, there was no responsibility to pay the amount of ₹ 67.5 crores to the respondent no.1. The supplementary agreement dated 18 March 2011 was sought to be produced by way of an affidavit. The learned counsel for the applicant vehemently opposed to take the document on record as the said document was never part of the proceedings before the Company Law Board and also not in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovide further safeguard to ensure that companies retain their substratum till the appeals are heard. 18. However, in view of the injunction granted, at this stage I am not inclined to appoint an administrator to take away the complete control from the respondent. I am however of the opinion that an independent observer is necessary to ensure the smooth functioning of the company till disposal of the appeals. Furthermore the amount of 12% on ₹ 67.5 crores under the agreement needs to be paid. The same shall be paid within three weeks from today. The observer will keep in mind the interest of the company. The matter was adjourned from time to time to enable the parties to work out modalities as regards functioning of the observer however, the parties have failed to arrive at a consenses at the modalities. 19. … 20. …. 21. The learned observer will in particular ensure as under :- (a) That the applicants will have full and complete access to all documents and records of the companies, with copies, as required ; (b) That the statutory liabilities of the respondent no.1 Companies are duly discharged and any proceedings in respect thereof are duly d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the applicant that it is the hostile directors who have signed an agreement which takes way the benefit which was supposed to accrue to respondent no.1................"; Especially when the respondents act in such an evasive manner during the court proceedings, as they have done". Therefore, the respondents projected themselves to the court as some one who had knowledge about and who controlled the payment to be made of ₹ 67.50 crores and the interest thereon. It is for that reason the court directed SPCPL to pay the amount of 12% on ₹ 67.5 crores under the agreement even though SPCPL was not a party. The respondents have represented to the court that they are in control of SPCPL. It is also necessary to record that SPCPL did not challenge this direction of the single Judge. 13 Coming to deal with defences of Respondent no.1 to Respondent No.3 : A (i) : Interim order dated 21.10.2013 has not been continued in the final order dated 12-20/8/2014 :- According to the respondents, in paragraph 139 of the final order dated 12-20/8/2014 it is clarified that except for the pending interim orders of 9.2.2012 and 7.11.2012 passed by the CLB, there will be no interim order as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er merges into that final order passed by the court. 15 The respondents also submitted that the contempt petition for an interim order is not maintainable once the interim order has merged with the final order [ point A (iii)] and the only remedy if at all the petitioner had, was to have filed the contempt petition when the interim order was in force or to sue for contempt of the final order if there was a breach of the final order and admittedly the respondents are not in breach of the order dated 12-20/8/2014. Therefore, this petition is not maintainable. In support of this submission, the respondents relied on the judgment of High Court of Chhattisgarh at Bilaspur in Contempt Case (C) No.02 of 2015 decided on 8.5.2015M/s.Mile Stone Soft. Tech. Pvt. Ltd. Vs. Nidhi Chhibber and the judgment of Supreme Court of Minnesota, USA delivered on June 30, 1944, 15 North Western Reporter, 2nd Series 127Richardson Vs. Richardson. 16 It is very difficult to accept the proposition of the respondents in as much as it would give rise to a very unacceptable situation. At interim stage the court would direct the party to deposit certain amounts in court. The party does not deposit the amount and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that was pending, subsequently a final judgment came to be passed by the High Court. It also relates to a writ petition. 18 As regards the judgment of the Apex court in Kunhayammed (supra) and the other judgments with regards to the doctrine of merger, the same have been considered by the Apex court in (2010) 11 SCC 153Commissioner of Central Excise, Delhi Vs. Pearl Drinks Limited. The Apex Court has held that the doctrine of merger is not a doctrine of rigid and universal application. Paragraphs-11, 12, 16 & 17 read as under :- "11. Appearing for the appellant Mr.Gourab Banerjee, learned Additional Solicitor General argued that the Tribunal had fallen in a palpable error in applying the doctrine of merger and dismissing the appeal filed by the Revenue. It was submitted that the doctrine of merger had no application to a case like the one at hand where the content and the