w w w . L a w y e r S e r v i c e s . i n



The Federal Agency for State Property Management of the Russian Federation (ROSIMUSHCESTVO) v/s Saraf Agency Pvt. Ltd. & Others


Company & Directors' Information:- S. M. MANAGEMENT PRIVATE LIMITED [Active] CIN = U74140AS2005PTC007642

Company & Directors' Information:- C & K MANAGEMENT LIMITED [Active] CIN = U91990TG2000PLC033293

Company & Directors' Information:- J M PROPERTY MANAGEMENT PRIVATE LIMITED. [Active] CIN = U70101MH2006PTC166436

Company & Directors' Information:- SARAF CORPORATION INDIA PRIVATE LIMITED [Active] CIN = U55100MH2006PTC159103

Company & Directors' Information:- P C M PROPERTY MANAGEMENT PRIVATE LIMITED [Active] CIN = U92410TG1998PTC029895

Company & Directors' Information:- U T AGENCY PVT. LTD. [Active] CIN = U45203WB1991PTC052617

Company & Directors' Information:- SARAF COMPANY PVT LTD [Active] CIN = U67120WB1984PTC037464

Company & Directors' Information:- S M MANAGEMENT PVT LTD [Not available for efiling] CIN = U74140WB1992PTC002848

Company & Directors' Information:- S M MANAGEMENT PVT LTD [Not available for efiling] CIN = U74140WB1992PTC057260

Company & Directors' Information:- S K H AGENCY PRIVATE LIMITED [Active] CIN = U52390TG2013PTC085384

Company & Directors' Information:- B K SARAF PRIVATE LIMITED [Active] CIN = U36921UP1995PTC018759

Company & Directors' Information:- FEDERAL AGENCY PRIVATE LIMITED [Active] CIN = U51109WB2009PTC136020

Company & Directors' Information:- S P SARAF PRIVATE LIMITED [Active] CIN = U74900PN2013PTC147703

Company & Directors' Information:- PROPERTY CO PVT LTD [Active] CIN = U70101WB1943PTC011361

Company & Directors' Information:- O M AGENCY PRIVATE LIMITED [Active] CIN = U52321TN1961PTC004668

Company & Directors' Information:- S M AGENCY PVT LTD [Active] CIN = U51109WB1964PTC026129

Company & Directors' Information:- W P MANAGEMENT INDIA PRIVATE LIMITED [Active] CIN = U40100TG2016PTC112006

Company & Directors' Information:- S R MANAGEMENT PRIVATE LIMITED [Active] CIN = U74140MH2000PTC129839

Company & Directors' Information:- G R AGENCY LTD [Strike Off] CIN = U51109WB1951PLC019409

Company & Directors' Information:- S N Q S AGENCY PRIVATE LIMITED [Active] CIN = U52110TZ1999PTC008761

Company & Directors' Information:- L B PROPERTY (INDIA) PRIVATE LIMITED [Strike Off] CIN = U70109MH2005PTC153870

Company & Directors' Information:- Y H MANAGEMENT INDIA PRIVATE LIMITED [Strike Off] CIN = U93030MH2012PTC238901

Company & Directors' Information:- A & N AGENCY PRIVATE LIMITED [Under Process of Striking Off] CIN = U51909TN2003PTC052088

Company & Directors' Information:- A E AGENCY PRIVATE LIMITED [Active] CIN = U65993TN2000PTC044931

Company & Directors' Information:- S R W AGENCY PRIVATE LIMITED [Active] CIN = U52190WB2011PTC160006

Company & Directors' Information:- V M G MANAGEMENT PRIVATE LIMITED [Strike Off] CIN = U74140WB2011PTC160061

Company & Directors' Information:- K L AGENCY PRIVATE LIMITED [Strike Off] CIN = U74899DL1992PTC050493

Company & Directors' Information:- S B T AGENCY PVT LTD [Strike Off] CIN = U51103WB1965PTC026347

Company & Directors' Information:- M B MANAGEMENT PVT LTD [Strike Off] CIN = U99999MH1981PTC025914

Company & Directors' Information:- SARAF MANAGEMENT PRIVATE LIMITED [Active] CIN = U51909WB2010PTC153207

Company & Directors' Information:- S B M AGENCY PRIVATE LIMITED [Active] CIN = U51504TN2004PTC052953

Company & Directors' Information:- G. C. PROPERTY PRIVATE LIMITED [Active] CIN = U70103MH2007PTC173581

Company & Directors' Information:- W P MANAGEMENT INDIA PRIVATE LIMITED [Active] CIN = U45201TG2016PTC112006

Company & Directors' Information:- M P S AGENCY PVT LTD [Active] CIN = U51109WB1998PTC088149

Company & Directors' Information:- I & J MANAGEMENT PRIVATE LIMITED [Active] CIN = U93000DL2016PTC292375

Company & Directors' Information:- A. G. AGENCY PRIVATE LIMITED [Strike Off] CIN = U51109DL2008PTC186212

Company & Directors' Information:- H AND S MANAGEMENT PRIVATE LIMITED [Active] CIN = U74140KL2005PTC018253

Company & Directors' Information:- S N AGENCY PVT LTD [Strike Off] CIN = U66010WB1989PTC047981

Company & Directors' Information:- V AND S AGENCY PRIVATE LTD. [Strike Off] CIN = U74999DL1986PTC025148

Company & Directors' Information:- M A S MANAGEMENT PRIVATE LIMITED [Strike Off] CIN = U74999DL1987PTC029434

Company & Directors' Information:- L AND T (MANAGEMENT) LIMITED [Dissolved] CIN = U99999MH1946PTC004765

    CC. No. 117 of 2017 & A.P. No. 1013 of 2016

    Decided On, 19 May 2020

    At, High Court of Judicature at Calcutta

    By, THE HONOURABLE MR. JUSTICE SOUMEN SEN

    For the Petitioner: Ratnanko Banerjee, Sr. Advocate, Sakabda Roy, Advocate. For the Jishnu Saha , Sr. Advocate, Jishnu Chowdhury, Soumabho Ghosh, S.K. Singhi, Riti Basu, Chandrani Das, Advocates.



Judgment Text


This is a contempt application. This application is filed against the alleged contemnors for wilful, deliberate, intentional and contumacious disobedience and disregard of the order dated 29th November, 2016 passed by this Court in A.P. 1013 of 2016 filed under Section 9 of the Arbitration and Conciliation Act, 1996. The said order was an interim order.

By the interim order I had restrained the contemnor no. 1 namely, Saraf Agency Pvt. Ltd. from alienating, encumbering and/or creating any third party interest over its fixed assets and properties.

The contemnors no. 2 to 7 are the directors of contemnor no.1. It is alleged that the directors of the contemnor no.1 have in pursuance of the Board Meeting dated 6th February, 2017 taken a decision to act contrary and in violation and contumacious disregard to the interim order by the following acts:

(i) Executed a Term Loan Agreement against Hypothecation of Movables for a Term Loan of Rs.140.39 crores, on February 7, 2017 creating a charge in favour of M/s. Allahabad Bank, Kolkata.

(ii) Executed Agreement cut letter of Hypothecation/ Pledge for packing Credit Advances for a Packing Credit of Rs.55 crores on February 7, 2017 creating a charge in favour of M/s Allahabad Bank, Kolkata

(iii) Executed a Supplementary Letter confirming deposit of Tile Deeds through constructive delivery of properties situate at Chhatarpur, District Ganjam, Odisha on February 21, 2017 creating charge in favour of M/s Allahabad Bank, Kolkata.

