Bombay High Court
Vinod Madanlal Talwar vs Samarth Erectors And Developers ... on 9 March, 2022
Bench: N. J. Jamadar
cpl-11206-2021.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
CONTEMPT PETITION (L) NO.11206 OF 2021
IN
SUMMARY SUIT NO.702 OF 2019
Vinod Madanlal Talwar ...Petitioner/
Original Plaintiff
VISHAL vs.
SUBHASH Samarth Erectors and Developers and Others ...Respondents/
PAREKAR
Original Defendants
Digitally signed by
VISHAL SUBHASH
PAREKAR Mr. Mohammed Zain Khan a/w. Mr. Faiyaz Khan, for the Petitioner.
Date: 2022.03.10
10:44:15 +0530 Mr. Milan Desai i/b. Mr. T.R. Patel, for the Respondents.
CORAM : N.J. JAMADAR, J.
RESERVED ON : 22nd NOVEMBER, 2021
PRONOUNCED ON : 9th MARCH, 2022
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ORDER
1. The Petitioner/original Plaintiff has preferred this Petition
under the Contempt of Courts Act, 1971 (the Act) to hold the
Respondents/original Defendants guilty of civil contempt for the
alleged willful breach of the undertaking given to the Court, in the
consent terms dated 10th January, 2020 on the strength of which
the suit came to be decreed.
2. Shorn of unnecessary details, the background facts leading to
this Petition can be stated in brief as under:
a] The Petitioner had instituted the Summary Suit for a money
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decree in the sum of Rs. 90 lakhs along with interest @ 18% p.a.
from 26th December, 2017 on the basis of the cheques drawn by the
Defendants which were dishonored on presentment. Those cheques
were drawn by the Defendants pursuant to a settlement arrived at
between M/s. Delta Electro Mechanical Private Limited for whom
the Plaintiff had carried out construction of the "Rehab" and "Sale"
buildings, the Defendant Nos. 2 and 5, and the Plaintiff.
b] During the pendency of the said Suit, the Respondents/
Defendants approached the Plaintiff for settlement, and it was
resolved to amicably settle the dispute upon payment of the sum of
Rs. 90 lakhs along with interest at the rate of 12% p.a. aggregating
to Rs. 1,11,60,000/-. Pursuant thereto, consent terms dated 10 th
January, 2020 were executed. On 10 th January, 2020 on the
strength of the consent terms, which were duly tendered and
affirmed before the Court by the Plaintiff and the Defendants, the
Suit came to be decreed in accordance with the consent terms
marked Exhibit X.
c] Under the consent terms, the Defendants/Respondents had
agreed to pay the amount of Rs. 1,11,60,000/- in installments. The
first installment of Rs. 7 lakhs was paid on 9 th January, 2020. The
balance amount was to be paid in installments. The first installment
of Rs. 15,70,000/- was payable on 20th February, 20202 and the rest
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seven of Rs. 12,70,000/- each were payable on 20 th day of each
month commencing from March, 2020 to September, 2020. In
default, the Defendants agreed, the Plaintiff shall be entitled to seek
execution of the consent terms in accordance with law and the
balance amount shall carry interest @ 18% p.a. till actual payment
and realization. The Petitioner, in turn, upon the payment of the
first installment of Rs. 15,70,000/-, agreed to withdraw the Criminal
Case No. 943/SS/2018 and also return the dishonored cheques.
3. The Petitioner asserts that the cheque drawn for Rs.
15,70,000/- towards first installment, was returned unencashed on
account of "insufficiency of funds". Upon being informed, the
Respondent No.1 requested the Plaintiff to return the said cheque
and instead issued one cheque for Rs. 5,70,000/- and two cheques
for Rs. 5,00,000/- each. At the request of the Respondents, the
Petitioner deposited those three cheques. First cheque drawn for Rs.
5,70,000/- was honored. The balance two cheques were, however,
returned unencashed. The rest cheques drawn for Rs. 12,70,000/-
were also dishonored, on presentment. By notice dated 28 th August,
2020 the Defendants/Respondents were called upon to make
payment of the due amount of Rs. 86,20,000/- along with interest as
agreed in accordance with the consent terms dated 10 th January,
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2020. The Respondents neither paid the amount nor gave reply to
the notice.