subject-matter of challenge in the two proceedings, namely, the appeal filed by the assessee and that filed by the Revenue were totally different. Reliance in support was placed bythe learned counsel upon the decision of this court in Kunhayammed v. State of Kerala. Reliance was also placed upon the decision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t case the direction in the interim order to make payment of 12% interest on ₹ 65.7 crores to be made within a stipulated time, i.e., 3 weeks, cannot be said to have merged with the final order. By the said order the respondents were directed to pay the amount within 3 weeks. On the expiry of 3 weeks period, the breach has occurred. Once a breach has occurred or once a party has committed a breach of an order, the party cannot come back and say the offence is undone only because the final order has been passed in the matter. It will be useful to quote paragraphs-9 & 15 of a judgment of the Karnataka High Court in ILR 1994 KAR 2936 New Hope Granites V.s. Shri Lokanath, The Deputy Conservator of Forest. "9. Courts passing final or interim orders do some times specify the time frame within which the order is to be carried out. Where the Court indicates that it was conscientiously directed expedition or forthwith execution, that direction shall be implemented in letter and spirit. Conversely, where no such time limit is prescribed, it shall be obligatory on the part of the authority to implement the order with the least possible delay within a reasonable period of time. Since t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the judgment of the High Court of Chatisgarh in the matter of M/s.Milestone Soft. Tech Pvt. Ltd. (supra) to contend that the contempt petition could not be filed after the main proceeding was disposed of. With due respect, there is no reason given to support the court's finding in paragraph-21 which reads as under :- "21. Thus contempt proceedings for disobedience of order dated 23.09.2014 at this stage, cannot be initiated as there is no enforceable order for maintaining and initiating contempt petition against the respondent/contemnor." 22 The learned Judge with due respect has accepted that settled legal position is as under :- "19 ..........At this point, it is appropriate to note this Court is alive to the legal position that disobedience of the interim order passed by the Court is punishable even if interim order is subsequently vacated or relief is refused to the party in the main proceedings and dismissal cannot justify disobedience of such order by the other party [ Kindly see Prithawi Nath Ram v. State of Jharkhand and others]. But the facts of the present case are quite distinguishable as in the instant case no contempt petition praying for initiation of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question in this appeal is whether the High Court was right in holding that since it has been found ultimately that the Civil Court had no jurisdiction to entertain the suit, the interim orders made therein are non-est and hence Defendants 1 and 2 cannot be punished for their violation even if they had flouted and disobeyed the said interim orders when they were in force. We are of the considered opinion that the High Court was not right in saying so........" 15.…....... Would it be right to say that violation of and disobedience to the said orders of injunction is no punishable because it has been found later that the Civil Court had no jurisdiction to entertain the suit. Mr.Sorabjee suggests that saying so would be subversive of the Rule of Law and would seriously erode the majesty and dignity of the court. It would mean, suggests learned counsel, that it would be open to the defendants-respondents to decide for themselves whether the order was with or without jurisdiction and act upon that belief. This can never be, says the learned counsel. He further suggests that if any party thinks that an order made by the Civil Court is without jurisdiction or is contrary to law, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the interim/interlocutory orders while they were in force, i.e., for violations and disobedience committed prior to the decision of the High Court on the question of jurisdiction. Holding that by virtue of the said decision of the High Court [on the question of jurisdiction], on one can be punished thereafter for disobedience or violation of the interim orders committed prior to the said decision of the High Court, would indeed be subversive of rule of law and would seriously erode the dignity and the authority of the courts. We must repeat that this is not even a case where a suit was filed in wrong court knowingly or only with a view to snatch an interim order. As pointed out hereinabove, the suit was filed in the Civil Court bonafide. We are of the opinion that in such a case the defendants cannot escape the consequences of their disobedience and violation of the interim injunction committed by them prior to the High Court's decision on the question of jurisdiction. Therefore, the submissions of respondents cannot be accepted. 