HONOURABLE SRI JUSTICE M.S.RAMACHANDRA RAO
AND
HONOURABLE SRI JUSTICE T.AMARNATH GOUD
CONTEMPT CASE NOS.649 AND 650 OF 2020
COMMON ORDER:
(Per Sri Justice M.S.Ramachandra Rao)
C.C.Nos.649 and 650 of 2020 are filed by the petitioners
therein to punish the respondents for willfully and deliberately
violating the common judgment and decree dt.22.11.2017 passed by a Division Bench of this Court in C.C.C.A.Nos.172 of 2015 and 175 of 2015.
2. The said Appeals had been disposed of in terms of a joint Memorandum of Compromise dt.21.11.2017 executed by the parties.
3. It is the contention of the petitioners that the respondents had failed to comply with the same in spite of specifically undertaking to comply with the terms and conditions set out therein.
4. There is no dispute that petitioner No.1 was the absolute owner and possessor of premises bearing Municipal No.8-2-293/82/A/796-A in Plot No.796-A admeasuring 1162 square yards situated at Road No.36, Jubilee Hills, Hyderabad-500033.
5. The said premises had been let out to the respondent under registered lease deed dt.06.12.2006.
6. On expiry of the said lease, petitioner No.1 had filed O.S.No.172 of 2012 before the II Additional Chief Judge, City Civil MSR,J & TA,J ::2:: cc_649&650_2020 Court at Hyderabad seeking eviction of the respondent and also recovery of mesne profits.
7. The respondent filed O.S.No.560 of 2012 in the same Court against the petitioners for specific performance of an alleged oral agreement for renewal of lease of the said premises for five years.
8. By a common judgment dt.17.10.2015, the trial Court had dismissed O.S.No.172 of 2012 filed by petitioner No.1 for eviction of the respondent and had decreed O.S.No.560 of 2012 filed by the respondent for specific performance.
9. This was questioned by petitioner No.1 by filing C.C.C.A.No.175 of 2015 against the judgment passed in O.S.No.172 of 2012.
10. Petitioners had also filed C.C.C.A.No.172 of 2015 against the judgment in O.S.No.560 of 2012.
11. An interim order was passed on 17.11.2016 by this Court asking the respondent to vacate the said premises and hand it over to petitioner No.1 on 31.01.2017 and it was observed that the entitlement to arrears of rents and other taxes payable by the respondent would be decided at the time of final hearing of the Appeals.
12. This was challenged by the respondent and the petitioners in SLP (C) No.2870 of 2017 and SLP (C) No.2279 of 2017 respectively in the Supreme Court.
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13. In the Supreme Court, there was an interim arrangement agreed between the parties and a consent order was passed disposing of both the Special Leave Petitions on 06.02.2017. As per the terms of the said consent order, the respondent was directed to furnish bank guarantee for Rs.69,34,180/- within one month; a sum of Rs.34,75,000/- being the difference of rental amounts for the period 17.10.2015 to 31.01.2017 along with the applicable service tax amounting to Rs.16,88,500/- and property tax amounting to Rs.4,57,000/- were directed to be paid by the respondent to petitioner No.1 within two months subject to the outcome of the Appeals pending before this Court. The respondent was also directed to pay monthly user charges of Rs.7,50,000/- to petitioner No.1.
14. Alleging that the respondent had deliberately and willfully disobeyed the order passed by the Supreme Court, the petitioners filed Contempt Petition No.829 of 2017 before the Supreme Court.
15. Thereafter, the respondent complied with all the directions passed by the Supreme Court except payment of service tax which was required to be paid after 31.01.2017. On the basis of the undertaking given by the counsel representing the respondent that service tax, being a quarterly obligation, it will be paid accordingly, the Supreme Court disposed of the Contempt Petition on 05.05.2017.
16. Thereafter, the parties entered into a Joint Memo of Compromise on 21.11.2017.
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Contentions of petitioners
17. It is the contention of the petitioners that :
(a) under the compromise decree, the respondent was permitted to make only interior decoration or internal temporary partitions without damaging the original structure and he had agreed to handover the schedule premises on the expiry of the lease period in 'as is where is' condition. But in August, 2018, the respondent had cut the slab by about 1200 square feet in the showroom of 'Sketchers' permanently altering/damaging the structure of the above premises in complete violation of the terms of the compromise and the judgment and decree passed in the Appeals.
