A.P.Mahesh Cooperative Urban ... vs Mr Umesh Chand Asawa And 10 Others
2022 Latest Caselaw 4321 Tel

           HONOURABLE SRI JUSTICE P. NAVEEN RAO

               CONTEMPT CASE NO. 353 OF 2021

                         Date :26.8.2022

Between:

A P Mahesh Cooperative Urban Bank Shareholders
Welfare Association, Regd.No.389/2019, Flat No.403,
Janapriya Granduer Street No.18, Himayatnagar,
Hyderabad, Represented by its President Sri Omprakash
Modani

                                                .... Petitioner

     And

Mr Umesh Chand Asawa, S/o Late Mr Radhakishanji Asawa
Aged 59 years, Occ:Managing Director and CEO, A.P.Mahesh
Cooperative Urban Bank, Road No.12, Banjara Hills, Hyderabad
and others.
                                             .... Respondents

The Court made the following:

PNR,J CC No.353 of 2021

HONOURABLE SRI JUSTICE P. NAVEEN RAO

CONTEMPT CASE NO.353 OF 2021

ORAL ORDER:

Heard learned counsel for petitioner Sri Diljit Singh

Ahluwalia and learned counsel for respondents Sri Vedula

Srinivas.

2. On the issue of holding elections to the Executive body of

the society, some of the members of the society were opposing

and some of the members are supporting other group. Several

Interlocutory applications are filed in the writ petitions.

I.A.Nos.1 and 2 of 2020 in W.P.No.21795 of 2020 is filed praying

to direct respondent authorities to conduct thorough

investigation and stay operation of bogus voters list dated

17.11.2020; I.A.No.1 of 2020 in W.P.No.23849 of 2020 is filed

praying to issue directions to complete the counting of votes and

to declare the results; I.A.No.1 of 2020 in W.P.No.23853 of 2020

is filed praying to issue directions to complete the counting of

votes and to declare the results; I.A.No.1 of 2020 in

W.P.No.23869 of 2020 is filed to issue directions to complete

the election process by completing counting of votes and to

declare results; and I.A.Nos.1 and 2 of 2020 in W.P.No.23976 of

2020is filed praying to suspend declaration of results and to PNR,J CC No.353 of 2021

conduct re-election. These Interlocutory Applications were

decided by common order dated 8.1.2021.

3. Paragraph 42 of the order reads as under:

"42. Having given my anxious consideration to the submissions of the learned counsel, following orders are passed:

i) I.A.No.1 of 2020 in W.P.No.23853, I.A.No.1 of 2020 in W.P.No.23869 and I.A.No.1 of 2020 in W.P.No.23849 of 2020 are ordered and the Returning Officer is directed to announce the result of the election held on 20.12.2020;

ii) In I.A.No.1 of 2020 in W.P.No.21795 of 2020, issue notice, returnable by 02.02.2020;

iii) I.A.No.2 of 2020 in W.P.No.21795 of 2020 is filed praying to stay the operation of bogus voters list dated 17.11.2020. For the reasons stated above, petitioner is not entitled to the relief sought in the Interlocutory Application. I.A.No.2 of 2020 in W.P.No.21795 of 2020 is dismissed;

iv) In I.A.No.1 of 2020 in W.P.No.23976 of 2020 petitioners are praying to suspend the declaration of results of the election. For the reasons stated above, petitioners are not entitled to the relief sought in the Interlocutory Application. I.A.No.1 of 2020 in W.P.No.23976 of 2020 is dismissed;

v) I.A.No.2 of 2020 in W.P.No.23976 of 2020 is filed to direct the 4th respondent Bank to conduct re-election to the posts of Directors. Unless the Court holds that the election process undertaken by the Returning Officer is vitiated, Court cannot direct re-election. Therefore, prayer sought in this Interlocutory Application cannot be granted at this stage. I.A.No.2 of 2020 in W.P.No.21976 of 2020 is dismissed;

vi) Until further orders, the newly elected Directors are directed not to take policy decisions affecting the affairs of the society and the bank, including dealing with the funds of the society except for attending to day to day needs of the Society and the Bank and payment of salaries and allowances of the staff."

