Shipping Corporation Of India ... vs Mathuradas Narandas & Sons ...
2002 Latest Caselaw 437 Bom

JUDGMENT

S.A. Bobde, J.

1. This Contempt Petition is taken out by the Shipping Corporation of India against the respondents. The respondent No. 1 is a private limited company. The respondent Nos. 2 and 3 are the Directors of respondent No. 1 and are main respondents in the sense that they were parties to the order passed by this Court under which they were bound to do some acts referred to hereinafter, which they have not done. The respondent Nos. 1, 2 and 3 are hereinafter referred to as "the respondents".

2. The respondent Nos. 3 and 5 are partners of respondent No. 4 and respondent No. 7 is a proprietor of respondent No. 6. At the outset the learned Counsel for the petitioners made a statement that the contempt is not being pressed against respondent Nos. 4 to 7. In view of the statement, contempt proceedings against respondent Nos. 4 to 7 are dismissed as not pressed.

3. In Suit No. 4541 of 1999 filed by the Shipping Corporation of India against the respondent Nos. 1, 2 and 3 and the other respondents a notice of motion was taken out by Plaintiffs. During the course of arguments, both the parties tendered minutes of the order along with the arbitration agreement. The

parties invited the Court to pass an order in terms of the minutes submitted by them. In short, the minutes provided that the Defendant No. 1 would be entitled to ply the trucks as Agent of the Receiver on a condition of payment of Rs. 3 lakhs per month as royalty directly to the Plaintiffs' attorneys towards Plaintiff's claim in the suit. The first amount of royalty of Rs. 3 lakhs was to be paid on 5th December, 1999. Subsequent royalties were to be paid on the 5th day of each month. It is provided that in the event of the Defendant No. 1 committing any two defaults in payment of royalty, the Court Receiver shall take possession of the said trucks from whomsoever is in possession and if necessary with police help and sell the same in one or more lots. There were other clauses of the minutes of the order with which this petition is not concerned.

4. In short, what has happened is that not a single instalment of royalty has been paid. The cheques issued for purported payment of the first instalment were dishonoured. The Receiver attempted to take possession of the trucks. All his attempts were thwarted. There is ample evidence of the Receiver attempting to take possession of the trucks from 6th March, 2000 which is the first report of the Receiver to the last report dated 6th December, 2000. From Exhibits "D" to "E-4" to the petition are the reports of the Receiver and letters by the respondents stating why possession of the trucks cannot be handed over.

5. The first report dated 6th March, 2000 states that the Defendant No. 2 i.e. respondent No. 2 made a statement that he will bring the suit vehicles to the Plaintiffs' place i.e. Maritime Training Institute at Powai by 26th March, 2000 and that an appointment was fixed for 27th March, 2000 to take possession of the said vehicles at Powai. The Receiver stated that he has obtained in writing from the Defendant No. 2 that he will bring the suit vehicles to the place provided by the Plaintiffs by 26th March, 2000. Possession of the vehicles was not handed over. The respondents then addressed a letter dated 17th July, 2000 signed by respondent No. 2 stating that the vehicle would be handed over to the Shipping Corporation of India at their nominated site on or before 2nd August, 2000. Then there is a report of the Receiver dated 6th July, 2000 in which the Receiver records that "due to heavy rain the Defendants could not bring the suit vehicles to Bombay". The Receiver apparently requested the representative of the respondents Company to bring as many vehicles as they could at the place decided by the Plaintiffs on that date so that the possession could be handed over to the Court Receiver. Apparently, the respondents agreed to the same. Barring six vehicles the other vehicles were not handed over. Thereafter the Receiver made another report dated 6th December 2000 recording the statement on behalf of the respondents that the vehicles which are to be handed over to the Receiver are out of station and he expressed the inability of the Defendants in handing over possession of the said vehicles on that day i.e. 6th December, 2000.

6. The net result is that out of 37 vehicles which were to be handed over, 5 vehicles have been handed over to the financiers in pursuance of the order of this Court leaving a total of 32 vehicles. Of the 32 vehicles 6 have been handed over by the respondents to the Receiver. Admittedly, 26 vehicles remained to be handed over. According to submissions at the Bar, the vehicles are at the moment all over the country.

7. The result is that the order passed by this Court in terms of the minutes drawn by the parties has neither been complied with as to the payment of royalty in the sum of Rs. 3 lakhs or as to what was to be done in default i.e. the taking over of the vehicles of the respondents has been effectively halted. The result is that not a single paise has been paid towards royalty and barring 6 vehicles possession of the vehicles has not been handed over to the Receiver in spite of the several appointments have been fixed with the respondents for handing over the said vehicles.

8. According to learned Counsel for the petitioners the amount of royalty outstanding as on date is in the sum of Rs. 77,83,783.78 after giving credit, for the reduction. We are, however, not concerned here with the accuracy of the claim allegedly outstanding.

9. As observed earlier, the minutes of the order also involved a reference of the dispute between the parties to arbitration. The Arbitrator has recorded that the respondent No. 1 promised to pay to the Receiver a sum of Rs. 15 lakhs presumably towards the royalty due by them. The Arbitrator has recorded as follows :--

"No amounts whatsoever have been paid by the respondent No. 1 to the Claimants. The conduct of the respondent is blameworthy. Prima facie the respondent No. 1 is in contempt. The respondent No. 1 has not handed over possession of all the trucks to the receiver. Only six trucks are handed over. The respondent No. 1 has impaired and jeopardized the securities of the Claimants."