4. The Petitioner thus asserts that the Respondents/Defendants
have committed willful breach of the undertaking given to the Court
in the consent terms on the strength of which the Suit came to be
decreed. The Respondents had no intention of complying with the
undertaking given in the consent terms and gave the undertaking
with a view to buy time and avoid a decree being passed against the
Respondents for the full claim in the said Summary Suit. The willful
breach of the said undertaking constitutes civil contempt within the
meaning of section 2(b) of the Act and, therefore, the Respondents/
Contemners are liable to be punished for the contempt of the Court.
Hence, this Petition.
5. The Respondents have filed an affidavit in reply. The Contempt
Petition is stated to be misconceived and not maintainable in law.
The Respondents have denied that they had given any 'undertaking'
to the Court. Nor the consent terms records any such undertaking
to the Court. Thus, there is no question of willful breach of the
undertaking to the Court, as alleged by the Petitioner. In any event,
the Respondents at all times were intending to comply with the
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obligation under the consent terms. However, due to unforeseen,
unexpected, unprecedented and catastrophic circumstances, which
arose in the wake of Covid 19 pandemic, there was a severe impact
on the finances and resources of the Respondents. The Respondent
No. 1 firm become non-operative and non-functional during the
entire lockdown period. Thus, inability of the Respondents to
comply with the consent terms under such adverse circumstances,
cannot be termed as willful breach of the undertaking to constitute
the contempt of the Court.
6. In the light of the aforesaid pleadings, I have heard Mr.
Mohammed Zain Khan, the learned counsel for the Petitioner, and
Mr. Milan Desai, the learned counsel for the Respondents at some
length.
7. Since the tenability of the Petition was assailed on the ground
that there was no 'undertaking' given by the Respondents and thus
no question of willful breach thereof would arise, it may be
expedient to record a finding as to whether a prima facie case for
contempt of Court is made out. To this end, it may be necessary to
reproduce the relevant paragraphs of the consent terms.
2. The parties have agreed to amicably settle the
aforementioned matter for the amount of Rs. 90,00,000/-
(Rupees Ninenty Lakhs Only) along with 12% interest till
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date i.e. for an amount of Rs. 21,60,000/- (Rupees Twenty
One Lakhs Sixty Thousand only). Accordingly, the
Defendants have agreed to pay the aforesaid amount
unconditionally to the Plaintiff in the following manner.
................. ................
3. It is hereby agreed that the time is the essence for making
the above payments, as such failure to make any of the
payment as mentioned above on the part of the Defendants
shall be construed as a default and the plaintiff shall be
entitled to seek execution of the present consent terms in
accordance with law. Further, in the event of default of any of
the aforesaid payments, the Respondents shall pay interest
at 18% on the balance amount till actual payment and
realization.
6. The present consent terms have been drafted under the
instructions of the parties, all the parties have read over and
understood the consent thereof and after understanding the
same, the parties to these consent terms confirm that it is in
terms of the understanding arrived at amongst them.
7. The present consent terms have been signed by the
parties and the parties hereto have been identified by their
respective advocates.
8. It would be contextually relevant to extract the order passed
by this Court on 10th January, 2020.
1. The learned counsels for the plaintiff and
defendant No.4 make a joint statement that the
dispute between the parties has been amicably
resolved and the parties have arrived at consent
terms.
2. The consent terms are tendered before the Court.
3. The plaintiff and defendant No.4, who claims to be
the Partner of defendant No.1-Partnership Firm, are
present before the Court.
4. The plaintiff and defendant No.4 state that the
consent terms have been arrived at by the free will of
the parties. They admit the contents of the consent
terms and their signatures thereon. The consent
terms are also signed by defendant Nos.2, 3 and 5.
The defendant No.4 has signed the consent terms on
behalf of defendant No.1-Partnership Firm as well.
The parties are identified by their respective counsels.
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5. The consent terms are taken on record and
marked 'X'. The undertakings given by the parties in
the consent terms are accepted as the undertakings
to the Court.
6. In view of above, the suit stands decreed in
accordance with the consent terms. The consent
terms shall form part and parcel of the decree.
(emphasis supplied)
9. In the light of the aforesaid consent terms and the order dated
10th January, 2020, the question that wrenches to the fore is
whether the Respondents/Defendants had given an undertaking on
the strength of which the Court proceeded to pass the decree. Mr.