4. This contempt case is filed alleging that directions issued

in paragraph 42 (vi) are violated and with impunity the elected PNR,J CC No.353 of 2021

Board of Directors are taking policy decisions affecting affairs of

the society and thereby committed contempt of the Court.

5. Elaborate submissions were made on both sides. Learned

counsel Sri Diljit Singh Ahluwalia also filed list of dates and

events and gist of the submissions.

6.1. According to learned counsel Sri Ahuluwalia, the Court

permitted the Board of Directors only to deal with day to day

needs of the bank whereas with impunity it has been taking

policy decisions. Loans worth Rs.100 crores were sanctioned;

Committees were constituted to deal with funds, dues, loans

etc. Proposals were made to the Board stating that loan

Committee can sanction loan proposals above Rs.30 lakhs and

upto Rs.70 lakhs and renewal of loan proposals amounting to

Rs.30 lakhs to Rs.1 crore. He would submit that when no loan

committee can be formed in view of direction 42 (vi), the said

committee sanctioning the loans is per-se illegal. Further, when

power of the Committee is limited to sanction loans upto Rs.70

lakhs, the Committee could not have sanctioned loans

amounting to Rs.100 crores.

6.2. According to learned counsel, the mandate of the Court

that the Board can take only decisions on day to day operations PNR,J CC No.353 of 2021

of the Bank was within the knowledge of the Board of Directors.

This is apparent from the grounds raised in W.A.No.21 of 2021

and I.A.No.1 of 2021 filed seeking clarification after the order of

Division Bench granting leave to the appellant Bank to move

appropriate application before the learned Single Judge. This

aspect was also debated in the meeting of the Board of

Directors. Five members opposed certain proposals placed

before the Board contending that approval of the agenda items

would be offending the order of the Court. Strangely, the

clarification petition was withdrawn on 30.3.2021. Contrary to

the earlier understanding, the Board has been taking policy

decisions. He further contended that as evident from the

correspondence of the Bank with Reserve Bank of India, the

Bank has already formulated new policies/ change of existing

policies on Audit, Cyber Security, Interest Rate on deposits etc.

6.3. According to learned counsel, all the actions of the Board

are in clear violation of the directions of the Court and such

actions are willful and deliberate. In support of his contention

that respondent board members violated directions of the Court

willfully and deliberately, and are liable to be punished, he

placed reliance on the decisions in Yashwant Sinha and

others vs. Central Bureau of Investigation through its PNR,J CC No.353 of 2021

Director and another1; Ashok Paper Kambar Union Vs.

Dharam Godha2 and Kapildeo Prasad Sah Vs State of Bihar3.

7.1. Per contra, learned senior counsel Sri Vedula Srinivas,

appearing for the respondents would submit that petitioner

failed to point out what policy decisions were taken by the

Board offending the directions of the Court. He would submit

that all the decisions taken by the Board are routine matters

concerning banking business based on existing policies of the

bank. He would submit that what amounts to a policy decision

in managing a banking establishment is not stated in the

contempt petition. Unless it is shown that the activities

undertaken by the respondents are policy matters, the

respondents can not be held guilty of contempt.

7.2. He would assert that there is ambiguity in the order in

paragraph 42 (vi) on its scope and application. Interpretation of

order of Court, the conduct of a respondent can not be said as

violating the order of the Court deliberately and willfully. When

there is no clarity in the order, the respondents can not be held

guilty of the contempt.

(2019) 6 SCC 1

(2003) 11 SCC 1

(1999) 7 SCC 569 PNR,J CC No.353 of 2021

7.3. Drawing attention to averments in paragraphs - 17, 18,

21 to 23 of counter filed by 1st respondent, learned senior

counsel would submit that granting membership and allotment

of "A" class shares and adjustment of "A" class shares to loan

accounts do not amount to policy decision as such procedure is

already specified and no new policy decision is made. On

9.12.2020 certain decisions were taken by the Board prior to

the interim order and same were affirmed in the meeting held

on 27.1.2021. Since Board decisions were earlier to order of the

Court affirming those decisions do not amount to taking policy

decisions violating the Court order. Further, by these decisions

policies of the bank are not altered.