(b) As per Clause 13 of the Joint Memo of Compromise dt.21.11.2017 which is Clause 14 of the judgment and decree dt.22.11.2017, the respondent is obligated to pay the applicable municipal tax to the municipal authorities on or before the due date and handover the receipt to the petitioners; the petitioners addressed a letter dt.03.08.2018 asking the respondent to pay the outstanding property tax of Rs.4,34,084/- within 15 days; and the respondent gave a letter on 10.08.2018 informing the petitioners that he had paid the property tax through two cheques bearing Nos.039224 dt.28.07.2018 and 039223 dt.28.07.2018. It is MSR,J & TA,J ::5:: cc_649&650_2020 contended that no proof of such payment was furnished to the petitioners and the online status on the portal of GHMC shows that the property tax is still outstanding.
(c) The 1st petitioner gave a legal notice on 24.08.2019 to the respondent asking him to pay the outstanding property tax amounting to Rs.2,15,098/- which includes Rs.2,312/- towards cheque bounce penalty as per the online payment status within 15 days and handover the payment receipt to petitioner No.1; the petitioner No.1 asked the respondent to deposit rent as per the agreed terms of the Joint Compromise, i.e., within 10th of every month. But the respondent issued a letter in April, 2020 through e-mail and Whatsapp to the petitioners stating that due to the lockdown imposed by the Government of India and Government of Telangana under the Disaster Management Act, 2005 and Epidemic Diseases Act, 1897, business operations were not permitted and it was not in a position to pay the rent for the month of April, 2020.
(d) Petitioner No.1 then sent another reply by way of legal notice dt.24.04.2020 asking the respondent to pay up the rent and pointing out that he cannot take shelter under the lockdown in view of the judgment and decree dt.22.11.2017 in C.C.C.A.Nos.172 of 2015 and 175 of 2015.
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18. According to the petitioners, despite issuance of notices, the respondent continued to violate the undertakings given to the petitioners to make timely payment of monthly rentals along with the applicable GST on or before 10th of every month and had willfully and deliberately violated orders of this Court.
According to the petitioners, the respondent has to pay Rs.9,99,000/- including GST and after deducting TDS for the month of April, 2020 and similar amounts for the months of May and June, 2020, and the respondent had also failed to handover proof of payment of property taxes for the subject premises.
According to the petitioner, the respondent on 15.06.2020 paid only a part of the outstanding rentals due of Rs.5,00,000/- on 15.06.2020 leaving a balance of Rs.24,99,997/- and had also not cleared the property tax dues by 31.07.2020 as agreed in the compromise decree.
It is contended that this conduct of the respondent amounts to willful disobedience of the orders passed by this Court and so the respondent should be punished for contempt.
The stand of the respondent
19. Counter affidavit is filed on 25.01.2021 by the respondent in both these matters stating that he had good respect for the orders of the Court and had no intention to violate the orders of this Court.
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20. Firstly it is contended that the consequences for default/breach of any of the terms contained the compromise decree are also mentioned in Clause 18 of the Joint Memo of Compromise dt.21.11.2017 and the petitioners have to file execution petition and avail those remedies and the Contempt Case is not maintainable.
21. According to him, the terms of the compromise decree cannot be equated to an undertaking given by the respondent.
22. It is contended that allegation regarding alteration of the structure allegedly made by the respondent is barred by limitation as contained in Section 21 of the Contempt of Courts Act, 1971 as the Contempt Case had been filed in July, 2020 and the violation had allegedly occurred in August, 2018.
23. It is then contended that property tax dues amounting to Rs.2,15,098/- claimed by the petitioners in the legal notice dt.24.08.2019 had been cleared by him.
24. It is contended that the respondent is running two showrooms, i.e., Centro and Sketchers, but both of them were ordered to be closed till the end of May, 2020 on account of Covid-19 pandemic when lockdown was imposed by the State Government.
According to the respondent, though alternate shops were permitted to be opened for some time, due to severity of Covid-19 pandemic till October, 2020, there were hardly any sales in his shops. It is alleged that with great difficulty, the respondent had paid MSR,J & TA,J ::8:: cc_649&650_2020 Rs.5,00,000/- on 10.06.2020 and Rs.2,00,000/- each on 31.08.2020, 12.11.2020, 10.12.2020 and 02.01.2021. It is contended that the respondent could not comply with the terms of the common judgment and decree dt.22.11.2017 on account of the said lockdown. According to him, on account of lack of business, and non-availability of funds, he could not pay the rents and he cannot be said to have intentionally evaded payment of rents.