Mr. Rane, learned Counsel for the respondents with characteristic fairness accepted the fact that 26 trucks have not been handed over to the Receiver and the Receiver has not been able to comply with the orders passed in terms of the minutes. He also fairly accepted that no amount towards the royalty has been paid as ordered by this Court.

10. The only submission made by the learned Counsel for the respondents is that it is because of exigency of business and lack of funds that the respondents have not been able to comply with the order of the Court. He stated that after sometime from now the possession of the trucks could be handed over to the Receiver. He was, however, unable to make a categorical statement about the time within which the outstanding royalty would be liquidated. The learned Counsel also referred to the 2nd respondent's letter to the Receiver saying, and if I may add in this case, merely saying, that the respondents would pay a sum of Rs. 15 lakhs by Demand Draft.

11. In my view, looking to the overall circumstance of the case, the statement made that the vehicles could be returned in the future and the money could be paid in the future does not have the ring of sincerity demonstrating a clear intention to comply with the order. In any case the facts of the case narrated above amply demonstrates that the respondents have rendered the order of this Court in terms of the minutes of the order completely ineffective. It is the respondents who invited the Court to pass an order promising to pay royalty in the sum of Rs. 3 lakhs and making a statement that the Receiver shall take over possession of the said trucks from whomsoever is in possession. It cannot be gainsaid that the respondents have not in term promised to handover the truck but merely agreed that the Court Receiver shall take possession of the trucks. Indeed,

the Receiver cannot take over possession of the trucks unless the respondents either handover the possession of the trucks or at least point out to the Receiver where the trucks are.

12. In this view of the matter, there is no doubt that the defaults and the non-compliance on the part of the respondents is not out of ignorance, lack of awareness or accidental. Right from October. 1999 when the order was passed till date nothing either in terms of payment of royalty or handing over of the trucks in default has been complied with. In fact, the Receiver has been effectively halted from taking over possession of the trucks. There is no doubt that this situation is brought about wilfully.

13. In paragraph 3 of their affidavit in reply after the respondents have tendered an unconditional apology the respondents have denied that there is any contempt of the court on the ground that they have filed a claim before the Arbitrator for recovery of more than Rs. 13 crores as per their defence statement. The defence, very boldly put forward is that until their claim is adjudicated the respondents are not liable to return the vehicles or make payment to the petitioners. Besides, there is precious little which the respondents have put forward to explain their non-compliance to the order of this Court.

14. Mr. Rane, learned Counsel for the respondents relying on a Judgment of the Supreme Court in the case of Babu Ram Gupta v. Sudhir Bhasin and Anr., submitted that the settled position in law is that a consent order under which a party agrees to pay a specified sum of money to another party can be executed in the event of nonpayment and that it would not give rise to cause of action for contempt of court. That, however, is not the case here. This is not case of a consent order, payments under which have been withheld. The order in question was passed by this Court in terms of the minutes of the order tendered by the party. The difference between the two kinds of order is well known in this Court and has also been recognised by the Supreme Court in Speed Ways Picture Pvt. Ltd. and Anr. v. Union of India and Anr., . The order in question in this case is an order in invitum and not a consent order. The Supreme Court has observed that such an order is appealable and reviewable. In fact, even in the case of Babu Ram Gupta (supra) the Supreme Court has observed as follows:--

"There is a clearcut distinction between a compromise arrived at between the parties or a consent order passed by the court at the instance of the parties and a clear and categorical undertaking given by any of the parties. In the former, if there is violation of the compromise or the order no question of contempt of court arises, but the party has a right to enforce the order or the compromise by their executing the order or getting an injunction from the court."

The order in question i.e. the order dated 29th October, 1999 passed in terms of the minutes is not an order recording compromise arrived at between the parties. If it were so, the parties could have been relegated to execution. The order in question for all purposes must be regarded as an order made by the Court albeit in invitum.

15. Having regard to the overall circumstances of the case, I am of the view that the respondents are guilty of wilful disobedience of the order of this Court passed in terms of the minutes on 29th October, 1999, the respondent

Nos. 2 and 3 being the Directors of the Company are therefore found to have wilfully disobeyed the order of this Court. The petitioners have pleaded in paragraph 2 of the Petition that the respondent Nos. 2 and 3 are in-charge of and responsible for the acts of respondent No. 1. In reply thereto, in paragraph 13 of the reply, the respondents have stated that "with reference to paras 1 to 4 of the petition, I say that the contents of the said para are substantially correct." In the circumstances, I am of the view that the respondents in the present case have seriously obstructed the course of justice. Having regard to the time that has lapsed since the order of the Court and the attitude of the respondents in complying with the order the apology does not seem genuine but a routine apology, made to ward off action for contempt.

16. In the result, therefore, I am being of the view that a fine will not meet the ends of justice and a sentence of imprisonment is necessary. I, therefore, sentence the respondent Nos. 2 and 3 for a period of one month and direct that they be detained in civil prison for the aforesaid period.

17. On a prayer by Mr. Rane, learned Counsel for the respondent Nos. 2 and 3 the sentence is suspended for a period of thirty days from today i.e. the period provided for preferring an appeal.

18. Contempt petition is allowed in terms aforesaid. All Authorities concerned to act on a copy of this order duly authenticated by the Chamber Registrar of this Court on payment on usual copying charges.

P. A. to give ordinary copy of this order to the parties concerned.