Desai, learned counsel fro the Respondents/Defendants would urge
that the observations of this Court in the order dated 10 th January,
2020 to the effect that 'the undertakings given by the parties in the
consent terms are accepted as undertakings to the Court' are not
borne out by the consent terms. A strenuous effort was made by Mr.
Desai to draw home the point that the consent terms do not record
such an undertaking. In the circumstances, the observations that
'the undertakings in the consent terms were accepted as
undertakings to the Court' do not advance the cause of the
Petitioner as, in fact, there was no such undertaking.
10. To bolster up this submission, Mr. Desai placed a strong
reliance on the judgment of the Supreme Court in the case of Babu
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Ram Gupta vs. Sudhir Bhasin and Another 1 wherein, in the facts of
the said case, the Supreme Court observed that the High Court had
committed an error of law in construing the consent order and the
direction contained therein as implied undertaking given by the
Appellant therein. It was observed that, there was a clear cut
distinction between a compromise arrived at between the parties or
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 a violation of the compromise or the order, no
question of contempt of Court arises but the party has a right to
enforce the order of compromise by either executing the order or
getting an injunction from the Court.
11. In the said case, it was further observed that it is not open to
the Court to assume implied undertaking when there is none on the
record. In the absence of any express undertaking given by the
Appellant or any undertaking incorporated in the order impugned,
it would be difficult to hold that Appellant willfully disobeyed or
committed breach of such an undertaking.
12. Reliance was also placed on another judgment of the Supreme
Court in the case of R.N. Dey and Others vs. Bhagyabati Pramanik
1 AIR 1979 Supreme Court 1528.
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and Others2 wherein Supreme Court observed inter alia as under:
7. We may reiterate that weapon of contempt is not to
be used in abundance or misused. Normally, it cannot be
used for execution of the decree or implementation of an
order for which alternative remedy in law is provided
for. Discretion given to the Court is to be exercised for
maintenance of Courts dignity and majesty of law.
Further, an aggrieved party has no right to insist that
Court should exercise such jurisdiction as contempt is
between a contemnor and the Court. It is true that in
the present case, the High Court has kept the matter
pending and has ordered that it should be heard along
with the First Appeal. But, at the same time, it is to be
noticed that under the coercion of contempt proceeding,
appellants cannot be directed to pay the compensation
amount which they are disputing by asserting that
claimants were not the owners of the property in
question and that decree was obtained by suppressing
the material fact and by fraud. Even presuming that
claimants are entitled to recover the amount of
compensation as awarded by the trial court as no stay
order is granted by the High Court, at the most they are
entitled to recover the same by executing the said
award wherein the State can or may contend that the
award is nullity. In such a situation, as there was no
willful or deliberate disobedience of the order, the
initiation of contempt proceedings was wholly
unjustified.
8. Further, the decree-holder, who does not take steps to
execute the decree in accordance with the procedure
prescribed by law, should not be encouraged to invoke
contempt jurisdiction of the court for non-satisfaction of
the money decree. In land acquisition cases when a
decree is passed the State is in the position of a
judgment debtor and hence the court should not
normally lend help to a party who refuses to take legally
provided steps for executing the decree. At any rate, the
court should be slow to haul up officers of the
Government for contempt for non-satisfaction of such
money decree.
(emphasis supplied)
13. Mr. Khan, learned counsel for the Petitioner, on the other
hand, submitted that the consent terms extracted above
2 (2000) 4 Supreme Court Cases 400
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unmistakably contain an undertaking to pay the amount and the
parties chose to make the time essence of the said settlement.
Laying emphasis on clause 3 of the consent terms (extracted
above), wherein it was expressly stipulated that the time was the
essence for making the payment, in installments, as agreed, Mr.
Khan would urge that the Respondents having obtained the benefit
of payment of decreetal amount in installments and at a reduced
rate of interest, cannot be permitted to resile therefrom and urge
that there was no undertaking at all. If consent terms are read as a
whole and in the light of the fact that the Court was made to rely on
the promise made therein and pass a decree thereon, no other view
than that of the decree having been passed on the strength of
undertaking given by the Defendants can be taken.