The reply affidavit of petitioner
25. Reply affidavit is filed by the petitioners refuting the said contentions.
26. It is contended by the petitioners that in addition to the remedies available to them under CPC, they are entitled to initiate the present contempt proceedings before this Court in view of the deliberate and willful violation of the judgment and decree passed on 22.11.2017 by this Court in C.C.C.A.Nos.172 and 175 of 2015.
27. They denied that they are only entitled to the remedies available in Clause 18. They denied that the terms of the compromise cannot be equated to an undertaking.
28. According to them, the respondent was required to make monthly payments apart from payment of property tax in a time- bound manner and unless he complies with the same, he cannot be allowed to be in possession of the premises in question.
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29. It is contended that even if the respondent could not operate his shops in the schedule premises until mid-May, 2020 due to the imposition of lockdown due to Covid-19 by the State Government, the same would not absolve the respondent from paying rents for the said period. It is pointed out that the respondent had continued in possession during the said period and was obligated to pay rents as agreed in the judgment and decree dt.22.11.2017.
30. It is also stated that businesses were reopened and the respondent was doing good business in both shops and in spite of the same, the respondent paid a mere Rs.13,00,000/- from June, 2020 to January, 2021 and an amount of Rs.91.50 lakhs was outstanding as on 28.01.2021 apart from property tax of Rs.4,60,000/- which had to be paid on 31.07.2020.
The consideration by the Court
31. We have noted the contentions of both sides.
32. We may extract Clause 18 of the compromise Memo filed by the parties, on the basis of which the common judgment and decree dt.22.11.2017 was passed in C.C.C.A.Nos.172 and 175 of 2015. It states:
"18. The Parties agree that upon default/breach of any of the terms contained herein in the present Compromise including but not limited to non-payment of the monthly rentals on or before 10th day of each month in advance and/or the applicable GST on the monthly rentals on or before 10th day of each month in advance and/or the Property Tax as assessed by the Greater MSR,J & TA,J ::10:: cc_649&650_2020 Hyderabad Municipal Corporation from time to time within the timelines prescribed hereinabove, the First Party will put the Second Party on Notice of such default/breach for the first two (2) defaults and the Second Party agrees and undertakes to rectify the said default/breach within 15 (fifteen) days from the date of receipt of the such Notice from the First Party. It is made clear that the issuance of Notice by the First Party to the Second Party notifying the default/breach committed by the Second Party is only agreed to be issued in the event of the first two (2) defaults committed by the Second Party and that no notice of whatsoever nature is required to be issued by the First Party or any person to the Second Party for any subsequent default/breach committed by the Second Party. The Second Party unconditionally agrees and undertakes that upon the failure of the Second Party to rectify the default/breach within 15 days from the date of receipt of Notice for the first two (2) defaults/breaches or in the case of any third default/breach committed by the Second Party will result in automatic eviction of the Second Party from the Scheduled Premises and the First Party will be entitled to immediately initiate appropriate proceedings to evict the Second Party from the Scheduled Premises without any further Notice or reference of whatsoever nature including by initiating Execution Proceedings for execution of the Decree passed in terms of the present Compromise in the Appeals vide C.C.C.A. No. 172 of 2015 and C.C.C.A. No. 175 of 2015 on the file of the Hon'ble High Court of Judicature at Hyderabad for the State of Telangana and the State of Andhra Pradesh. Further, the First Party shall also be entitled to forfeit the entire Security Deposit amount of Rs.15,00,000/- (Rupees Fifteen lakhs only) without any claims of whatsoever nature from the Second Party."
33. A reading of the above Clause indicates that if there are two defaults or breaches or if there is a third default or breach committed by the respondent, it would result in automatic eviction of the respondent from the premises and petitioner No.1 would also be entitled to immediately initiate proceedings to evict the respondent MSR,J & TA,J ::11:: cc_649&650_2020 without any further notice apart from forfeiting the security deposit of Rs.15,00,000/.
34. It is not in dispute that the rental amount agreed to be paid was Rs.9,99,000/- including GST after deducting TDS, and that for the months of April, May and June, 2020, these amounts were not paid by the respondent to the petitioners.