(iv) Executed a Deed of Corporate Guarantee to secure a borrowing of Rs.70 crores by a Saraf group company namely Forum Projects Private Ltd. on June 14, 2017 and as per the Master Data of Contemnor No.1 available at the MCA website, contemnor no.1 has also created a floating charge worth Rs.70,00,00,000 (Rs.70 crores) in favour of Union Bank of India on June 14, 2017.

It is thus contended that the contemnors have wilfully breached the interim order by the aforesaid acts.

It is stated in the petition that contemnor no.1 has on 7th February, 2017, executed a Term Loan Agreement against Hypothecation of Movables (Term Loan Hypothecation Agreement) in favour of M/s Allahabad Bank, Industrial Finance Branch. The recital to the Term Loan Hypothecation Agreement states that contemnor no.1 has applied for and is being sanctioned Term Loan Facility of Rs.140.30 crore and contemnor no.1 has hypothecated and charged to the Bank:

(a) All machinery/plant/capital goods/assets purchased or to be purchased out of the loan as set out in Annexure A (1) to the Agreement and all existing and future machinery, plant, vehicles, capital goods, assets and those assets/ movable properties capable of passing by delivery as specified in Schedule A(2).

(b) Exclusive charge on 39 acres of land related to Titanium Slag Plant and movable and immovable assets relating to Titanium Slag Plant on pari passu basis and an exclusive on 57.30 acres of land and all movable and immovable assets related to captive plant on pari passu basis. Further the Bank shall have exclusive charge on Corporate Office Land and Building at 4,4/1 Red Cross Place Kolkata on pari passu basis.

(c) Exclusive charge on all the bank accounts into which all the operating cash flows, other incomes, and revenues/receivables would be deposited. Exclusive charge over a FDR of Rs.6 .32 crores has been created.

(d) Bank has a general line and set off on the other accounts of contemnor no.1 with the Bank.

As ascertained from the Term Loan Hypothecation Agreement the same has been signed for and on behalf of contemnor no.1 "pursuant to Board Resolution passed at the Board Meeting dated 6th February, 2017 of contemnor no.1. The Term Loan Hypothecation Agreement has been signed by and on behalf of contemnor no.1 by Mr. Ajeet Raj Mehta, Director, contemnor no.4".

Furthermore, on 7th February, 2017 an Agreement-cum-Letter of Hypothecation/ pledge for Packing Credit Advances has also been entered into by contemnor no.1 with Allahabad Bank for Rs.55 crores against inter alia charge over all the project assess including but not limited to the tangible movable machineries, plant, machinery fixture, fittings, other installations etc.

The Packing Credit Agreement too has been signed for and on behalf of contemnor no.1 pursuant to Board Resolution passed at the Board Meeting dated 6th February, 2017 of contemnor no.1 and by and on behalf of contemnor no. 1 by Mr. Ajeet Raj Mehta, Director, contemnor no.4.

The contemnor no.1 in particular has also executed a Supplemental Letter confirming deposit of Title Deeds through constructive delivery of properties situate at Chatarpur, District Ganjam, Odisha on 21st February, 2017 for grant of Rs.195.39 crores of Credit Facilities in 2017 by the Bank to contemnor no.1. The Equitable mortgage confirmation records that in addition to the mortgage created by way of deposit of title deed on 6th June, 2014 for Term Loan Facility in the sum of Rs.234.21 crores, Bank has granted the aforesaid Term Loan and Packing Credit Facility to the tune of Rs.195.39 crores and that consequent to the restructuring of credit facilities and for the purpose of having the restructuring of limits covered, the security of mortgage over land described in Schedule B and the title deeds mentioned in Schedule A deposited with an intention to create mortgage security, is being extended/shall apply/cover/ be available to cover the enhanced/ reviewed aggregate limit of Rs.195.39 crores inclusive of interest.

The contemnor no.1 filed Form CHG I for registration of the charges created with respect to the facilities granted in 2017 with the Registrar of Companies. By way of certificate dated 24th March, 2017 the charge created in favour of the Bank has been recorded and the Registration of Charge Certificate has been issued by the Registrar of Companies.

Pertinently the contemnor no.1 has stood corporate guarantor for a group company namely Forum Projects Private Ltd. on 14th June, 2017 and as per the Master Data of contemnor no.1 available at the MCA website, contemnor no.1 has also created a floating charge worth Rs.70 crores in favour of Union Bank of India on 14th June, 2017.

The said Deed of Guarantee inter alia provides that "in the event of any default on the part of the Borrower to repay the Loan together with interest, the Guarantor shall, upon demand, forthwith pay without demur all amounts remaining unpaid under the Rupee Loan Agreement and the Borrower's liability is notwithstanding any variation alteration or modification of the terms of lending between the borrower and the Lender".

It is further stated that the charges, including the floating charge, created in the year 2017 over the assets of contemnor no.1 to secure the facilities of 2017 as aforementioned, are in addition to the charges already created over the assets of contemnor no.1 for securing the facilities in the sum of Rs.234.21 crores granted to contemnor no.1 in the year 2014.

The fact that the charges created in 2017, including the floating charge, are in addition to the already existing charge of 2014 over the assets of contemnor no.1 is clearly discernible from the fact that Form CHG 1 of 2017 filed with the ROC clearly states that the same is for "creating of charge". Furthermore as per the Index of charges of contemnor no.1 available on the MCA website clearly shows that the charges created in the year 2017 are in addition to the charges created in the year 2014.

Thus despite the Interim Order being clear and unequivocal and subsisting and binding contemnor no.1 and its directors and person in control of its affairs have wilfully disobeyed the same and created a charge/ extended charge over the immovable / fixed assets of contemnor no.1. All the Directors of contemnor no.1 present or not at the Board Meeting of 6th February, 2017 and arrayed as contemnors no. 2 to 7 have directly and/or if not present are deemed to have participated in and are bound by the decision taken on 6th February, 2017 to create charge over the assets of contemnor no.1 despite and inspite of the Interim Order and have participated in the contumacious wilful disobedience and deliberate defiance of the Interim Order.

Initially I did not issue any rule but called for affidavits, thereafter, being prima facie satisfied that the acts of contempt has been committed, rule was issued and pursuant to the rule the alleged contemnors appeared in person and filed their affidavits in answer to the Rule.

Mr. Ratnakno Banerjee, the learned Senior Counsel appearing on behalf of the petitioner has submitted that the term loan agreement dated 7th February, 2017 creating inter alia, and exclusive charge in favour of the Bank on 39 acres of land relating to the Titanium Slag Plant and movable and immovable assets relating to Titanium Slag Plant on pari passu basis and an exclusive on 57.30 acres of land and all movable and immovable assets related to captive plant on pari passu basis and exclusive charge on Corporate Office Land and Building etc. are all after the interim award was passed on 14th October, 2016 and the interim order passed in the application under Section 9 of the Arbitration and Conciliation Act, 1996 on 29th November, 2016 in order to defeat the award and rendered it nugatory.