7.4. According to learned senior counsel utilization of funds of

the bank and diverting surplus funds to money market,

government securities and loans and advances strictly following

RBI guidelines is a routine business and enables the bank

secure revenue to meet its day to day needs including payment

of salaries and allowances to employees permitted by this Court.

It is not possible to meet this expenditure by simply locking the

funds of the bank.

PNR,J CC No.353 of 2021

7.5. Relying on observations of Hon'ble Supreme Court in

Chhotu Ram vs. Urvashi Gulati and another4, R.S.Sehrawat

Vs. Rajeev Malhotra and others5, and Kanwar Singh Saini vs.

High Court of Delhi6, he would submit that contempt of court

proceedings is quasi-criminal and allegation of violation of Court

order require same proof as in criminal case. He would submit

that the Court cannot draw inference of guilt. Petitioner failed

to substantiate the conduct of respondents beyond all

reasonable doubt to hold them guilty of contempt. Taking

through the decision of Hon'ble Supreme Court in SLP

(Criminal) No.3869 of 2021, he would submit that Hon'ble

Supreme Court assessed the conduct of petitioner in the

manner in which he was prosecuting the litigation and with that

standing he can not prosecute this contempt. Learned senior

counsel also relied on decision of Hon'ble Supreme Court in

U.N. Bora v. Assam Roller Flour Mills Association7.

7.6. Learned senior counsel took serious objection to filing

internal correspondence between the Bank and its legal advisors

and also sought to know the source of alleged information

secured by the petitioner. He would submit that the

(2001) 7 SCC 530

(2018) 10 SCC 574

(2012) 4 SCC 307

(2022) 1 SCC 101 PNR,J CC No.353 of 2021

consultation process with Legal Advisors by a client is

confidential and privileged between the client and the legal

advisor and cannot be put in public domain. Same objection is

raised by other respondents.

8. In reply to the last of the submissions of learned senior

counsel, Sri Ahulwalia submitted that the claim of privilege on

what transpired between the lawyer and client is confidential

only between them and not to third parties.

9. I have carefully considered the submissions of learned

counsel for

10. As noticed by the Hon'ble Supreme Court in SLP

(Criminal) No.3869 of 2021, the acrimony between two warring

groups of the Bank continue unabated. Leaving aside the

bitterness among warring groups, the issue for consideration is

whether actions/decisions of respondents amount to willful

and deliberate disobedience of the orders of this court.

11. Suffice to note at this stage that the Court is not taking

note of the exchange of correspondence between counsel and

the bank to decide the issue.

PNR,J CC No.353 of 2021

12. On what constitutes disobedience of the order of the

Court, Division Bench of this Court in Commercial Tax

Officer, Vijayawada and another Vs. Sri K. Naveen Kumar,

Vijayawada, Krishna District8, reviewed the law on the

subject. The Division Bench held,

"9. Effective administration of justice would require some penalty to be imposed for disobedience of orders of the Court if disobedience is more than casual, accidental or unintentional. (Heatons Transport Ltd. v. Transport and General Workers Union; Court on its own motion v. N.S. Kanwar). In exercise of its contempt jurisdiction, the Court is primarily concerned with an enquiry whether the contemnor is guilty of intentional and wilful violation of the orders of the Court. (Maninderjit Singh Bitta v. Union of India). The wilful element is an indispensable requirement to bring home the charge within the meaning of the Act. (Anil Ratan Sarkar v. Hirak Ghosh). 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 the purpose of either disobeying or disregarding the law. (Patel Rajnikant Dhulabhai v. Patel Chandrakant Dhulabhai; Ashok Paper Kamgar Union v. Dharam Godha). Wilful would exclude casual, accidental, bona fide or unintentional acts or genuine inability to comply with the terms of the order. Whether or not disobedience is willful depends on the facts and circumstances of each case. Even negligence and carelessness can amount to disobedience. (Kapildeo Prasad Sah v. State of Bihar).

