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TMI Blog2004 (7) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of Rs. 7 crores given in the order dated 26-5-1997 has not been compile with by the respondents. According to the petitioners a clear case of civil contempt under Section 2(b) of the Contempt of Courts Act, 1971 has been made out and accordingly, the respondents are liable to be punished under Section 12 of the said Act. 3.On the other hand, the respondents contend that the undertaking dated 21-2-1995 and the order dated 25-4-1997 stood modified by the subsequent order of this Court dated 26-5-1997 and, therefore, insofar as the question of breach of undertaking dated 21-2-1995 is concerned that issue is no longer alive and has been washed away by the subsequent order of this Court passed on 26-5-1997. Insofar as the compliance with the directions contained in the order dated 26-5-1997 is concerned the respondents contend that the direction to deposit the amount of Rs. 7 crores could not be complied with despite their best efforts as, in the meanwhile, the respondent No.1 company had become a sick company and proceedings in respect thereof under the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as "SICA" were pending before the Board for Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner was recorded before the Registrar of this Court, inter alia, to the following effect :- "I undertake that the banks shall remain bound by the terms of the bank guarantees marked A, B, C and D and that the petitioner shall get the bank guarantees renewed from time to time and shall keep the same alive during the pendency of the case as per Court's order". On the same date after recording statements of other persons the Registrar of this Court, inter alia, issued the following order:- "Having regard to their statements made on oath and documentary evidence produced by them I am satisfied that the bank guarantees marked 'A' to 'D' are in order. They are hereby accepted. The undertaking given by the petitioner is accepted. The petitioner shall get these bank guarantees renewed from time to time and they shall be kept alive during the pendency of these proceedings in accordance with the orders of the Hon'ble Court". Thereafter the bank guarantees were renewed. 4.3.The bank guarantee issued by the Punjab and Sind Bank for Rs. 7 crores was extended by letter dated 13-3-1996. As a result of this extension, the bank guarantee was to expire on 31-1-1997. The bank guaran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crores and to keep the same alive in terms of the order dated 26th August, 1994. The petitioner has not kept alive this bank guarantee of Rs. 7 crores. This court in fact is not concerned with the disputes, if any, between Punjab and Sind Bank on one hand and the petitioner on the other. We may notice that according to petitioner the bank is liable to deposit Rs. 7 crores under the extension letter dated 13th March, 1996. Prima facie, we have not accepted the said stand of the petitioner. Besides recovery of Rs. 7 crores, the petitioner could have been proceeded for breach of undertaking but having regard to the facts and circumstances of the case, at this stage, we refrain from so doing and instead we direct the petitioner to deposit within eight weeks Rs. 7 crores with Commissioner of Central Excise-II, Mumbai. The order dated 25th April, 1997 stands modified to the extent noticed hereinbefore. CMs are disposed of in the above terms. A copy of the order be given dasti to Counsel for the parties". (Underlining added) 4.6.The order dated 26-5-1997 makes it clear that the Court consciously refrained from proceeding against the respondents herein for the purported breach of under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overy of the said liability of Rs. 7 crores till the approval of the rehabilitation scheme by the BIFR. It was also indicated in the application that the respondent No. 1 shall make the payment if the said liability as per schedule of payment formed part of the scheme after its sanction from BIFR. 4.10. On 12-9-1997 the respondent No. 1's Civil Appeal Nos. 5134-5135/1997 and SLP (Civil) No. 14324/1997 [2000 (120) E.L.T. 47 (S.C.)] were dismissed by the Supreme Court. 4.11.Ultimately, the application which was pending before the BIFR was disposed of by an order dated 16-12-2002 sanctioning the rehabilitation scheme in respect of the respondent No.1. In CM 360/2003 filed in this contempt petition, the respondent No.1 has stated that it had made bona fide efforts to make the payment of Rs. 7 crores to the petitioner - departments and that it was unable to do so in time. It further stated that it was genuinely suffering from a cash crunch and was also disabled from liquied dating any asset or from doing anything except in the ordinary course of business for the reason that the company was a sick industrial company and its scheme for rehabilitation was pending before the BIFR. Alt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Shree Vallabh Glass Works Ltd., (1990) 2 SCC 440, the Supreme Court held that "arrears of taxes and the like due from sick industrial companies that satisfy the conditions set out in Section 22(1) of the Central Act cannot be recovered by coercive process unless the said Board gives its consent thereto". No such consent had been obtained to proceed against the respondent No. 1 in respect of which a scheme was pending consideration before the BIFR. As such also, it was contended that the delay in the payment of the said amount of Rs. 7 crores was not wilful but due to circumstances beyond the control of the respondents. 