35. In the counter affidavit of the respondent, he admitted to have paid only Rs.13,00,000/- between 10.06.2020 and 02.01.2021.
36. Therefore, even after June, 2020 for the months of July, 2020 to January, 2021, the rents have not been paid.
37. Thus, admittedly, there have been more than three defaults in payment of rent since default in payment of rent for each month is to be counted as a separate default in compliance with the terms of the compromise decree in the Appeals, which requires the respondent to pay every month the said amount.
38. It is also not in dispute that notices had been exchanged between the parties several times in the interregnum period between April, 2020 and January, 2021 and the requirement of Clause 18 was fulfilled by the petitioners.
39. Failure on the part of the respondent to comply with the terms of the compromise would entitle in automatic vacation of the MSR,J & TA,J ::12:: cc_649&650_2020 respondent from the subject premises as he himself agreed to the same in clause 18.
40. The Supreme Court in Rama Narang Vs. Ramesh Narang and another1 observed that all decrees and orders are executable under the Code of Civil Procedure and consent decrees and orders are also executable. But merely because an order or decree is executable, it would not take away the Courts jurisdiction to deal with a matter under the Contempt of Courts Act, 1971 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. It referred to the definition of 'civil contempt' in Section 2(b) of the Contempt of Courts Act, 1971 and noted that in the said provision, wilful disobedience to any judgment, decree, direction, order, writ or other process of a Court apart from wilful breach of an undertaking given to a Court is itself civil contempt, i.e., that the said Section itself provided that wilful violation of any order or decree etc., would tantamount to contempt; a compromise decree is as much a decree as a decree passed on adjudication; and in such circumstances, it would neither be in consonance with the statute, judicial authority, principle or logic to draw any distinction between wilful violation of the terms of the consent decree, and wilful violation of the decree which is passed on adjudication.
1
(2006) 11 SCC 114
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41. In view of this authoritative pronouncement of the Supreme Court, the contention of the respondent that the Contempt Case would not lie because the decree or order is executable, and that there was no specific undertaking given by him, is rejected.
42. We may also point out that whatever difficulty the respondent might have had in paying the agreed rent after April, 2020 on account of Covid-19 pandemic and the consequent lockdown imposed by the State and Central Governments on businesses, admittedly even according to the respondent, by the end of May, 2020, he was permitted to operate the shops in question.
43. Therefore, even if there was no wilfulness on the part of the respondent in violating the judgment and decree dt.22.11.2017 in the Civil Appeals during the period of the lockdown in April, 2020 and May, 2020, he cannot state that because of lack of business till October, 2020, his obligation to comply with the direction in the compromise decree to pay a sum of Rs.9,99,000/- every month stood suspended and that the payment of Rs.13,00,000/- made by him between 10.06.2020 and 02.01.2021 should be taken into account to discharge him from the charge of contempt.
44. In our considered opinion, whatever be the difficulties faced by the respondent post May, 2020, he cannot ask the petitioners to share in his misfortune because the obligation to pay rents to the petitioners cannot be said to be suspended for the period after May, 2020 assuming for the sake of argument without conceding that for the MSR,J & TA,J ::14:: cc_649&650_2020 months of April and May, 2020 there was no wilfulness in non- payment of rent by the respondent to petitioner No.1.
45. In this view of the matter, we are of the opinion that the respondent had wilfully and deliberately violated the common judgment and decree dt.22.11.2017 in C.C.C.A.Nos.172 and 175 of 2015 and is liable to be punished for contempt of Court.
46. Accordingly, the Contempt Cases are allowed; the respondent is directed to pay all the arrears of rent due to the petitioners and Municipal taxes due in respect of the subject premises to the GHMC within four (4) weeks; he shall also pay costs of Rs.3,00,000/- (Rupees Three lakhs only) to the petitioners; the respondent shall also vacate the subject property by 15.04.2021 and pay the rents up to the said date without fail. In default of compliance with any of these directions, he shall suffer civil imprisonment for four (4) months and also pay a fine of Rs.2,000/- (Rupees two thousand only).
47. Pending miscellaneous petitions, if any, in these Contempt Cases shall stand closed.
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M.S.RAMACHANDRA RAO, J
_______________________
T.AMARNATH GOUD, J
Date: -03-2021
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