Mr. Banerjee has referred to the letter of Hypothecation/pledge dated 7th February, 2017 for packing and credit advances with Allahabad Bank, Supplemental Letter of confirming deposit of Title Deeds dated 21st February, 2017 creating charge by way of equitable mortgage by depositing Title Deeds including a lease deed executed on 25th April 2016 are wilful and deliberate acts of violation of the order dated 29th November, 2016. It is submitted that the above charges created by the contemnor no.1 in February, 2017 to secure the term loan of Rs. 140 crores and packing credit in the sum of Rs.55 crores, are fresh /new charges created in wilful violation of the interim order and are not charges for a restructuring /step down of an existing loan of Rs.234 crores of vintage 2014 has attempted to be explained and put up as a defence by the contemnors.

Mr. Banerjee has referred to Form CHG 1 under Section 77,78 and 79 read with Section 384 of the Companies Act, 2013 and Rule 3(1) of the Companies (Registration of Charges) Rules 2014 for registration of creation of charges and has submitted that the said form is not for modification of charge. Mr. Banerjee, by referring to paragraphs 3(a), 7, 8, 11(a), (d) and 14(viii) of the said form CHG-1 has submitted that it is interesting to note that the contemnor no.1 although had the option of opting for modification of the charge in the same form but selected creation of charge instead which supports the contention of the petitioner that the charge created in 2017 was distinct and fresh. Moreover certificate of registration of charge dated 24th March, 2017 issued by the Ministry of Corporate Affairs with respect of registration of charges to secure the amount of INR 195 crores by way of which a unique and distinct registration number was allotted to the charge also supports the contention of the petitioner that it is a fresh charge.

Mr. Banerjee has drawn my attention to the status of the charges at different point of time.

By referring to page 145 of the petition it is submitted that the charge created in 1987 was closed, the charge created in 2008 was closed, the charge created in 2014 to secure borrowing of Rs.234 crores is open without there being any modification to the same note. This has further been closed only in 2018 but the revised MCA document is not on the record. Ergo at the time of creating charges to secure Rs.195 crores in February, 2017, the charge of Rs.234 was separate and distinct.

The charge credited in 2017 is shown as open. The index of charges would also show that the charge of Rs.234 crores dated 6th June, 2014 is separate and distinct. The charges created for Rs.195 crores dated 7th February, 2017 is also distinct from the charge created in 2014.

The learned Senior Counsel has referred to the supplemental letter of confirming deposit of title deeds dated 21st February, 2017 and has submitted that it creates a fresh charge and the very fact that it creates a mortgage inter alia over a property which is a subject matter of lease deed executed on 25.04.2016 substantiates the position that the equitable mortgage of 21st February, 2017 is a new charge and distinct from any previous charge and ergo is in violation of interim order. Apart from above it is submitted that the contemnor no.1 has also created a floating charge over its assets pursuant to executing a deed of corporate guarantee on 14th June, 2017 to secure a borrowing of INR 70 crores by Saraf Group Company namely Forum Project Pvt. Ltd. even when the interim order has been in force.

The deed reflects the financial position of contemnor as on 31st March, 2017 to INR 188.23 crores.

It has been argued that the floating charges over the assets of contemnor no.1 created by contemnor no.1 in June 2017 to secure the borrowing of Forum Projects, is a fresh / new charge, created in wilful violation of the interim order and the submission of contemnors that charge creation documents have been incorrectly filed does not hold any merit as even till date, the said alleged error has not been rectified and the floating charge over the assets of the contemnor no.1 pursuant to the corporate guarantee given by it in June 2017.

Mr. Banerjee has referred to Form CHG-1 at page 137 and the corporate guarantee relied upon by the contemnor no.1 as also various other documents in support of his submission. My attention is also drawn to the orders passed by the coordinate benches where it has been held that the contemnor no.1 had created various charges on all its assets and properties in favour of its bankers in defiance of subsisting injunction by order dated 29th November, 2016 passed in A.P. 1013 of 2016. Mr. Banerjee in this regard has also referred to the order dated 22nd February, 2017, 5th February, 2018 of coordinate benches and the order of the Division Bench dated 8th May, 2018 being an appeal preferred against the order dated 29th November, 2016.

Mr. Banerjee has been quite emphatic in his submission that these charges are over and above created in 2014 which has still shown in the MCA website as open. The charge of 2014 was for a sum of Rs.234 crores. The documentation for the 2014 borrowing would show that it was closed only in 2018 but the revised MCA document is not on record.

Per Contra, Mr. Jishnu Saha, learned Senior Counsel appearing on behalf of the alleged contemnors has submitted that the contemnors have given justification for the creation of the charges which are misinterpreted to be a creation of a fresh charge over the assets and properties of the company in violation of the order dated 29th November, 2016. Mr. Saha has submitted that it will appear from the said documents that the term loan agreement dated 7th February, 2017 is for term loan facility of Rs.140.39 crores which, inter alia, provides that the security for the same will be the exclusive charge on 39 acres of land relating to the Titanium Slag Plant and 57.30 acres of land relating to the captive power Plant at Chhatrapur in Ganjam District of Odisha. The agreement cum letter of hypothecation dated 7th February, 2017 is in respect of a packing credit advance not exceeding Rs.55 crores. The supplementary letter confirming the deposit of title deeds executed on 21st February 2017 is only a confirmation of deposit of title deeds which were deposited earlier in 2014 to secure loans and advances which the respondent no.1 had enjoyed from the Allahabad Bank since June, 2014. The said letter written by one Ajeet Raj Mehta records that "I had deposited with you on 06.06.2014 the title deeds relating to immovable property of the company situated at Chhatrapur in Ganjam District of Odisha with the intention to create an equitable mortgage by deposit of title deeds in favour of Allahabad Bank as securities for the amount due to the bank from Saraf Agency Private Limited." The said letter further records the current nature or facility extended to the respondent No. 1 to be Working Capital/PC(CC) - Rs. 55 crores and Term Loan - Rs. 140.39 crores, Total Rs. 195.39 crores. The letter records that deposit of the title deeds which was initially made to secure a term loan of Rs.234.21 crores would now "cover the enhanced/received aggregate limit of Rs.195.39 crores." It is as such clear that the execution of the said banking documents did not amount to alienation, encumbrance or creation of third party interest over the fixed assets and properties of the respondent No.1 as the 2017 documents were executed merely to continue the mortgage created earlier in June, 2014, to now secure the rundown balance in the credit facilities extended by the Allahabad Bank to the respondent No.1 Similarly, the corporate guarantee dated 14th June, 2017 referred to by the petitioner cannot and does not amount to alienation or encumbering of and/or creation of any third party interest over any fixed asset or property of the respondent No.1, and as such cannot amount to a violation of the order dated 29th November, 2016. It is submitted that reference has, however, been made to a charge document (CHG-I) to contend that the same amounted to a creation of a floating charge, which amounted to a violation of the order dated 29th November, 2016. It will appear from clause 7(b) of the said document that in the row providing for particulars of "Nature description and brief particulars of the instruments creating or modifying the charge", that the only entry is "Deed of corporate guarantee". Although the box next to floating charge has been crossed in row 8 of the form, it will appear from Row 12 of the form that there are no particulars mentioned against item no. 12(a) requiring mention of "Date of Creating Security interest by actual/constructive deposit of title deeds with bank/housing finance company". Against item no. 12(j) of the form requiring particulars of "Extent and operation of the charge it is made clear that "The company has not created charge on any specific assets, however, the floating charge so created to be fixed / crystalized only after the borrower fails to comply with the terms of sanction of the Member Banks. Reference is also made to a certificate of Registration of Charge which shows details of charged amount, date of creation, date of medication and status. Although at the time, the sanction limit of the respondent no.1 which stood at Rs.234,21,00,000/- on 6th June, 2014, stood reduced to Rs.195,39,00,000/- the status of both these charged amounts is shown as open. This is itself clearly indicates that the said document is not conclusive of the nature or extent of the charge created or subsisting. Although there is also mention of a floating charge against the sum of Rs.70 crores, it is interesting that there are no particulars of such floating charge provided in the document. In this context it may be noted that although against the figure of Rs.234,21,00,000/- the assets under charge are mentioned as "immovable property or any interest therein; book debts, floating charge; movable property (not being pledge)" and against the figure of Rs.195,39,00,000/- the assets under charge are similarly mentioned as "immovable property or any interest therein; book debts, floating charge; movable property (not being pledge)", there is no mention of any asset under charge against the figure of Rs.70 crores. This coupled with fact that the form clearly mentions that "the company has not created charge on any specific assets, and that floating charge will be fixed/crystalized only after the borrower fails to comply with the terms of sanction of the Member banks" shows that there is no present alienation, encumbrance or creation of any third party interest over any fixed asset or property of the respondent no.1.

