Paragraph numbers below are the court’s original numbering, recovered from the source text.
16. 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 G 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.
17. Our attention was further drawn to a counter affidavit dated A 6.04.2004 filed by Respondent No. 2 wherein it was stated that he wa5 not a signatory to the original dealership agreement and was not involved in any of the day to day affairs of Mahalxmi Motors Ltd.
18. Our attention was also drawn to a counter affidavit dated B 16.2.2004, and fl,lrther affidavits dated 1.08.2004, 5.08.2005 and 4.10.2005 wherein, as noticed hereinbefore, Respondent No. 1 had tendered unconditional apology for his inability to raise the resources and furnish a bank guarantee to the tune of Rs. 763.22 lakhs .. Respondent No. 2 had also stated that he was forced to sell his personal flat at c Bangalore to meet his debts and obligations and he was ready and willing to relinquish all rights with the respect to the land in Secunderabad.
19. It was furthermore submitted that as the learned Arbitrator has passed an award only against the Company, the interlocutory order passed by this Court having merged with the final award, no contempt of this D Court has been committed.
20. The fact of the matter, as noticed hereinbefore, clearly goes to show that the alleged contemnors not only prevaricated their stand at different stages in different proceedings, they intended to prolong the E litigation one way or the other. They had accepted their liability at !east to the extent of 7.63 crores. They must have invested the said amount. The parties hereto accepted that the disputes and differences pending between them should be referred to an arbitrator. It was agreed to by the petitioner only on the representation made by the alleged contemnors F that they would furnish a bank guarantee provided an order is passed in that behalf by the learned Arbitrator.
21. The fact that the learned Arbitrator issued such a direction is not in dispute. The learned Arbitrator even otherwise had the jurisdiction G to pass interim order in tenns of Section 9 of the Act. Correctness or otherwise of the said order has not been questioned. Despite undertaking given before this Court, in the aforesaid matter, the alleged contemnors did not furnish any bank guarantee. Admittedly, their application for modification was also dismissed. Not only, they went back from the H l.111dertaking given before this Court, they also sold away the only property which was in their possession. The property situate at Secunderabad MARUTI UDYOG LIMITED v. MAHINDER C. MEHTA 94 7 [SINHA, J.] admittedly had been claimed by the State of Andhra Pradesh. The alleged A contemnors even did not disclose that the said property was an encumbered one. The same was disclosed only at a later stage.
22. If they were not in a position to furnish any bank guarantee or otherwise, they could have taken such an unequivocal stand before the B courts. They not only suppressed material facts, but also made a wrong representation that in the event the property at Secunderabad is sold, the price whereof is about 11 crores and, thus, from the sale proceeds the ·r dues of the debtors would be satisfied. Such a claim was evidently made, as would now appear, that an application for regularization was pending c 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 D not otherwise.
23. We, therefore, are of the opinion that the alleged contemnors have misled this Court and have committed gross contempt of this Court.
24. In Bank of Baroda v. Sadruddin Hasan Daya and Anr., [2004] E 1 SCC 360, 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 contemptuous statement. F However, the written submission made by the respondents before the Debts Recovery Tribunal, wherein they said that the Supreme Comt had no jurisdiction to pass the decree dated 28-7-1999 and the decree had no validity and is a nullity, has to be seen in the factual background of the case. It may be noted that the decree G -:J had been passed on the basis of consent terms. It is not the case of the respondents that any fraud was played upon them by any party when they entered into a settlement and signed the minutes of the decree. It appears that the respondents from the very inception had no intention of paying the amount, but they agreed H c for a settlement and consent terms only for the purpose of gaining time whereunder instalments were fixed. They adopted the same procedure in the suit instituted by Oman International Bank, SAOD, wherein they offered the same property to remain under attachment till the decree was satisfied. Placing the same property under attachment is bound to create problems for the decree- holders of either of the suits as no one wants to buy such property in court auction which may land him in further litigation. The respondents intentionally and deliberately adopted such a course of action so that further hurdles may come in the way of execution of the decree and therefore it is clearly a case of wilful breach of an undertaking given to the Court."
25. This Court in Babu Ram Gupta v. Sudhir Bhasin, [1980] 3 sec 47 held: "IO .. .Indeed, if we were to hold that non-compliance of a compromise decree or consent order amounts to contempt of court, the provisions of the Code of Civil Procedure relating to execution of decrees may not be resorted to at all. In fact, the reason why a breach of clear undertaking given to the court amounts to contempt of court is that the contemner by making a . false representation to the court obtains a benefit for himself and if he fails to honour the undertaking, he plays a serious fraud on the court itself and thereby obstructs the course of justice and brings into disrepute the judicial institution. The same cannot, however, ;i be said of a consent order or a compromise decree where the fraud, if any, is practisoo by the person concerned not on the court but on one of the parties. Thus, the offence committed by the person concerned is qua the party not qua the court, and, therefore, the 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 r before the Court by the contemner 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 i l' ).., MARUTI UDYOG LIMITED v. MAHINDER C. MEHTA [SINHA, J.] 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."
26. Mr. Divan, however, relied upon a decision of this Court in R.N Dey and Ors. V. Bhagyabati Pramanik and Ors., [2000] 4 sec 400 wherein it has been held: "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 court's dignity and majesty oflaw. Further, an aggrieved party has no right to insist that the court should exercise such jurisdiction as contempt is between a conternner and the court … " This Court in R.N Dey (supra) has categorically held that the contempt is a matter between the court and the conternnor. Unlike R.N Dey (supra), here in the respondents are not disputing their liability to pay the awarded amount. Therein no undertaking had been given.
27. In Rama Narang v. Ramesh Narang and Anr., [2006] 11 SCC 114 whereupon reliance has been placed by Mr. Divan, the question revolved round the alleged violation of certain clauses of the consent terms. In that case the consent order did not contain an undertaking. It, on that premise, opined: "24. All decrees and orders are executable under the Code of Civil Procedure. Consent decrees or orders are of course also executable. But merely because an order or decree is executable, would not take away the court's jurisdiction to deal with a matter under the Act provided the court is satisfied that the violation of the order or decree is such, that if proved, it would warrant punishment under Section 13 of the Act on the ground that the contempt substantially interferes or tends substantially to interfere with the due course of justice. The decisions relied upon by the respondents themselves hold so as we shall subsequently see." c -~V This Court in Rama Narang (supra), thus, clearly laid down the ·r proposition of law that when an undertaking has been recorded in accordance with law, a contempt proceeding would be maintainable.
28. We, therefore, keeping in view the peculiar facts and circumstances of this case and the conduct of the alleged conternnors, B are of the opinion that they have committed contempt of this Court. We are clearly of the opinion that it is eminently a fit case where jurisdiction ofthis Court under Article 129 of the Constitution ofindia as also the provisions of the Contempt of Courts Act, 1970 should be invoked.
29. However, the fact that the alleged contemnor No. 3 has resigned, being not in dispute, no action is being taken against him. So far as, the alleged contemnor No. I is concerned, we are of the opinion that he being the Managing Director of the Company, is liable to be punished. He is sentenced to undergo six months imprisonment. The alleged contemnor D No. 2 is also held guilty but as he was not the Managing Director, we are of the view that sentencing him three months imprisonment shall meet the ends of justice.
30. The contempt petition is allowed with the aforementioned directions. S.K.S. Contempt Petition allowed.