27 As regards A(iv) : Shri Sancheti submitted that the ratio in Tayabbhai Bagasarwalla (supra) has no application because it would apply in a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tent jurisdiction to obey it unless and until that order is discharged. The uncompromising nature of this obligation is shown by the fact that it extends even to cases where the person affected by an order believes it to be irregular or even void. Lord Cottenham, L.C. said in Chuck v. Cremer: (1) (1 Coop. Temp. Cott.342). A party, who knows of an order, whether null or valid, regular or irregular, cannot be permitted to disobey it....It would be most dangerous to hold that the suitors, or their solicitors, could themselves judge whether an order was null or valid-whether it was regular or irregular. that they should come to the court and not take upon themselves to determine such a question. That the course of a party knowing of an order, which was null or irregular, and who might be affected by it, was plain. He should apply to the court that it might be discharged. As long as it existed it must not be disobeyed.' Such being the nature of this obligation, two consequences will in general follow from its breach.The first is that anyone who disobeys an order of the court (and I am not now considering disobedience of orders relating merely to matters of procedure) is in contem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rders passed meanwhile) either non-est or without jurisdiction. Punishing the defendants for violation of the said order committed before the said decision (Vishanji Virji Mepani) does not amount, in any event, to enforcing them after the said decision. Only the orders are being passed now. The violations are those committed before the said decision. 29 Here is not a case where the respondents are being accused of contempt for violation committed after the appeal was finally disposed but for disobedience and violation of the said order of deposit committed before the judgment dated 12-20.8.2014. This court had power to pass interim order which it did. The court also has powers to enforce the orders. I cannot accept the submission of the counsel for the respondents that the order of 21.10.2013 could be enforced only till 12-20.8.2014 and not thereafter. It was open to the respondents to apply to the court for modifying the interim order dated 21.10.2013. It was also open to the respondents to apply to the court on 12-20.8.2014 that they be relieved of their responsibility under the interim order. In my view, the proposition that emanates from Tayabbhai (supra) is that the interim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d control. This could be seen from the paragraphs of the said order quoted above. Moreover, respondent no.3 through his Constituted Attorney respondent no.2, during the meeting held on 31.10.2013 before the court appointed observer Mr.Justice Suresh (retired) sought some additional time to make the payment which has been recorded in paragraph-4 of the minutes of the meeting. The same reads as under :- "4. One of the items in the order says that the Observer should ensure due payments of interest by SPCPL on the amount of ₹ 67.50 crores. However, Mr. Chaudhari for the Respondents states that according to him, the interest amount comes to about ₹ 20 crores and the Company has some difficulty in paying the amounts, immediately, and that they would be able to pay by installments. However, on seeing para 18 of the said order which says that the same shall be paid within 3 weeks from the date of the Order (i.e. 21.10.13), the Observer pointed out that he will not be able to give any direction as requested by the Respondents." This clearly shows that the respondents, particularly respondent no.3 and respondent no.2 had accepted two things. Firstly, the fact that the obliga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the main beneficiary of the trust that controlled SPCPL, he cannot be held to be guilty of any breach of any order. This also is a false stand as could be seen later. 37 It appears from the affidavit filed by respondent nos.1 to 4 in reply to the contempt petition and from the oral arguments made on their behalf is that :- (i) None of the four respondents have contended that they were not in a position to comply with the order ; (ii) None of the respondents have contended that they did not, at the relevant time, (when the order was passed and thereafter at the meetings before the court appointed Observer) believe that the order was not directed against them and/or that the order in question was intended to be an order against SPCPL ; (iii) No explanation was forthcoming from any of the respondents either for their failure to comply with the order or for their actions pursuant thereto including the fact that they requested the Court appointed observer for some