14. To bolster up this submission, Mr. Khan placed a strong
reliance on the judgment of the Supreme Court in the case of Bank
of Baroda vs. Sadruddin Hasan Daya and Another 3. In the said case,
the Supreme Court repelled the submission that the party in whose
favour a consent decree is passed can execute the decree and thus
there would be no contempt. The Supreme Court observed that the
willful breach of the undertaking given to the Court amounts to civil
contempt within the meaning of section 2(b) of the Act. The
3 (2004) 1 Supreme Court Cases 360.
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Respondents therein having committed breach of the undertaking
given to the Court in the consent terms filed on 28 th July, 1999 were
clearly liable for having committed contempt of Court. The fact that
the Petitioner could execute the decree had no bearing on the
contempt committed by the Respondents.
15. In arriving at the said conclusion, the Supreme Court referred
a Division Bench Judgment of this Court in the case of Bajranglal
Gangadhar Khemka vs. Kapurchand Limited4 wherein following
statement of law was made.
There is no reason why even in a consent decree a
party may not give an undertaking to the Court. Although
the Court may be bound to record a compromise, still,
when the Court passes a decree, it puts its imprimatur
upon those terms and makes the terms a rule of the
Court ; and it would be open to the Court, before it did so,
to accept an undertaking given by a party to the Court.
Therefore, there is nothing contrary to any provision of
the law whereby an undertaking cannot be given by a
party to the Court in the consent decree, which
undertaking can be enforced by proper committal
proceedings.
(emphasis supplied)
16. Reliance was also placed by Mr. Khan on the judgment of the
Supreme Court, in the case of Suman Chadha and Another vs.
Central Bank of India5 wherein the juridical connotation of
contempt in the context of willful breach of undertaking given to the
4 AIR 1950 Bom 336.
5 2021 SC OnLine SC 564.
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Court was further expounded. The observations of the Court in
paragraphs 16 to 18 are material and hence extracted below:
16. It is true that this Court has held in a series of decisions
that the wilful breach of the undertaking given to the Court
amounts to contempt of Court under Section 2(b) of the
Act. But the Court has always seen (i) the nature of the
undertaking made; (ii) the benefit if any, reaped by the
party giving the undertaking; and (iii) whether the filing of
the undertaking was with a view to play fraud upon the
court or to hoodwink the opposite party. The distinction
between an order passed on consent terms and an order
passed solely on the basis of an undertaking given to court
and the distinction between a person playing fraud on the
court thereby obstructing the course of justice and a
person playing fraud on one of the parties, was brought out
by this Court in Babu Ram Gupta vs. Sudhir Bhasin10, in
the following words:
"...Indeed, if we were to hold that noncompliance of
a compromise decree or consent order amounts to
contempt of court, the provisions of the Code of
Civil Procedure relating to execution of decrees
may not be resorted to at all. In fact, the reason
why a breach of clear undertaking given to the
court amounts to contempt of court is that the
contemner by making a false representation to the
court obtains a benefit for himself and if he fails to
honour the undertaking, he plays a serious fraud
on the court itself and thereby obstructs the
course of justice and brings into disrepute the
judicial institution. The same cannot, however, be
said of a consent order or a compromise decree
where the fraud, if any, is practised by the person
concerned not on the court but on one of the
parties. Thus, the offence committed by the person
concerned is qua the party not qua the court, and,
therefore, the very foundation for proceeding for
contempt of court is completely absent in such
cases."
17. But the decision in Babu Ram Gupta (supra) was
clarified and held in part to be obiter by a three member
Bench of this Court in Rama Narang vs. Ramesh Narang
and Another11. In Rama Narang (supra), this Court
pointed out the distinction between two categories of cases
covered by Section 2(b) of the Act namely (i) wilful
disobedience to a process of court; and (ii) wilful breach of
an undertaking given to a court.
18. In fact, in Rama Narang (supra), this Court went to the
extent of holding that it would neither be in consonance
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with the statute, judicial authority, principle or logic to
draw any distinction between the willful violation of the
terms of a consent decree and willful violation of a decree
passed on adjudication. We have our own doubts whether
the first category of cases covered by Section 2(b) can be
stretched so far. Anyway, that question does not arise in
this case and hence we leave it at that.