Mr. Saha has drawn my attention to paragraph 9 of the Affidavit in opposition filed by the alleged contemnors where it has been stated that the form CHG 1 had been incorrectly filed. The said paragraph 9 has been dealt with by the petitioner in its affidavit in reply wherein it has, inter alia, been stated that "Arguendo if it is assumed that the same has been filed incorrectly as alleged then the contemnor no 2 is acceding to the fact that it has made incorrect statutory filings before the ROC, therefore, is in violation of the Companies Act, 2013, while also playing an active fraud on the process of this Hon'ble Court and the ROC.

It is submitted that the respondent No. 1 has disclosed documents in its affidavit which would clearly demonstrate that the charge of the immovable property in question was created in 2014, much before the order dated 29th November, 2016. This will appear from the Term Loan Agreement dated 6th June, 2014, the Letter of Hypothecation dated 6th June, 2014 and the Letter of Mortgage confirming the Deposit of Title Deeds dated 6th June, 2014. The said documents clearly show that the mortgage of the immovable property of the respondent No. 1 at Chhatrapur in the Ganjam District of Odisha was created on 6th June, 2014 to secure the term loan of Rs. 234.21 crores.

The documents of 2017 referred to and relied on by the petitioner have clearly been executed to renew the loan facility granted by the Allahabad Bank to the respondent No.1 and that too for the rundown balance of Rs.195.39 crores.

It will appear from the Board Resolution passed by the respondent No. 1 company at the time of execution of the banking documents in 2017 that it was only the reduced facility of Rs.195.39 crores that was sought to be secured by the same properties mortgaged in 2014. On 18th January, 2018 the Allahabad Bank has itself written a letter certifying that the existing Term Loan Facility of the respondent no.1 is the rundown balance of Rs.140.39 crores which has been secured by the equitable mortgage of the lands at Chhatrapur in Ganjam District, Odisha created on 6th June, 2014 There is in the circumstances mentioned hereinabove, no violation of the order dated 29th November, 2016. There is in any event clearly no wilful disobedience of the order which can give rise to civil contempt within the meaning of Section 2(b) of the Contempt of Courts Act, 1971.

The banking documents executed in 2017 were only documents of renewal of the undischarged mortgage of the immovable properties created in 2014 by deposit of title deeds. It is not as if the said mortgage would have been discharged if the respondent No. 1 had not executed the renewal documents, which it did at the behest of the bank, as required by the bank. The documents of renewal were executed by the respondent No.1 at the behest of the bank. It is reiterated that the mortgage created in 2014, was security in 2017 only for a rundown balance of the term loan of the respondent No.1 at Rs. 140.39 crores. It is as such evident that the contempt application has been filed relying on these banking documents executed by the respondent No. 1 in 2017 only with the object of vexing and harassing the respondents.

It is clear from the Form CHG-1 that the same does not in fact create any charge. There are no fixed assets identified and the document clearly mentions that the charge, which is in effect only the corporate guarantee as mentioned in CHG-1, would take effect only in the event of a default on the part of the borrower company. It has been stated by the respondent No.1 that CHG-1 mentioning a floating charge has been filed by mistake. The petitioner has in its reply accepted that the same might in fact be a mistake and has proceeded to allege that such mistake would, in any event, constitute a violation of the provisions of the Companies Act 2013. In the circumstances, the factum of creation of floating charge, if at all, become a matter of dispute. It is now well settled that in respect of disputed matters it cannot be stated that a party has acted wilfully in contempt of court. Reference in this regard has been made to the following decisions:

Gopal Chandra Biswas v. State of West Bengal & Ors.; AIR 1974 Cal 3.

Dilip Mitra & Anr. V. Swadesh Chandra Bhandra & Ors.; (2009) 17 SCC 645, (paragraph 8).

East Delhi Fruits & Vegetables Thok Vikreta Association & Ors. v. Mukhtiar Singh & Ors., (2005) SCC online Delhi 856 (paragraph 18).

Mr. Saha also stated that even if it is assumed that a floating charge has been created, the same could not have and has not resulted in contempt, wilful or otherwise, committed as a floating charge does not amount to alienation or encumbering of an asset or the creation of a third party interest over the same. It is now settled law that creation of floating charge does not amount to creation of right, title or interest in the property. In this regard reference was made to:

Yorkshine Woolcombers' Association Ltd., (1903) 2 Ch 284 affirmed in Illingworth v. Houldworth, (1904) AC 355 and Armagh Shoes Ltd. Re, 1984 BCLC 405 CH D;

Mr. Saha refers to Section 100 of the Transfer of Property Act, 1882 that defines a charge and includes within its ambit mortgage. It is argued that even if it is assumed that a floating charge has been created, such charge does not and cannot amount to a mortgage. As the same does not immediately create any right in favour of any third party, the creation of a floating charge cannot amount to violation of the order dated 26th November 2016. The learned Senior Counsel in this regard has referred to the following decisions:

i) National P. & U. Bank v. Charnley, (1924) 1 KB 431 at 449 and

ii) Dublin City Distillery Co. V. Doherty, 1914 AC 823.

Mr. Saha submitted that as will appear from the said decisions it is only when a floating charge crystallises into a fixed charge by an order of court that the same will prevent further alienation of the property concerned. Such an eventuality cannot arise in the instant case in view of the orders dated 26th November, 2016, 8th December 2016 and 22nd February 2017 whereby this Hon'ble court has restrained alienation of the fixed assets of the respondent no.1.

Neither the petitioner and nor the floating charge holder or a fixed charge holder would have any preferential right to recover dues directly from the concerned properties. The orders restraining alienation of fixed assets of the respondent no.1 have the same effect of preventing alienation, to facilitate recovery upon decree, in future. Therefore, the petitioner could not have and has not suffered any prejudice by reason of creation of floating charge, if at all created. Reference and in support of his submission has been made to in RE Bright-life Ltd., 1987 Ch. 200.

In view of the character of a floating charge, the same cannot in any event amount to a wilful or deliberate violation of the order dated 26th November, 2016 as extended thereafter.

