SUMAN CHADHA & Anr. v. CENTRAL BANK OF INDIA

1.5 In the instant case, the series of acts committed by the petitioners (i) in issuing post-dated cheques, which were dated beyond the date within which they had agreed to make payment; (ii) in allowing those cheques to be dishonoured; (iii) in not appearing before the Court on the first date of hearing with an excuse that was found to be false; (iv) in coming up with an explanation about their own debtors committing default; and (v) in getting exposed through the report of the SFIO, convinced the High Court to believe that the undertaking given by the petitioners on 08.04.2015 was not based upon good faith but intended to hoodwink the Court. Therefore, there is no fault with the High Court holding the petitioners guilty of contempt. [Para 27][384-D-F]

1.6 The submission that the failure to honour a commitment made while securing a conditional order of stay, cannot be treated as wilful disobedience, could have been accepted, but for the fact that the petitioners issued post-dated cheques purportedly in compliance of the undertaking, but allowed them to be dishonoured. The story cooked up for the dishonor of the cheques having been found to be false, it is not open to the petitioners to raise the submission that there was no wilful disobedience. [Para 28][384-G-H]

1.7 The submission based upon the language of Section 13(a) of the Act also does not appeal in the light of what had happened after 08.04.2015. The fact that the order dated 08.04.2015 also indicated certain other consequences to follow, may not take away the contempt jurisdiction of the Court. In appropriate cases where a party had acted bonafide while giving an undertaking, but could not honour the undertaking on account of reasons that are reasonable and genuine, the Court could certainly withhold its stick from being wielded. But in this case there are findings of fact to the effect that the petitioners did not act bonafide. Therefore, the submission is also unsustainable. [Para 29][385-A-C] A B C D E F G H SUMAN CHADHA & ANR. v. CENTRAL BANK OF INDIA 373

1.8 The submission that if the order dated 08.04.2015 is capable of being interpreted and understood in more than one way as to the consequences flowing out of the same, the party understanding and interpreting the said order in one particular manner must be allowed the benefit, is perfectly correct, as a pure and simple proposition of law. But in the instant case, the same cannot be permitted to be used, tocover up whatever the petitioners have done. On the submission was that the disobedience, if any, was not wilful and intentional, less said the better. [Para 30][385-C-D]

1.9 The finding of the High Court that the petitioners are guilty of contempt, does not call for interference under Article 136. It is not disputed that the mortgaged properties have now been sold and with extraordinary efforts, the Bank has also taken possession. The petitioners have also spent 11 days in custody out of the total period of imprisonment of three months imposed by the High Court. In such circumstances, it is sufficient punishment for the petitioners. The finding of the Single Judge and the Division Bench of the High Court that the petitioners are guilty of contempt of court is upheld, but the period of sentence is reduced from three months to the period of imprisonment already suffered/undergone by the petitioners. [Para 31, 33, 34][385-E; 385-F-H; 386-A] Narain Singh v. Lala Rajendra Lal & Ors. (1976) SCC Online All 425; Indian Overseas Bank v. Lalit Kumar Aggarwal & Anr. (2000) SCC Online Del 710; K.Saravankumar v. Sheela & Ors. 2008 (3) CTC 669; National Agricultural Cor. Marketing v. Reliance Polycrete Ltd. (2009) 163 DLT 441; Dinesh Kumar Gupta v. United India Insurance Company Limited (2010) 12 SCC 770 : [2010] 13 SCR 599; Niaz Mohammad v. State of Haryana (1994) 6 SCC 332 : [1994] 3 Suppl. SCR 720; Bank of Baroda v. Sadruddin Hasan Daya & Anr. (2004) 1 SCC 360 : [2003] 6 Suppl. SCR 764; Rama Narang v. Ramesh Narang & Another (2006) 11 SCC 114 : [2006] 3 SCR 1068; Rama Narang v. Ramesh Narang and Another (2009) 16 SCC 126 : [2007] 3 SCR 1099; Babu Ram Gupta v. Sudhir A B C D E F G H 374 A SUPREME COURT REPORTS [2021] 8 S.C.R. Bhasin 10, (1980) 3 SCC 47 : [1979] 3 SCR 685 – referred to. Case Law Reference (2008) (3) CTC 669 B (2009) 163 DLT 441 [2010] 13 SCR 599 [1994] 3 Suppl. SCR 720 [2003] 6 Suppl. SCR 764 C [2006] 3 SCR 1068 [2007] 3 SCR 1099 [1979] 3 SCR 685 referred to referred to referred to referred to referred to referred to referred to referred to Para 8 Para 8 Para 9 Para 9 Para 10 Para 10 Para 10 Para 16 CIVIL APPELLATE JURISDICTION: Special Leave Petition D (C) No. 28592 of 2018. From the Judgment and Order dated 27.09.2018 of the High Court of Delhi at New Delhi in Cont. App. (C) No. 3 of 2017. Santosh Kumar - I, Adv. for the Petitioners. Anuj Jain, Mukesh Verma, Anurag Agarwal, Yash Pal Dhingra, Advs. for the Respondent. The Judgment of the Court was delivered by V. RAMASUBRAMANIAN, J.