17. In the light of the aforesaid exposition of the legal position, it
emerges that in view of the definition of "civil contempt" under
section 2(b) of the Act, a willful breach of an undertaking given to
Court constitutes contempt. An undertaking in its plain meaning,
implies "to undertake an obligation or task". In a sense,
'undertaking' is a relative term. It subsumes in its fold a 'promise' or
'pledge'. From this stand point, the question as to whether in a given
case, the party has given undertaking is required to be determined,
upon construction of the consent terms/statement made before the
Court, as as whole. The absence of expression like "a party
undertakes" is not of a decisive significance. If the Court upon a
proper construction of the consent terms/statement, comes to the
conclusion that there is indeed a promise to act in a particular
manner or an obligation to discharge a liability, then the Court
would be justified in construing an undertaking, notwithstanding
the absence of the formal expression "undertaking".
18. Undoubtedly there should be an undertaking. In the absence
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of any material the Court cannot imply an undertaking. However,
this aspect cannot be stretched to such an extent that the Court
would construe an undertaking only when there is a formal
undertaking in the consent terms/statement made before the Court.
19. The matter can be looked at from a slightly different
prospective. We cannot loose sight of the fact that a Court is made to
act upon a solemn statement and pass orders thereon. A party
obtains advantage by making an assurance to the Court. But for
such assurance or solemn statement, the Court would not have
made a particular order. In such situation, if the party who makes
the Court to believe in its assurances is permitted to wriggle out of
the situation by asserting that there is no formal undertaking, it
would lead to anomalous consequences. The very authority of the
Court to find the parties to terms they undertake would be eroded.
20. On the aforesaid touchstone, if the facts of the case at hand are
considered, in my view, the consent terms ("X") do make out such a
clear promise to make the payment. Clause 2 of the consent terms
(extracted above) contains a clear and unequivocal assurance on
the part of the Defendants to pay the amount of Rs. 1,11,60,000/-
unconditionally. Clause 3 further makes the time essence for
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making the payment. Clause 6 reinforces the fact that the parties
had entered into the consent terms after fully understanding the
terms thereof and the liabilities which flowed there from. It is true
that the consent terms provide for execution of the decree in the
event of default and payment of interest at a higher rate of 18% p.a.
However, those stipulation do not detract materially from the
undertaking, to make the payment, incorporated therein.
21. For the foregoing reasons, I am not persuaded to accede to the
submissions on behalf of the Respondents that there was no
undertaking. In my view, the consent terms (X), which was acted
upon by the Court and resulted in passing of consent decree by,
order dated 10th January, 2020, do, prima facie, incorporate the
"undertaking".
22. Mr. Desai, learned counsel for the Respondents urged with a
degree of vehemence that even if it is assumed that Respondents
had given such undertaking and could not honour the terms
thereof, yet it cannot be said that there is a willful breach of the said
undertaking. Mr. Desai would urge that in the backdrop of the
situation which arose on account of Covid 19 pandemic, wherein no
sector was immune from the devastating consequences, the failure
to make payment, as promised, cannot be construed as a willful
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breach. Mr. Khan joined the issue by advancing a submission that
default had occurred much before the lockdown restrictions came to
be imposed. Moreover, the subsequent conduct of the Respondents
justify an inference that the Respondents never intended to comply
with the consent terms.
23. At this juncture, I do not consider it necessary to delve deep
into the aspect of "willful breach". Evidently, there is non
compliance of the obligation under the consent terms. The question
as to whether the Respondents were prevented by the weight of the
circumstances from complying with the obligation under the
consent terms is essentially rooted in facts. Whether the failure to
comply with obligations under the consent terms was justifiable on
account of the situation which arose on account of Covid 19
pandemic is a matter which would also warrant consideration.
24. In the aforesaid view of the matter, I am persuaded to hold
that the Petitioner has succeeded in making out a prima facie case
for initiation of action for civil contempt against the Respondents. It
would therefore be necessary to initiate action for contempt against
the Respondents in accordance with Contempt of Courts (Bombay
High Court) Rules, 1994. Hence, the following order.
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ORDER
Issue notice to the Respondents under Rule 1036 of the
Contempt of Courts (Bombay High Court) Rules, 1994 to appear in
person before the Court on 30th March, 2022.
(N.J.JAMADAR, J.)
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