additional time to comply with the order; (iv) No submissions whatsoever were made, and nor was any attempt at all made to explain the contradiction between the numerous statements made on oath with regard to resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... take over the management of the business. Accordingly the parties to the SSD (including RKM and RJM) chose to grant me very wideranging powers under the SSD to take all necessary actions in that behalf. I was given complete control over the SuperMax group companies, including the newly created company, SPCPL." (@ pg.4-5 of the witness statement) (c) Points of claim filed by Respondent No.3 on 15th June, 2012 in proceedings before the Queens Bench Commercial court, London in Case no.2012 Folio 463 : "6 Pursuant to the terms of the SSD, RM was given complete control over the running of the Business and, in particular SPCPL." (@ page 3 of the Points of Claim) (d) SLP No.24572-24579 of 2014 filed by Respondent No.3 to impugn the order dated 12th /20th August 2014, passed in inter alia Company Appeal Nos.15 to 18 of 2013 "6 GROUNDS FOR INTERIM RELIEF : A. Because the petitioner is in control of the newly formed Indian Company called Supreme Personal Care Pvt. Ltd. and that if the present order is allowed to continue the Respondent shall take control of the other Indian Companies and cancel all Agreements mandated to be entered into by the SSD and the business of the P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es but did so without notice or intimation to their owners, RKM, Transauto and the other family members. When these owners sought information, it was denied. Rakesh went so far as to threaten the directors should they make any disclosure. With orders from the CLB, these directors, all beholden to Rakesh, continued on the RKM Indian companies. This is the very "status quo" of which Mr. Madon now seeks a continuance." 41 This court in its order dated 12.8.2015 passed in Company Appeal (L) No.52 of 2015 has taken judicial notice of the fact that respondent no.3 controls both Supermax group. Paragraph-4 reads as under :- "4. In March 2011, pursuant to an investment made by Actis Consumer Grooming Products Ltd. ("Actis"), a private equity firm, in one of the holding companies of Supermax Personal Care Pvt. Ltd. ("Supermax"), the business of some of the RKM group companies was transferred to Supermax. The transfer was effected on 18th March 2011. Pursuant to this transfer, Rao and Goyal, who were employees of RKM group, resigned from their existing employment and were absorbed by Supermax as employees or consultants. Rao and Goyal, however, continued to work as directors of Unique, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st incurred throughout by Rakesh in the fight between RKM and Rakesh is borne by SPCPL and shown by SPCPL in its accounts as legal expenses of SPCPL. This fact therefore clearly demonstrates that incorrect statements have been made by SPCPL in the Appeal, in the affidavits filed on behalf of SPCPL therein and in the Arbitration Petition relied upon by SPCPL in the Appeal, to give an incorrect impression to the Court that SPCPL has not approached the Court at the instance of Rakesh, after Rakesh failed to succeed in preventing the removal of Vyas and Chauhdhari as Directors of VMPL ; that SPCPL is not controlled by Rakesh (though Rakesh has himself admitted this fact in his SLP before the Hon'ble Supreme Court) ; that SPCPL is not concerned with the family disputes between Rakesh and RKM and had no alternative but to approach the Court only because, since December 2014 RKM/VMPL started inferring with the business of the Appellant; and that SPCPL is a professionally led and managed Company where Rakesh is not a member of the Board of Directors of the SPCPL and is also not concerned with the day to day affairs of SPCPL. 5.6 ….........Through these pliant Directors, Rakes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nance and assets of VMPL as per his wishes.......... Since Vyas and Chaudhari have during the interregnum throughout denied access to RKM qua the working and affairs of VMPL and have acted as per the directions of Rakesh who admittedly controlled SPCPL and allowed Rakesh to deal with the finances and assets of VMPL as per his wishes.............. All these happenings were only because Rakesh, who controlled SPCPL, also controlled Vyas and Chaudhari, who were employees/consultants of SPCPL and also the ex-directors of VMPL and through them acted completely against the interest of VMPL and RKM.......... Rakesh who admittedly controls SPCPL started prevailing upon Vyas and Chaudhari and through them was dealing with the finance and assets of VMPL as per his wishes..........." 22......... or is an act of SPCPL at the instance of Rakesh who admittedly controls SPCPL.".......... but Rakesh, who admittedly controlled SPCPL.........." 