10. If a party who is fully in the know of the order of the Court, or is conscious and aware of the consequences and implications of the undertaking furnished by him to the Court, ignores it or acts in violation thereof, it must be held that disobedience is wilful. It may not be possible to prove the actual intention behind the act or omission. A Court can approach the question only objectively, and it may presume the intention from the act done as every man is presumed to intend the probable consequence of his act. (N.S. Kanwar3). To establish contempt of court, it is sufficient to prove that the conduct was willful and that the contemnor knew of all the facts which made it a breach of the order. It is not necessary to prove that he appreciated that it did breach the order. (St. Helens Ltd. v. Transport & General Workers Union; Adam Phones Ltd. v. Goldschmidt)."

11. While the jurisdiction exercised in cases of contempt is quasi- criminal in nature and the court must be satisfied, on the material before it, that contempt of court was in fact committed, such satisfaction may be derived from the circumstances of the case. (Ram Autar Shukla v. Arvind Shukla; Bank of India v. Vijay Transport). For the purposes of judging 'civil contempt', intention or mens rea

2017 SCC Online Hyd 323 PNR,J CC No.353 of 2021

is not relevant. The question is only whether the breach was on account of wilful disobedience i.e, whether it was not casual or accidental and unintentional. (V.C. Govindaswami Mudali v. B.Subba Reddy). Every person, be it a party to a lis before the court and even otherwise, must obey orders of the Court, in its true letter and spirit, with due respect for the institution. (Maninderjit Singh Bitta4). " (emphasis supplied)

13. Learned senior counsel placed reliance on paragraphs 8

and 9 of the Hon'ble Supreme Court judgment in U.N.Bora. In

these paragraphs Hon'ble Supreme Court explains what is

meant by disobedience. Hon'ble Supreme Court highlighted the

requirement of 'knowledge' of the contemnor. These paragraphs

read as under:

"Discussion

8. We are dealing with a civil contempt. The Contempt of Courts Act, 1971 explains a civil contempt to mean a wilful disobedience of a decision of the Court. Therefore, what is relevant is the "wilful" disobedience. Knowledge acquires substantial importance qua a contempt order. Merely because a subordinate official acted in disregard of an order passed by the Court, a liability cannot be fastened on a higher official in the absence of knowledge. When two views are possible, the element of wilfulness vanishes as it involves a mental element. It is a deliberate, conscious and intentional act. What is required is a proof beyond reasonable doubt since the proceedings are quasi-criminal in nature. Similarly, when a distinct mechanism is provided and that too, in the same judgment alleged to have been violated, a party has to exhaust the same before approaching the court in exercise of its jurisdiction under the Contempt of Courts Act, 1971. It is well open to the said party to contend that the benefit of the order passed has not been actually given, through separate proceedings while seeking appropriate relief but certainly not by way of a contempt proceeding. While dealing with a contempt petition, the Court is not expected to conduct a roving inquiry and go beyond the very judgment which was allegedly violated. The said principle has to be applied with more vigour when disputed questions of facts are involved and they were raised earlier but consciously not dealt with by creating a specific forum to decide the original proceedings.

9. We do not wish to reiterate the aforesaid settled principle of law except by quoting the reasoned decision of this Court in Hukum Chand Deswal v. Satish Raj Deswal [Hukum Chand Deswal v. Satish Raj Deswal, (2021) 13 SCC 166 : 2020 SCC OnLine SC 438] wherein the PNR,J CC No.353 of 2021

celebrated judgment in Ram Kishan v. Tarun Bajaj [Ram Kishan v. Tarun Bajaj, (2014) 16 SCC 204 : (2015) 3 SCC (L&S) 311] , has been quoted. The following paragraphs would govern the aforesaid principle : (Hukum Chand Deswal case [Hukum Chand Deswal v. Satish Raj Deswal, (2021) 13 SCC 166 : 2020 SCC OnLine SC 438] , SCC paras 20-21 & 25-27)