#1. Upon being found guilty of committing contempt of Court, the petitioners who are husband and wife respectively, were sentenced to simple imprisonment for three months along with a fine of Rs.2000/- each, by a learned Judge of the Delhi High Court. The said Order having been confirmed by the Division Bench of the High Court in an appeal under Section 19 of the Contempt of Courts Act, 1971 (‘Act’ for short), the petitioners have come up with the above Special Leave Petition.

#2. We have heard Mr. Santosh Kumar, learned counsel appearing for the petitioners and Mr. Anuj Jain, learned counsel appearing for the respondent-Bank. E F G H SUMAN CHADHA & ANR. v. CENTRAL BANK OF INDIA [V. RAMASUBRAMANIAN, J.] 375

#3. The background facts which led to the petitioners being held guilty of contempt of Court, are lucidly recorded in the Order dated 18.07.2017 of the learned Judge. They are as follows: (i) The petitioners were Directors of a company by name Parul Polymers Private Limited, which availed loan/credit facilities from the respondent Bank. The petitioners guaranteed the repayment of the loan and had also offered immovable properties as security. (ii) On 24th July, 2014, the loan of the respondents was categorized as a Non Performing Asset due to defaults in repayment. On 18th August, 2014, a notice under Section 13(2) of SARFAESI Act was issued for recovery of Rs. 28,82,25,942.24 plus interest. It was followed by a possession notice under section 13(4) in respect of two properties. (iii) Aggrieved by the same, the petitioners filed S.A. No. 367/ 2014 before the Debts Recovery Tribunal-III, New Delhi (‘DRT-III’ for short), under Section 17 of the SARFAESI Act. However, the DRT-III declined to grant any interim relief against the physical possession of the aforesaid properties. (iv) The petitioners filed an appeal but could not deposit Rs. 7 crores being 25% of the amount demanded in the notice under Section 13(2). Eventually the appeal was dismissed as withdrawn on 31.03.2015. (v) However, on 01st April, 2015, the petitioners secured a conditional order of stay from DRT-III, New Delhi in S.A. No. 367/ 2014 whereby the petitioners were required to deposit a sum of Rs. 5 crores within thirty days. The order also stipulated that Rs. 2 crores would be deposited by 03rd April, 2015. (vi) On 03rd April, 2015, the petitioners gave a letter to SHO, Police Station Katju Marg, Rohini, Delhi showing their intention to deposit the amount of Rs. 2 crores by way of four cheques. Therefore, the Receiver was unable to take possession of the properties. (vii) Thereafter, the petitioners challenged the conditional order of stay passed by DRT-III on 01st April, 2015 before the High Court by way of W.P. (C) No. 3406/2015 stating that the Bank and DRT-III were acting unfairly and unjustly in not accepting their cheques totalling to Rs. 2 crores. (viii) When the writ petition came for admission and interim orders on 8th April, 2015, the petitioners admitted liability and offered, by way A B C D E F G H 376 SUPREME COURT REPORTS [2021] 8 S.C.R. of a statement under oath, to deposit Rs. 7 crores, i.e. 25% of the notice amount in three instalments on or before 30th June, 2015. The Bank gave its assent and thereafter the Court ordered that the possession of the properties of the petitioners shall not be disturbed subject to the petitioners depositing Rs. 7 crores on or before 30th June, 2015, i.e. Rs. 2 crores on 30th April, 2015, Rs. 2.5 crores each on 31st May, 2015 & 30th June, 2015. (ix) On 29th April, 2015, the petitioners gave a letter along with four cheques for Rs. 50 lakhs each dated 06th May, 2015 purportedly in compliance of the order dated 08th April, 2015. (x) Accordingly, the possession proceedings for one property scheduled for 30th April, 2015 were deferred by the Bank. But on 08th May, 2015, all the four cheques bounced.

#4. Therefore, the respondent-Bank filed a petition under Sections 10 and 12 of the Contempt of Courts Act, 1971 for punishing the petitioners for wilful and deliberate breach of their undertaking dated 08.04.2015. Though the petitioners resisted the contempt petition on the ground that breach of an undertaking, made with a view to secure a conditional order of stay may not tantamount to contempt, especially when the consequences of breach of such undertaking are spelt out in the order of the Court itself, the learned Judge was not convinced. Therefore, by an Order dated 18.07.2017, the learned Judge of the High Court held the petitioners guilty of contempt and sentenced them simple imprisonment for three months with a fine of Rs. 2000 each. The Division Bench upheld the said order and the petitioners are before us.