22.1 .......... In the SLP grounds, Rakesh categorically affirmed that he controlle SPCPL and stated that he was apprehensive that if the stay order was vacated and RKM was allowed to take control of the 5 Companies including VMPL, he would jeopardize a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legal proceedings and notwithstanding the findings contained in the orders referred to above, the message conveyed by respondent no.3, in his affidavit dated 21.8.2015 filed in response to the present Contempt Petition is to the contrary. This is a false denial by respondent no.3 and it also clearly amounts to an act of perjury. In fact, this stand has been taken before Hon'ble Mr. Justice S.J.Kathawalla and Justice Kathawalla has also not accepted these submissions. Infact Mr. Justice Kathawalla has made strong observations against respondent no.3 and SPCPL (judgment dated 30.11.2015). False denial by respondent no.3 amounts to an act of perjury on his part in view of his previous statements made on oath. The counsel for respondent Shri Sancheti submitted that the petitioner cannot rely on documents not annexed to the contempt petition or any other pleadings to support his submission as Contempt petition is quasi criminal in nature which requires standard of proof which is beyond reasonable doubt. This defence which is mentioned at point-(D) of paragraph 6 above, was raised because the petitioner had sought to rely on certain affidavits filed by respondent no.3 in the contemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame shall be paid within 3 weeks from the date of the Order (i.e., 21.10.13), the Observer pointed out that he will not be able to give any direction as requested by the Respondents. Mr.Chaudhari then hands over a letter addressed to the Observer stating that they intend to file a Special Leave Petition in the Supreme Court of India against this Order dated 21st October 2013. The said letter is taken on record." (emphasis supplied) 45 As could be seen from the order dated 9.12.2013, following which there was another meeting before the court appointed observer, it was never contended by respondent no.3 or any other respondents that no obligation was cast on them to comply with the order dated 21.10.2013. 46 In the circumstances, respondent no.3 has been in a position to ensure compliance of the direction contained in the said order dated 21.10.2013 (para 18) and I have no hesitation to conclude that he deliberately and willfully failed to comply with the order. 47 As regards respondent nos.1 and 2, the allegations against them is that they were directors of VMPL when the order of 21st October, 2013 was passed and in any case until 20th November, 2014 and hence were duty bou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erately did not take steps to recover the amount from SPCPL, can the court hold them guilty of willfully disobeying the order of 21st October, 2013? I am afraid not. It is, therefore, difficult for me to hold that respondent nos.1 and 2 are guilty of contempt. 51 Before I go on to discuss the conduct of Respondent no.4, there are other submissions of the respondents generally that requires consideration. Shri Sancheti, learned counsel also submitted that as the order of 21st October, 2013 directed SPCPL to make the payment, in the absence of SPCPL, no finding of breach of order (much less contempt) can be rendered. It was also submitted that the petitioners have failed to prove the contempt under provisions of Contempt of Courts Act, 1971 including section 12(4) and section 12(5). It was submitted that in a contempt petition a specific charge must be framed and the Contemnor must be given notice of that charge and if interpretation of the order is an issue, contempt petition is not maintainable. Shri Sancheti, counsel also submitted that admittedly SPCPL is not a party to the present contempt proceedings and as direction of payment of interest amount in the order dated 21st Octobe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als; and (b) "director", in relation to a firm, means a partner in the firm. 53 The counsel submitted that therefore, prosecution against the directors, officers, etc., of the company without arraying the company as an accused is not maintainable. The counsel further submitted that this statutory provision is based on the principle that (a) in the absence of the company, the court cannot render a finding that company has committed a breach (much less contempt) and (b) in the absence of a cogent finding of breach and consequential contempt by the company, the person in-charge, director, officer, etc., cannot be held criminally liable for such an offence. The counsel also submitted that section 12(4) would not be applicable to the present case because it only relates to an undertaking given to the court and it is not the case of anyone that any undertaking was given. The counsel further submitted that under section 12(5) where the contempt of court referred to therein has been committed by a company and it is proved that the contempt has been