In their affidavit, the respondents have in any event offered their unqualified apology to this Hon'ble Court in the event their acts have, even unintentionally, amounted to a violation of the order dated 29th November, 2016.

For the aforesaid reasons it is submitted that the contempt application being CC No. 117 of 2017 deserves to be and should be dismissed.

The jurisdiction of the court under Contempt of Courts Act, 1971 is a special jurisdiction conferred upon the court to punish the contemnor if it is found that the alleged contemnors have wilfully, intentionally and deliberately violated the order of which he has been charged with contempt. Before a contemnor is punished for acts of contempt it is the duty of the court to find out if the acts complained of is wilful and/or deliberate. Every act of omission or commission may not amount to contempt. It has to be a deliberate, wilful and intentional act. The court needs to find out if the acts complained of is a wilful and deliberate act to circumvent the order and is an attempt to nullify the efficacy of the order.

'Wilful' connotes purposefulness and clear intention to flout'. It connotes deliberate and conscious disregard of the order of court.

In Ashok Paper Kamgar Union v. Dharam Godha; [(2003) 11 SCC 1], the Court had an occasion to consider the concept of "wilful disobedience" of an order of the Court. It was stated that "wilful" means an act or omission which is done voluntarily 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 is to say, with bad purpose either to disobey or to disregard the law. It signifies the act done with evil intent or with a bad motive or purpose. It was observed that the act or omission has to be judged having regard to the facts and circumstances of each case."

In Kapildeo Prasad Sah & Ors. v. State of Bihar & ors; ((1999) 7 SCC 569) it was held that for holding a person to have committed contempt, it must be shown that there was wilful disobedience of the judgment or order of the court. But it was indicated that even negligence and carelessness may amount to contempt. It was further observed that issuance of notice for contempt of court and power to punish are having far- reaching consequences, and as such, they should be resorted to only when a clear case of wilful disobedience of the court's order is made out. A petitioner who complains (sic of a) breach of court's order must allege deliberate or contumacious disobedience of the court's order and if such allegation is proved, contempt can be said to have been made out, not otherwise. The Court noted that power to punish for contempt is intended to maintain effective legal system. It is exercised to prevent perversion of the course of justice.

In the celebrated decision of Attorney General v. Times Newspaper Ltd.1974 AC 273 Lord Diplock stated: (AC p.308 A) ... There is an element of public policy in punishing civil contempt, since the administration of justice would be undermined if the order of any court of law could be disregarded with impunity...

In Anil Ratan Sarkar v. Hirak Ghosh; [(2002) 4 SCC 21] this Court held that the Contempt of Courts Act has been introduced in the statute book for securing confidence of people in the administration of justice. If an order passed by a competent court is clear and unambiguous and not capable of more than one interpretation, disobedience or breach of such order would amount to contempt of court. There can be no laxity in such a situation because otherwise the court orders would become the subject of mockery. Misunderstanding or own understanding of the court's order would not be a permissible defence.

It was observed that power to punish a person for contempt is undoubtedly a powerful weapon in the hands of judiciary but that by itself operates as a string of caution and cannot be used unless the court is satisfied beyond doubt that the person has deliberately and intentionally violated the order of the court. The power under the Act must be exercised with utmost care and caution and sparingly in the larger interest of the society and for proper administration of justice-delivery system. Mere disobedience of an order is not enough to hold a person guilty of civil contempt. The element of willingness is an indispensable requirement to bring home the charge within the meaning of the Act.

In All Bengal Excise Licensees Assn. v. Raghabendra Singh reported at [(2007) 11 SCC 374] the Apex Court considered several cases and observed that wilful and deliberate act of violation of interim order passed by a competent court would amount to contempt of court.

The aforesaid decisions have been followed and principles laid down in those decisions have been reiterated in C. Elumalai vs. A.G.L. Irudayaraj reported at 2009 (4) SCC 213 In the instant case, there cannot any doubt that the alleged contemnors were enjoying credit facilities from the Allahabad Bank. The creation of charges for enjoying various credit facilities are all prior to 2016, more precisely before the order dated 29th November 2016.

In the affidavit in opposition the contemnor no.1 has stated that after the order dated 29th November, 2016 the credit facilities alleged to have been obtained by the said contemnor against further charge of its fixed assets and properties are, in fact, only a restructuring of the existing facilities that the said respondent no.1 was already enjoying from the Allahabad Bank. The contemnor no.1 has referred to a letter dated 18th January, 2018 issued by the Allahabad Bank to the respondent no.1 at the request of the respondent to put the matter in the correct perspective. The certificate reads:

"we hereby certify that the review of limit of M/s. Saraf Agencies Pvt. Ltd. vide letter dated 24.01.2017 is renewal of existing Term Loan facility at run down balance of Rs.140.39 Crore. Original sanction dated 30.01.2014 was for underwriting of Rs.234.21 Crore for setting up of 36,000 TPA Titanium slag plant and 15 MW coal based captive power plant with our holding position of Rs. 100.00 Crore (out of total limit of Rs.234.21 Crore).

Apart from other property collaterally mortgaged to us, equitable mortgage has been created on the entire project land of 259.94 acres (details annexed) at Chatrapur, Dist. Ganjam, Odhisa, on 06.06.2014, out of which, 39 acres was for titanium slag project and 57.30 acres was for proposed CPP project. Pari-passu charge may be created in favour of other lenders if the company comes up with new projects on balance land in future.

This certificate is issued on the request of M/s. Saraf agencies Pvt Ltd of 4/1 Red cross place, Kolkata 700001".

(Emphasis supplied)

The said certificate unusual in its contents shows that the original sanction was granted on 30th January, 2014 for underwriting of Rs.234.21 crores for setting up of 36000 TPA Titanium Slag plant and 15 MW coal based captive power plant with the Allahabad Banks holding position of Rs.100 crores out of total limit of Rs.234.21 crores. Furthermore, equitable mortgage was created on various properties mentioned in the said certificate on 6th June 2014. Thus it shows that on 18th January, 2018 the alleged contemnor no.1 was enjoying credit facilities of Rs.100 crores with a sanctioned outer limit of Rs.234.21 crores. However, on a review of the credit facilities the bank vide letter dated 24th January, 2017 renewed the existing Term Loan facility at a run down balance of Rs.140.39 crores. Thus the exposure of the respondent no.1 to the Allahabad Bank appears to have been reduced. However, surprisingly instead of proportionate release of securities for a reduced borrowing the securities not only remained the same but more assets were included towards security. This makes the certificate suspect and raises doubt about its authenticity. The creation of such additional security was clearly prohibited by the interim order.

The alleged contemnors have maintained its stand that the document CHG1 dated 14th June 2014 showing charge on assets has been incorrectly filed. After the first set of affidavits filed Rule has been issued primarily on the ground that the document at page 145 although have shown that the limits of the respondent no.1 had reduced from 234.21 to 195.39 crores but no satisfactory explanation was offered for creation of floating charge of Rs.70 crores. It appears to have been created subsequent to the bank's letter dated 24th January, 2017 for a fresh charge, I was not satisfied with the explanation offered towards execution of the deed of corporate guarantee dated 14th June, 2017 in favour of Union Bank of India in relation to the floating charge. I was prima facie satisfied with the submission made by Mr. Banerjee that it is a new facility with different terms. The contemnors have filed their respective affidavits in answer to the rule. The contemnors have denied creations of floating charge and claimed that the MCA portal showing such creation of charge is by mistake. It, however, could not be said to be an accidental or an involuntary act. Although it was open for the contemnor to rectify the MCA portal by deleting charge of 14th June, 2017 but no attempt has been made by the contemnors to rectify the said MCA.