"20. At the outset, we must advert to the contours delineated by this Court for initiating civil contempt action in Ram Kishan v. Tarun Bajaj [Ram Kishan v. Tarun Bajaj, (2014) 16 SCC 204 : (2015) 3 SCC (L&S) 311] . In paras 11, 12 and 15 of the reported decision, this Court noted thus : (SCC pp. 209-11) '11. The contempt jurisdiction conferred on to the law courts power to punish an offender for his wilful disobedience/contumacious conduct or obstruction to the majesty of law, for the reason that respect and authority commanded by the courts of law are the greatest guarantee to an ordinary citizen that his rights shall be protected and the entire democratic fabric of the society will crumble down if the respect of the judiciary is undermined. Undoubtedly, the contempt jurisdiction is a powerful weapon in the hands of the courts of law but that by itself operates as a string of caution and unless, thus, otherwise satisfied beyond reasonable doubt, it would neither be fair nor reasonable for the law courts to exercise jurisdiction under the Act. The proceedings are quasi-criminal in nature, and therefore, standard of proof required in these proceedings is beyond all reasonable doubt. It would rather be hazardous to impose sentence for contempt on the authorities in exercise of the contempt jurisdiction on mere probabilities. (Vide V.G. Nigam v. Kedar Nath Gupta [V.G. Nigam v. Kedar Nath Gupta, (1992) 4 SCC 697 : 1993 SCC (L&S) 202] , Chhotu Ram v. Urvashi Gulati [Chhotu Ram v. Urvashi Gulati, (2001) 7 SCC 530 : 2001 SCC (L&S) 1196] , Anil Ratan Sarkar v. Hirak Ghosh [Anil Ratan Sarkar v. Hirak Ghosh, (2002) 4 SCC 21] , Bank of Baroda v. Sadruddin Hasan Daya [Bank of Baroda v. Sadruddin Hasan Daya, (2004) 1 SCC 360] , Sahdeo v. State of U.P. [Sahdeo v. State of U.P., (2010) 3 SCC 705 : (2010) 2 SCC (Cri) 451] and National Fertilizers Ltd. v. Tuncay Alankus [National Fertilizers Ltd. v. Tuncay Alankus, (2013) 9 SCC 600 : (2013) 4 SCC (Civ) 481 : (2014) 1 SCC (Cri) 172] .)

12. Thus, in order to punish a contemnor, it has to be established that disobedience of the order is "wilful". The word "wilful" introduces a mental element and hence, requires looking into the mind of a person/contemnor by gauging his actions, which is an indication of one's state of mind. "Wilful" means knowingly intentional, conscious, calculated and deliberate with full knowledge of consequences flowing therefrom. It excludes casual, accidental, bona fide or unintentional acts or genuine inability. Wilful acts does not encompass involuntarily or negligent actions. The act has to be done with a "bad purpose or without justifiable excuse or stubbornly, obstinately or perversely". Wilful act is to be distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. It does not include any act done negligently or involuntarily. The deliberate conduct of a person means that he knows what he is doing and intends to do the same. Therefore, there has to be a calculated action with evil motive on his part. Even if there is a disobedience of an order, but such disobedience is the PNR,J CC No.353 of 2021

result of some compelling circumstances under which it was not possible for the contemnor to comply with the order, the contemnor cannot be punished. "Committal or sequestration will not be ordered unless contempt involves a degree of default or misconduct." (Vide S. Sundaram Pillai v. V.R. Pattabiraman [S. Sundaram Pillai v. V.R. Pattabiraman, (1985) 1 SCC 591] , Rakapalli Raja Ram Gopala Rao v. Naragani Govinda Sehararao [Rakapalli Raja Ram Gopala Rao v. Naragani Govinda Sehararao, (1989) 4 SCC 255] , Niaz Mohd. v. State of Haryana [Niaz Mohd. v. State of Haryana, (1994) 6 SCC 332] , Chordia Automobiles v. S. Moosa [Chordia Automobiles v. S. Moosa, (2000) 3 SCC 282] , Ashok Paper Kamgar Union v. Dharam Godha [Ashok Paper Kamgar Union v. Dharam Godha, (2003) 11 SCC 1] , State of Orissa v. Mohd. Illiyas [State of Orissa v. Mohd. Illiyas, (2006) 1 SCC 275 : 2006 SCC (L&S) 122] and Uniworth Textiles Ltd. v. CCE [Uniworth Textiles Ltd. v. CCE, (2013) 9 SCC 753] ."