#5. Before we proceed further we should record certain developments which have taken place after the order of single Judge dated 18.07.2017. They are as follows:- (i) The learned Judge himself granted suspension of the sentence of imprisonment till 26.07.2017, to enable the petitioners to move an intra-court appeal; (ii) The petitioners moved an intra-court appeal, which came up before the Division Bench on 25.07.2017. The Division Bench wanted the petitioners to comply at least with a part of their undertaking before the sentence could be suspended. But the petitioners could not. Therefore, the Division Bench did not grant suspension of sentence on 25.07.2017; A B C D E F G H SUMAN CHADHA & ANR. v. CENTRAL BANK OF INDIA [V. RAMASUBRAMANIAN, J.] 377 (iii) The petitioners filed a Special Leave Petition along with an application for exemption from surrendering. But the said application was dismissed by an order in Chamber dated 31.07.2017; (iv) On 03.08.2017, the Division Bench of the High Court dismissed the miscellaneous application seeking suspension of sentence; (v) Challenging the said order dated 03.08.2017, the petitioners moved a Special Leave Petition along with an application seeking exemption from surrendering. This application was dismissed vide order in Chamber dated 18.08.2017. (vi) On a subsequent application seeking extension of time, this Court granted three weeks’ time vide order dated 11.09.2017; (vii) Eventually, the petitioners surrendered and were taken into custody on 06.11.2017. After being in custody for 11 days, the petitioners were released on interim bail by Order dated 16.11.2017; (viii) The contempt appeal was thereafter dismissed by the Division Bench of the High Court by an Order dated 27.09.2018, with a direction to the petitioners to surrender within 10 days. However on 01.11.2018, this Court ordered notice in the present SLP and also granted stay of the impugned order.

#6. The reason why we have noted certain events post the order of the learned single Judge is to bring on record the fact that the petitioners have already served simple imprisonment for a period of 11 days, out of the penalty of simple imprisonment for three months. They have also paid the fine.

#7. The main grounds of attack of the petitioners to the impugned order, as articulated by Mr. Santosh Kumar, learned counsel for the petitioners, are: (i) that the failure of a party to comply with an undertaking, on the basis of which a conditional order of stay was granted, cannot be treated as a wilful disobedience warranting the invocation of the contempt jurisdiction; (ii) that the failure of the petitioners to honour the undertaking cannot be taken to substantially interfere with the due course of justice and, hence, the case would fall under Section 13(a) of the Act; (iii) that when an order indicates the consequences of the failure of a party to comply with a condition or honour the undertaking, the invocation of the contempt jurisdiction may not be appropriate; and (iv) that in any case if the defaulting party has relied upon an interpretation of the order that the consequences of failure A B C D E F G H 378 SUPREME COURT REPORTS [2021] 8 S.C.R. A B C D E F G H are already inbuilt in the order, such an understanding of the order is to be treated as reasonable and rational and he cannot be held guilty of contempt.

#8. In support of his first contention, the learned counsel for the petitioners, relies upon the decisions of a few High Courts. They are: (a) Narain Singh vs. Lala Rajendra Lal & Ors.1; (b) Indian Overseas Bank vs. Lalit Kumar Aggarwal & Anr.2; (c) K. Saravankumar vs. Sheela & Ors.3; and (d) National Agricultural Cor. Marketing vs. Reliance Polycrete Ltd.4.

#9. In support of his third contention, the learned counsel relies upon the decision of this Court in Dinesh Kumar Gupta vs. United India Insurance Company Limited5. In addition, the learned counsel also submitted that in the light of the decision of this Court in Niaz Mohammad vs. State of Haryana6, the disobedience should be wilful and intentional, to tantamount to contempt.

#10. In response to the aforesaid, Shri Anuj Jain, learned counsel for the respondent submitted that the petitioners had several opportunities to honour their commitments, but they repeatedly adopted dilatory tactics. The learned counsel took us through various orders passed by the High Court and the orders passed in various proceedings before other forums including the DRT and the Chief Metropolitan Magistrate and sought to impress upon us that the conduct of the petitioners throughout, has been one of deceit and that such persons do not deserve any leniency. Inviting our attention to the decisions in (i) Bank of Baroda vs. Sadruddin Hasan Daya & Anr7.; (ii) Rama Narang vs. Ramesh Narang & Another8 and (iii) Rama Narang(5) vs. Ramesh Narang and Another9, the learned counsel contended that the availability of other modes of enforcement need not deter the Court from invoking its contempt jurisdiction and that the deliberate failure to comply with a solemn undertaking given to a Court has always been frowned upon by Courts.