The petitioner in the contempt application has filed an affidavit affirmed on 20th November, 2019 reiterating that the documents filed by the contemnors before the Registrar of Companies would show that the contemnors created fresh charge over the assets of the contemnor No.l in favour of the Allahabad Bank after the order and these documents are:-

(i) Form CHG-1 filed with the ROC for registering of 'creation' of the charges created by way of the aforesaid documents for a Loan of INR 195.39 crores and a floating charge of INR 70 crores.

(ii) Certificates of Registration of Charges issued by the Ministry of Corporate Affairs ("MCA") with respect to registration of charges to secure Loan of INR 195.39 crores and floating charge of INR 70 crores, allotting unique and distinct registration numbers to each charge.

(iii) Master Data of the Contemnor No.1 as available on the MCA Website where distinct charges appears to have been created in 2014 to secure loan of INR 234 crores, 2017 to secure loan of INR 195.39 crores and floating charge of INR 70 crores.

(iv) Index of Charges of Contemnor No.1 available on the MCA Website where once again the charge created in 2014 is independent and distinct from the charges created in 2017.

In the said affidavit the petitioner has disclosed a mortgage deed that recently had come to the knowledge of the petitioner. It is stated that the mortgage deed was executed by the sister concern of contemnor No. 1 namely Hind Ceramics Private Limited (hereinafter referred as Hind Ceramics) on February 21, 2017 by which mortgage without possession has been created in favour of Allahabad Bank by Hind Ceramics to secure the loan of INR 195.39 crores availed by the Contemnor No. 1 from the Allahabad Bank. The creation of the additional mortgage to secure the contemnor no.1 is unregistered and undeclared on the ROC Website. The market value of the property upon which the mortgage has been created is, as stated in the INR 222 Corers. It is thus, submitted that a bare perusal of the said mortgage would show that the contemnor No.1 applied to Allahabad Bank for grant of loan /credit facilities of INR 195.39 crores as contemnor no. 1 was in need of funds. The Allahabad Bank had agreed to grant loan/credit facilities to the extent of INR 140.39 crores in term loan amount of INR 55 crores in FBWC/Pre shipment account. It is contended that, even though contemnor No. 1 passed a Resolution dated February 06, 2017 resolving that additional mortgage by way of mortgage of immovable properties situated at 147, Nilgunge Road, Belghoria, Kolkata of Hind Ceramics Private Limited to an extent of INR 40 crore with the bank however, contemnor No. 1 has mischievously averred that there has been only a re-structuring of the earlier loan/credit facilities, whereas the deed of mortgage executed by Hind Ceramics clearly shows to the contrary and states mortgage has been created to secure fresh facilities of contemnor No.1 and that too not for INR 40 Crores but for INR 140.39 crores in term loan account and INR 55 crores in FBWC/Pre shipment account.

The petitioner disclosed the document creating mortgage which shows that the contemnor No. 4 executed the said deed of mortgage in favour of the Allahabad Bank. The nexus between the appellant and Hind Ceramics Private Limited is clearly established. The Court can always lift the corporate veil of Hind Ceramics to find out who are the real fraud stars. However, in the instant matter I am not to travel that far in absence of any order restraining Hind ceramics Private Limited or its directors from alienating or encumbering its interlocutory assets. What could have been a relief possibly available to the petitioner in the pending proceeding cannot form the basis in a contempt jurisdiction as the scrutiny of the Court in a contempt jurisdiction is limited to ascertain if the order has been wilfully and deliberately violated. In the affidavit in opposition to the said affidavit by one Sudhakar Ayalasomayajula claiming himself to be the authorised representative of the contemnor No. 4 Ajeetraj Mehta has stated that the security of the property on Belghoria was to ensure improvement of credit ratings and in this regard has disclosed a letter dated 13th July, 2017 issued by the respondent No. 1 along with extracts of the India Rating and Research Website. It is stateed that the credit rating has improved and the property of Hind Ceramics private Limited has been released from mortgage, as would appear from the deed of release dated 13th October, 2017 and a letter dated 15th October, 2017.

The Hon'ble Supreme Court in Advocate-General, State of Bihar v. M. P. Khair Industries; AIR 1980 SC 946 at 949 has discussed the nature of the contempt proceedings in the following words:

".....it may be necessary to punish as contempt, a course of conduct which abuses and makes a mockery of the judicial process and which thus extends its pernicious influence beyond the parties to the action and affects the interest of the public in the administration of justice. The public have an interest, an abiding and a real interest, and a vital stake in the effective and orderly administration of justice, because, unless justice is so administered, there is the peril of all rights and liberties perishing. The court has the duty of protecting the interest of the public in the due administration of justice and, so, it is entrusted with the power to commit for contempt of court, not in order to protect the dignity of the court against insult or injury as the expression 'contempt of court' may seem to suggest, but, to protect and to vindicate the right of the public that the administration of justice shall not be prevented, prejudiced, obstructed or interfered with. 'It is a mode of vindicating the majesty of law, in its active manifestation against obstruction and outrage'. Per Frankfurter J. in Offutt v. U.S (1954) 348 US 11.

'The law should not be seen to sit by limply, while those who defy it go free, and those who seek its protection lose hope.' Per Judge, Curtis-Raleigh quoted in Jennison v. Baker (1972) 1 All ER 997, 1006 (CA).' In Phonographic Performance Ltd. v. Amusement Caterers (Peckham) Ltd.; (1963) 3 All ER 493, 496 (Ch D) Cross J. said:

"As is pointed out in Halsbury's Laws of England, third edition, Volume 8, pages 20, 21, where there has been wilful disobedience to an order of the court and a measure of contumacy on the part of the defendants, then civil contempt, what is called contempt in procedure, 'bears a two-fold character, implying as between the parties to the proceedings merely a right to exercise and a liability to submit to a form of civil execution, but as between the party in default and the state, a penal or disciplinary jurisdiction to be exercised by the court in the public interest'."

Thus, it is clear that the law of contempt is conceived in the public interest. In the event the corporate veil is being blatantly used as a cloak to wilfully disobey the orders of the court - an improper purpose, lifting the corporate veil, in those circumstances, is imperative to punish improper conduct. Public interest requires that the corporate veil must be lifted to find out the person who disobeyed the order of the court.

The third parties may also be liable for contempt if he "knowing of an injunction, aids and abets the defendant in breaking it". (See. Seaward vs. Paterson, 1895-99 ALL ER Rep. 1127) Guilt of third person not bound by court order, but through his conduct committing contempt of court came up for consideration in Sita Ram v. Balbir; (2017) 2 SCC 456. It is stated that despite dual perceived character of such liability: (i) as aiding and abetting contempt by another, and (ii) as committing contempt himself, held, such conduct will amount to contempt by himself. Proceeding against a person for breach of court order where he is bound by that order is one thing and proceeding against a person who is not party to that court order but he is conducting himself so as to obstruct course of justice is different thing. In former case, court proceeds against violator for enforcing its order for benefit of person who got it. In latter case, court will not allow its process to be set at naught and treated with contempt. A third person can also be held liable for contempt of Court if he, knowing terms of order wilfully assists person bound by it to disobey that order.