committed with the consent and connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the same as could be seen from the court appointed Observer's meeting minutes dated 31st October, 2013 and 3rd January, 2014. Before the affidavits in reply were filed it was not the case of the respondents that the directions were not to them. 56 I also find no ambiguity in the said order. There is no interpretation of the order also required. In any event the order dated 9th December, 2013 passed by the same judge who passed the order dated 21st October, 2013 lays to rest the so called ambiguity because he holds that the respondents were to comply with the same. Paragraphs 1 and 4 of the order dated 9th December, 2013 reads as under :- "1. On 21 October 2013 in Company application taken out in these appeals, detailed interim directions were issued, including appointment of an observer. 2. …..... 3. …..... 4.The order dated 21 October 2013 has given various directions which are to be implemented by the respondents more particularly directions given in paragraph No.21A, 21E and 21F. The respondents are duty bound to comply with the same. Upon a query from the Court as to who is in charge of the respondent Companies at present, it is informed that Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... November, 2015 passed by this court it has also been observed that it was SPCPL that was funding the litigation cost of respondent no.3 against the petitioner. Therefore, in my view, section 12(4) and section 12(5) of the said Act have no bearing in the facts of the present case. Therefore, none of the judgments relied upon by the counsel for the respondents in this regard have any application in the facts and circumstances of this case. 60 In any event in the matter of Matrix Cellular Services Pvt. Ltd. (supra) the court held that only the company was a party to the proceedings and none of the employees were party and hence the facts or factual situation is totally in variance with the present case and Anita Hada's case (supra) was rendered in the context of section 138 and 141 of the Negotiable Instrument Act. As regards Sharad Kumar Sanghi's case (supra) also it was principally directed against the company and not against the directors. What will be applicable to the present case is section 12(3) of the Contempt of Courts Act, 1971 which reads as under : 12. Punishment for contempt of court.- (1) ….... (2) ….... (3) Notwithstanding anything con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hey have not contended that they did not have it within their power and ability to comply with the order. The only stand throughout is that they are not liable to be punished for a breach or disobedience of the said order and it is legally impermissible to the court in its contempt jurisdiction to punish them for disobedience of the said order. 62 The other submission that was raised on behalf of the respondents, was, i.e., (E) that no contempt proceedings can be invoked and is not intended to be used for enforcement of money decree or directions/orders for payment of money :- The counsel for the respondents relied on three judgments of the Apex Court, i.e., (2009) 5 SCC 665 Food Corporation of India vs. Sukh Deo Prasad; (2000) 4 SCC 400 R.N. Dey and others vs. Bhagyabati Pramanik and others and 2012 (4) SCC 307 Kanwar Singh Saini vs. High Court of Delhi. The counsel submitted that if a person is directed to pay any amount, does not pay the amount, the remedy is to execute the decree and an action for contempt for disobedience or breach does not lie. The counsel submitted that no proceedings for execution of said order dated 21st October, 2013 has been filed by the petitioner and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... econd decree the respondent had intentionally and deliberately acted in breach of the undertaking given to the Court in the first consent decree. The Court approved the statement of the law by the Bombay High Court in Bajranglal Gangadhar Khemka & Anr. Vs. Kapurchand Ltd.(supra). Significantly, the Court also said: "The violation or breach of the undertaking which become part of the decree of the court certainly amounts to contempt of court, irrespective of the fact that it is open to the decree-holder to execute the decree." (Emphasis added) 30. This decision reinforces our view of the law. It does not in any way run contrary to our opinion as expressed earlier on the interpretation to be put on Section 2(b) of the Act. On the other hand the Court repelled the submission of the respondents that the petitioners remedy lay in executing the decree in the following words:- " The fact that the petitioner can execute the decree can have no bearing on the contempt committed by the respondents." 