14. Guided by above enunciation of law, the facts and

circumstances of this case have to be analyzed.

15. To allege violation of the directions of the Court, heavy

reliance is placed on the grounds urged in support of W.A.No.21

of 2021 against the direction in paragraph No.42 (vi) and in

I.A.No.1 of 2021 filed seeking clarification/modification of the

order in paragraph 42 (vi). By placing reliance on internal

correspondence learned counsel emphasized that even the

Board members knew that except undertaking day to day

functions of the Bank they cannot take decisions such as

admission of members, allocation of shares, extending loans,

investing money of the bank in securities, etc. He also

contended that sanctioning loans touching Rs.100 crores is

illegal.

PNR,J CC No.353 of 2021

16. In paragraph 42 (vi) the Court directed newly elected

Board of Directors not to take policy decisions affecting the

affairs of the society, that also include dealing with the funds of

the society. What was permitted was only day to day needs of

the society and the bank and payment of salaries and

allowances of the staff.

17. Therefore, it is necessary to see whether various decisions

of the Board would amount to taking policy decisions affecting

the affairs of the society including dealing with the funds of the

society not concerning day to day needs of the Society and the

Bank and whether these decisions/ actions are in violation of

the directions.

18. At this stage, it is expedient to note how the respondents

understood the directions of the Court and visualized the

situation.

19. Writ Appeal Nos. 21 and 22 of 2021 are filed against

interlocutory orders of this Court. Grounds - 4, 5 and 9 of

grounds of W.A.No.21 of 2021 read as under:

"4. The learned single Judge failed to see that the normal day-to-day operations of the Bank involves utilization of its surplus funds by granting loans and investing in Government securities and other market related securities and once those activities are prevented from being discharged by the Board, the functioning of a Bank will be hit severely and it will directly effect the income generation of the Bank.

PNR,J CC No.353 of 2021

5. The learned single Judge failed to see that the functioning of a Bank would be different from that of any other commercial establishment and the essential function in a Bank is handling the surplus funds in accordance with the established policies and guidelines of the RBI.

xxxx

9. The learned single Judge grossly erred in restraining the Board of Directors of the Bank from dealing with the funds of the Society except for attending to day-to-day needs of the Society and the Bank and for payment of salaries and allowances of the staff, without bearing in mind the fact that a Bank survives only by making effective utilization of its funds in the form of loans, advances and investments in various market related securities, etc."

20. Appellants also filed I.A.No.1 of 2021 praying to suspend

the order in paragraph-42 (vi). Paragraphs-11 and 12 of I.A.,

read as under:

"11. It is submitted that the said direction issued by the learned single Judge is unwarranted and unreasonable. By virtue of the same, the newly formed Board of Directors are prevented from applying the funds of the Bank as per its requirements in accordance with the established policies and guidelines of the RBI. The learned single Judge has virtually tied the hands of the Board of Directors from applying the funds of the Bank in the normal day-to-day banking activities as per the guidelines of the RBI and the existing policies of the Bank.

12. It is submitted that the normal day-to-day activities of a Bank involve utilization of the funds available with it by way of granting loans and investing in Government securities as per the guidelines of the RBI. The statement annexed to this affidavit describes the normal day-to-day activities of a Bank and unless they are discharged, the Bank will be put to severe financial loss everyday and that would hamper its legitimate generation of income. The Board of Directors will have to take decisions regarding the utilization of the funds of the Bank, as per the existing policies of the Bank and the guidelines of the RBI. The learned single Judge has stalled the same as per para-42(iv) of his order and that para is to be set aside or else it would result in loss of income to a huge extent everyday, to the Bank."

21. The statement enclosed to the Writ Appeal lists out

various activities required to be performed by the Management

of the Bank. They encompass wide spectrum of activities PNR,J CC No.353 of 2021

including aspects on which allegations are leveled in this

contempt case.