In my order dated 29th November, 2016 I have not restrained Hind Ceramics or the respondent No. 2 to7 from alienating encumbering and a third party interest over its assets and properties. There is no indication in the order to rope in any of the sister concern of the respondent no. 1 as well as companies where the contemnor Nos. 2 to7 could have controlling block of shares. Nor my order put any restrain on any properties of the said contemnors as Hind Ceramics. It would not be proper to stretch this jurisdiction to nullify such transactions. Moreover from the affidavit filed on behalf of the contemnor No. 4 affirmed on 22nd January, 2020, it appears that this property has already been released by the Allahabad Bank on 15th September, 2017.

Even if I accept the submission of Mr. Saha that all the related documents after 29th November, 2016 are essentially for restructuring of the existing loan but I am unable to accept that no fresh charge has been crated particularly in view of the document at page 145 which clearly shows that a fresh charge was created on 14th June, 2017 for Rs. 70 crores. There is another interesting feature in this matter. While the loan was claimed to have been reduced to 195 crores, the floating charge of Rs.70 crores put together would exceed the original credit facilities that the contemnor no.1 was originally enjoying in 2014 namely 234.21 crores as the total exposure now if the said document is accepted to be correct would be little over 265 crores. The creation of floating charge or any charge after the order dated 21st November, 2016 has not been satisfactorily answered. The Deed of Corporate guarantee dated 14th June, 2017 to secure a borrowing of INR 70 crores is a clear and deliberate interference with the interim order. In fact the coordinate bench by order dated 5th February, 2018 has relied upon my order dated 29th November, 2016 to arrive at a conclusion that all those charges in favour of its bankers are in defiance of the order dated 29th November, 2016. The said order reads:

"Now, with regard to the merit of the prayer of the petitioner I find, that in this case from the documents disclosed by the petitioner in the application namely, the Term Loan Agreement dated February 07, 2017, the Packing Credit Agreement dated February 07, 2017, the Supplemental Letter of Confirmation dated February 21, 2017, the deed of corporate guarantee dated June 14, 2017 and the Master Data of the respondent no. 1 available at the website of the MCA and the copies of the relevant forms CHG-1 filed by the respondent no. 1 with the Registrar of Companies, it is evidently clear that the respondent no. 1 has created various charges on all its assets and properties in favour of its bankers in defiance of the order of the subsisting injunction dated November 29, 2016, passed in A.P. No. 1013 of 2016. The respondent no. 1 has even charged all its bank accounts in favour of its bankers.

The alleged contemnors in this proceeding has made same and /or similar submissions and raised and/or same and similar pleas with regard to creation of additional charges which was nullified by coordinate bench in the order dated 5th February, 2018 and the appeal preferred before the Hon'ble Division Bench was withdrawn as would be evident from the order of the Hon'ble Division Bench dated 8th May, 2018 in APO No. 53 of 2018."

The unwillingness of the contemnors to carry out necessary rectification in the MCA portal (at page 145) with regard to creation of floating charge although it had enough opportunities to do so and failure to disclose necessary documents in relation to floating charge creates genuine doubt in the mind of the court about the stand taken by the contemnors with regard to creation of floating charge. Any corporate guarantee creating additional charges was clearly prohibited by the interim order and the certificate of the Allahabad Bank appears to the tailor made and procured to stave off contempt. Although the contemnors have stated in their affidavits that the entry of Rs.70 crores were incorrect however, having regard to the fact that record still shows otherwise, I hold the contemnors guilty of contempt.

At this point it is necessary to consider the apology tendered by the contemnor. The contemnors have contested the interlocutory application where the petitioner has specifically contended that there has been a violation of the order dated 29th November, 2016. They had due knowledge regarding creation of mortgage and additional charge over its assets. The repeated and relentless attempt on the part of the contemnors to justify that there has been no breach of the interim order dated 29th November, 2016 did not find favour with the coordinate bench and also the Hon'ble Division Bench. In this proceeding, in defence, the contemnors have raised same pleas as raised in earlier proceedings before me with an apology that in the event that they are held to have acted in breach, the apology may be accepted. At this stage it would be proper to consider some of the decisions on apology in a contempt proceeding.

Apology is an act of contrition. Unless apology is offered at the earliest opportunity and in good grace apology is shorn of penitence. If apology is offered at a time when the contemnor finds that the court is going to impose punishment it cease to be an apology and it becomes an act of cringing coward. Mulk Raj V. State of Punjab, (1972) 3 SCC (Cri) 24.

In T.N Godavarman Thirumulpad (102) v. Ahsok Khot; 2006 (5) SCC 1 in paragraphs 31 and 32 the defence of apology was considered . The said paragraphs read:

"31. Apology is an act of contrition. Unless apology is offered at the earliest opportunity and in good grace, the apology is shorn of penitence and hence it is liable to be rejected. If the apology is offered at the time when the contemnor finds that the court is going to impose punishment it ceases to be an apology and becomes an act of a cringing coward.

32. Apology is not a weapon of defence to purge the guilty of their offence, nor is it intended to operate as universal panacea, but it is intended to the evidence of real contriteness. As was noted in L.D Jaikwal Vs. State of U.P: (SCC P.406, para1)".

We are sorry to say we cannot subscribe to the 'slap-say sorry-and forget' school of thought in administration of contempt jurisprudence. Saying 'sorry' does not make the slapper taken the slap smart less upon the said hypocritical word being uttered. Apology shall not be paper apology shall not be paper apology and expression of sorrow should come from the heart and not from the pen. For it is one thing to 'say' sorry-it is another to 'feel sorry."

This view has been reiterated in C. Elumalai (supra). Apology cannot be a defence, justification, or a calculated strategy to avoid punishment for act which tantamount to contempt of court, and is not to be accepted as a matter of course. However, apology can be accepted where conduct for which apology is given is such that it can be ignored without compromising dignity of court, or evidences real contrition, and is sincere. Apology cannot be accepted where it is hollow, there is no remorse, no regret, no repentance, or if it is only a device to escape rigour of law i.e. it is merely "paper apology", (See. Bal Krishan Giri V. State of U.P.; (2014) 7 SCC 280.) Since this Court is of the view that the apology is not genuine and it is intended to get rid of the consequences of acts of contempt, I am not accepting the said apology. It is sometimes necessary to vindicate the outraged dignity of the court by fining or imprisonment of the offender. Unless respect for the court is maintained, the administration of justice becomes a meaningless travesty. Accordingly, I hold the contemnor nos. 1, 2 and 3 guilty of contempt.

It would be clear from the aforesaid decision that punishing a person for contempt is indeed a drastic step and serious matter. The court is to act with care and great contemptuous and it is only when a clear case of contemporaneous conduct not explainable otherwise; arises that the contemnor must be punished. If for proper administration of justice and to ensure due compliance of the orders passed by a court it is necessary and required to take strict view under the Act, it should not hesitate in wielding the potent weapon of contempt. In Patel Rajnikant Dhulabhai Vs. Patel Chandrakant Dhulabhai reported at (2008) 14 SCC 561) at SCC pages 575-79, paragraphs 56-57, 60-64, 66 & 70 the Hon'ble Supreme Court has discussed the width and ambit of the power of the Court in exercising its contempt jurisdiction in the following words:

"56. The next question is whether for disobedience of the order passed by this Court, the respondents/contemners are liable to punishment? In this connection, we may refer to some of the legal provisions. Article 129 of the Constitution declares this Court (Supreme Court) to be "a Court of Record having all the powers of such a Court including the power to punish for the contempt of itself".