6.Against this, the learned Counsel for the petitioner contended that the decision of the Supreme Court in the case of Tata Davy (supra) was not applicable to the facts of the present case as the present case was one of breach of an undertaking given to the Court. I am unable to agree with this submission. First of all, as will be clear from the discussion below, the undertaking was washed away by the subsequent orders of this court. Secondly, the Tata Davy decision (supra) was only relied upon by the learned Counsel for the respondents to show the inability on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was wilful and intentional. The civil court while executing disagrees against the judgment-debtor is not concerned and bothered whether the disobedience to any judgment, or decree, was wilful. Once a decree has been passed it is the duty of the court to execute the decree whatever may be consequence thereof. But while examining the grievance of the person who has invoked the jurisdiction of the court to initiate the proceeding for contempt for disobedience of its order, before any such contemner is held guilty and punished, the court has to record a finding that such disobedience was wilful and intentional. If from the circumstances of a particular case, brought to the notice of the court, the court is satisfied that although there has been a disobedience but such disobedience is the result of some compelling circumstances under which it was not possible for the contemner to comply with the order, the court may not punish the alleged contemner". (underlining added) So, disobedience alone will not make the alleged contemner liable for contempt. The disobedience must be "wilful"; it must be intentional. And, a finding to this effect must be recorded. If there are extenuating circum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder may not be sufficient to amount to a "civil contempt" within the meaning of Section 2(b) of the Act of 1971 - the element of willingness is an indispensable requirement to bring home the charge within the meaning of the Act and lastly, in the event two interpretations are possible and the action of the alleged contemnor pertains to one such interpretation - the act or acts cannot be ascribed to be otherwise contumacious in nature. A doubt in the matter as regards the wilful nature of the conduct if raised, question of success in a contempt petition would not arise". Finally, I refer to the recent decision in Ashok Paper Kamgar Union v. Dharam Godha, (2003) 11 SCC 1. The Supreme Court reiterated the well settled principles as follows : "Section 2(b), Contempt of Courts Act defines 'civil contempt' and it means wilful disobedience to any judgment, decree, direction, order, writ or other process of a Court or wilful breach of undertaking given to a Court. 'Wilful' means an act or omission which is done voluntarily and intentionally and with the specific intent to do something the law forbids or with the specific intent to fail to do something the law requires to be done, that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has subsequently been paid by the respondents as indicated above. The issue is whether the delay in payment of the said amount of Rs. 7 crores was wilful and/or whether the respondent lacked bona fides? From the narration of the facts and circumstances, it does appear to me that the delay in the payment was not occasioned by any attitude on the part of the respondents displaying an affront to the orders of this Court but was the result of the circumstances under which they were placed and which were beyond their control. It is quite clear that the respondent No. 1 had been declared to be a sick company on 3-4-1997. It is also clear that on the same date, the BIFR had directed respondent No. 1 not to alienate any of its assets in terms of Section 22A of SICA. In these circumstances, it became extremely difficult, if not impossible, for the respondent No. 1 to pay up the amount of Rs. 7 crores. The scheme of rehabilitation which was under preparation was ultimately sanctioned by the BIFR on 16-12-2002. It is to be noted that the respondent No. 1 had started making payment towards the said sum of Rs. 7 crores even before the said order dated 16-12-2002. In any event, by March, 2003 th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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