31. The decision in R.N. Dey and Anr Vs. Bhagyabati Pramanik & Ors 2000(4) SCC 400, also relied upon by the respondents, disposed of an appeal filed from an order d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the complainant therein may not receive any relief to his benefit. The discretion given to the court in its contempt jurisdiction is for the maintenance of the court's dignity and majesty of law. Paragraph 39 of the said judgment reads as under :- "39. Merely because the order is an executable order, it cannot be said that no contempt proceedings would lie against the defaulter in such cases nor it can be said that in case of monetary claim under a order or undertaking, the defaulter cannot be made to face contempt proceedings. The law laid down by the Apex Court and the decisions referred to above clearly reveal that the contempt proceedings are independent of the execution proceedings and are primarily made to ensure the compliance of the Court's order rather than giving a relief to the parties and, therefore, mere availability of the execution proceedings cannot be construed as bar for contempt proceedings as the remedies are not alternative remedies and they can be invoked simultaneously. The purpose behind the execution proceedings is solely to enable the decree holder to enjoy the fruits of the decree in his favour while the contempt proceedings are primarily t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own to law, an application for contempt of Court for noncompliance of that order is not maintainable, has no merit. There is no warrant for saying that where an order, the disobedience of which is complied of, can be executed, the jurisdiction of the Court to initiate proceedings under the Contempt of Courts Act, 1971, and to punish the offender, if proved guilty, under S.12 of the said Act, is in any way affected. As a matter of fact, a perusal of S.22 of the 1971, "shall be in addition to, and not in derogation of the provisions of any other law." The section, unmistakably declares that its provisions are to be taken in addition to and not in derogation of the other laws. In view of this express inhibition in absolute terms against the provisions of the 1971 Act being considered in derogation of any other law, the argument that since the order, disobedience of which is complained of, could have been got executed through a procedure otherwise known to law, recourse to contempt proceedings could not be had falls flat. The object of proceedings under the Contempt of Courts Act, 1971, is to punish a party guilty of the disobedience as contemplated by S.2(b) of the said Act. The purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o operate at the time when the petition was filed; (iv) The fact that the Order dated 21st October, 2013 did not contain any direction against Respondent No. 4 is also clear from the Order dated 9th December, 2013 which holds Respondent Nos. 1 and 2 liable for non-compliance of the directions contained in the Order dated 21st October, 2013; (v) SPCPL is not a party either to the proceedings which led to the Order dated 21st October, 2013 being passed or to the present proceedings; (vi) The Petitioner has failed to make out any case for holding Respondent No. 4 responsible for any purported non-compliance by SPCPL. 72 As regards the defences in sub paragraphs (i),(iii),(iv) and (v) of paragraph 71 above, Respondent no.1 to 3 have also raised similar defences and those have already been dealt with above while dealing with respondent nos.1 to 3. The same applies to Respondent no.4 as well. So we need not re-enter that arena. 73 As regards point (ii) and (vi) in paragraph 71 above that the direction, if any, was to the Learned Observer to ensure that appropriate steps for recovery of money was taken is absolutely unintelligible. In any event that cannot absolve the respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... second part that the order had ceased to operate, I have already concluded that it did not cease to operate. Moreover under Article 215 of the Constitution of India every high court shall be a court of record and shall have the powers of such a court including the power to punish for contempt of itself. 76 Therefore, as the direction was against the respondents to the company application which included respondent no.4, the respondent no.4 having not even made an attempt to explain what steps he took to comply with the directions of the court as contained in the said order dated 21st October, 2013, the Respondent no.4 certainly is guilty of willfully disobeying the orders of this court. The conduct of Respondent no.3 and Respondent no.4 actually makes a mockery of the judicial process. Their conduct extends beyond the parties to the action and affects the interest of the public in the administration of justice. Their conduct is specifically intended to impede and prejudice the administration of justice. Judiciary is the bed rock and hand maid of orderly life and civilized society. If the people could lose faith in justice imparted by this court or disobey orders of this court, woe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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