57. Clause (c) of Section 94 of the Code of Civil Procedure, 1908 enacts that in order to prevent the ends of justice from being defeated, the Court may, commit the person guilty of disobedience of an order of interim injunction to civil prison and direct his property be attached and sold. Rule 2A of Order XXXIX as inserted by the Code of Civil Procedure (Amendment) Act, 1976 (Act 104 of 1976) reads thus:

2A. Consequence of disobedience or breach of injunction--(1) In the case of disobedience of any injunction granted or other order made under rule 1 or rule 2 or breach of any of the terms on which the injunction was granted or the order made, the Court granting the injunction or making the order, or any Court to which the suit or proceeding is transferred, may order the property of the person guilty of such disobedience or breach to be attached, and may also order such person to be detained in the civil prison for a term not exceeding three months, unless in the meantime the Court directs his release.

(2) No attachment made under this rule shall remain in force for more than one year, at the end of which time, if the disobedience or breach continues, the property attached may be sold and out of the proceeds, the Court may award such compensation as it thinks fit to the injured party and shall pay the balance, if any, to the party entitled thereto.

60. In Ashok Paper Kamgar Union v. Dharam Godha & Ors., (2003) 11 SCC 1, this Court had an occasion to consider the concept of `wilful disobedience' of an order of the Court. It was stated that `wilful' means an act or omission which is done voluntarily 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 is to say, with bad purpose either to disobey or to disregard the law. According to the Court, it signifies the act done with evil intent or with a bad motive for the purpose. It was observed that the act or omission has to be judged having regard to the facts and circumstances of each case.

61. In Kapildeo Prasad Sah & Ors. v. State of Bihar & Ors., (1999) 7 SCC 569, it was held that for holding a person to have committed contempt, it must be shown that there was wilful disobedience of the judgment or order of the Court. But it was indicated that even negligence and carelessness may amount to contempt. It was further observed that issuance of notice for contempt of Court and power to punish are having far reaching consequences, and as such, they should be resorted to only when a clear case of wilful disobedience of the court's order is made out. A petitioner who complains breach of Court's order must allege deliberate or contumacious disobedience of the Court's order and if such allegation is proved, contempt can be said to have been made out, not otherwise. The Court noted that power to punish for contempt is intended to maintain effective legal system. It is exercised to prevent perversion of the course of justice.

62. In the celebrated decision of Attorney General v. Times Newspaper Ltd.; 1974 AC 273 : (1973) 3 All ER 54 : (1973) 3 WLR 298; Lord D

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iplock stated: "There is an element of public policy in punishing civil contempt, since the administration of justice would be undermined if the order of any court of law could be disregarded with impunity." 63. In Anil Ratan Sarkar & Ors. v. Hirak Ghosh & Ors., (2002) 4 SCC 21, this Court held that the Contempt of Courts Act has been introduced in the statute-book for securing confidence of people in the administration of justice. If an order passed by a competent Court is clear and unambiguous and not capable of more than one interpretation, disobedience or breach of such order would amount to contempt of Court. There can be no laxity in such a situation because otherwise the Court orders would become the subject of mockery. Misunderstanding or own understanding of the Court's order would not be a permissible defence. 64. It was observed that power to punish a person for contempt is undoubtedly a powerful weapon in the hands of Judiciary but that by itself operates as a string of caution and cannot be used unless the Court is satisfied beyond doubt that the person has deliberately and intentionally violated the order of the Court. The power under the Act must be exercised with utmost care and caution and sparingly in the larger interest of the society and for proper administration of justice delivery system. Mere disobedience of an order is not enough to hold a person guilty of civil contempt. The element of willingness is an indispensable requirement to bring home the charge within the meaning of the Act. 66. In All Bengal Excise Licensees Association v. Raghabendra Singh & Ors., (2007) 11 SCC 374, this Court considered several cases and observed that wilful and deliberate act of violation of interim order passed by a competent Court would amount to contempt of Court. 67. A reference in this connection may also be made to a decision of this Court in Tayabbhai M. Bagasarawala v. Hind Rubber Industries (P) Ltd., (1997) 3 SCC 443. In that case, the plaintiff-landlord filed a suit against the defendant-tenant in the City Civil Court for permanent injunction restraining the defendant from carrying on construction in the suit premises. Ad interim injunction was granted by the Court. Defendant's application for vacating injunction was dismissed. The defendant, however, committed breach of injunction. The plaintiff, hence, filed an application under Order XXXIX, Rule 2-A of the Code. The defendant came forward and raised an objection as to jurisdiction of the Court and power to grant injunction. The High Court, ultimately, upheld the objection and ruled that City Civil Court had no jurisdiction to entertain the suit. It was, therefore, argued by the defendant that he cannot be punished for disobedience of an order passed by a Court which had no jurisdiction to entertain a suit or to grant injunction. The High Court upheld the contention. The plaintiff approached this Court. 68. This Court observed that until the question of jurisdiction had been decided, the City Civil Court possessed power to make interim orders. The Court could also enforce them. A subsequent decision that the Court had no jurisdiction to entertain the suit did not render interim orders passed earlier non est or without jurisdiction. A party committing breach of such orders could not escape the consequences of such disobedience and violation thereof. Accordingly, the Court held the defendant guilty for intentionally and deliberately violating interim order and convicted him under Rule 2-A of Order XXXIX of the Code and sentenced him to one month's imprisonment. 69. Speaking for the Court, Jeevan Reddy, J. stated; "Can it be said that orders passed by the Civil Court and the High Court during this period of six years were all non est and that it is open to the defendants to flout them merrily, without fear of any consequence. The question is whether the said decision of the High Court means that no person can be punished for flouting or disobeying 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), no 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 the Rule of Law and would seriously erode the dignity and the authority of the courts. 70. From the above decisions, it is clear that punishing a person for contempt of Court is indeed a drastic step and normally such action should not be taken. At the same time, however, it is not only the power but the duty of the Court to uphold and maintain the dignity of Courts and majesty of law which may call for such extreme step. If for proper administration of justice and to ensure due compliance with the orders passed by a Court, it is required to take strict view under the Act, it should not hesitate in wielding the potent weapon of contempt." On consideration of the aforesaid facts and circumstances of the case and various aspects discussed above, I am satisfied there has been disobedience of the impugned order passed by me on 29th November, 2016. In view thereof, in exercise of the power conferred under Article 129 of the Constitution of India read with Section 12 of the Contempt of Courts Act, 1971 I impose exemplary costs of Rs.30,000/- on each of the contemnors to be deposited with the learned Registrar General in cash or by bank draft in the name of Learned Registrar General within six weeks from date. On such deposit being made, a sum of Rs.1 lakh shall be transferred to the State Legal Service Authority and the balance amount of Rs.80,000/- shall be transferred to the West Bengal State Emergency Relief Fund, A/C.No.628005501339, IFS Code- ICIC0006280. The learned Registrar General shall file a report as to compliance of this order after eight weeks. In case of non-payment the contemnor found to be in breach shall suffer simple imprisonment for three weeks. Any third party right created after order dated 29th November, 2016 is void and is of no consequence. The Member Secretary, SLSA shall earmark the said fund for "juvenile". The contempt petition is disposed of.
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