22. While disposing of the Writ Appeals, the Division Bench

observed,

"3. ....... If the appellant/Bank is of the opinion that the day to day activities of the bank include those listed at serial Nos.1 to 21 of the statement enclosed with W.A.No.21 of 2021 at page 118, liberty is granted to the appellant/Bank to move an appropriate application before the learned single Judge for seeking necessary clarification in respect of para 42 (vi) of the impugned common order."

23. After the disposal of Writ Appeals, the Bank filed I.A.No.1

of 2021 in W.P.No.21795 of 2021. To the extent relevant

paragraphs- 5 and 7 read as under:

"5. ... It is necessary for them to take decisions in respect of the above mentioned activities of the Bank, and also to constitute such Committees for carrying out the day-to-day business activities of the Bank. However, by virtue of the order of the Hon'ble Court at para 42(vi), the Board is unable to take decision for applying the funds of the Bank even in respect of the above mentioned day-to-day activities of the Bank.

... For example, the Bank will be investing surplus funds in Government securities on day-to-day basis as per the guidelines of the RBI and once that is not done, every day the Bank loses substantial amount. Similarly, the loan applications of the customers will have to be attended to and disposed of either by the Loan Committee or by the Board of Directors itself depending upon the amount of loan and this is an essential function of the Bank.

.... All the activities narrated in the annexed statement are core in the functioning of the Bank, and unless they are performed day-to- day, the total activities of the bank will get crippled and the Bank will be put to huge financial loss as well as loss of reputation and image.

7. It is therefore prayed that this Hon'ble Court may be pleased to clarify the paragraph 42 (vi) of the order dated 08.01.2021 in I.A.Nos.1 and 2 of 2020 in W.P.No.21795 of 2020 & batch so as to permit the Board of Directors of the 4th respondent Bank to carry out the normal day-to-day activities of the Bank as mentioned in the statement annexed to the affidavit, and pass such other order or orders as this Hon'ble Court may deem fit and proper in the circumstances of the case."

PNR,J CC No.353 of 2021

24. From the reading of extracted averments, it is apparent

that even according to respondents certain activities listed in

the statement filed in W.A.No.21 of 2021 are core and essential

to the functioning of the Bank. From the above grounds and

averments, it is clear that the Directors and the Managerial staff

of the bank understood that the restraint imposed by the Court

in paragraph 42 (vi) is all pervasive and severely dents the core

and essential activities of the bank leading to several

administrative and financial problems and that various

activities mentioned in the statement at page no.118 of

W.A.No.21 of 2021 paper book are core and essential activities

of the Bank.

25. Alleging crippling of the functioning of the Bank is one

thing and taking a 'U'-turn on their understanding of the order

o the Court and indulging on all aspects of functioning of a

bank as if all those aspects are only day-to-day activities is

another thing.

26. The change of their understanding and approach is

evident from the stand expressed in paragraphs - 18, 21 and

22 of the counter affidavit of the 1st respondent. They read as

under:

PNR,J CC No.353 of 2021

"18. It is submitted that the agenda items taken up during the Board Meeting dated 27.01.2021 are not amounting to any policy decisions affecting the affairs of the Society and the Bank and hence the same do not amount to violating the order of the Hon'ble Court. The agenda item 10 (a) was to seek approval/ ratification of membership/ allotment of A class shares and adjustment of A class shares to loan accounts, which is not a policy decision but which is a routine matter and hence the same is not in violation of Court order.

xxx

21. The Agenda No.1 was for confirming the Minutes of Meeting of the Board of Directors held on 09.12.2020 and the same was prior to the order of the Hon'ble Court dated 09.01.2021. The same is not amounting to taking a policy decision affecting the affairs of the Society and the Bank. It is submitted that attending to the day to day needs of the Bank would involve utilization of the funds of the Bank towards its core business by following the guidelines and restrictions imposed by the RBI. The petitioner cannot misread the order of the Hon'ble Court and urge that except payment of salaries and allowances of the staff, for no other purpose the bank should spend its funds or else it amounts to violation of the court order. The utilization of the funds and parking of the surplus amount of the Bank in various options available to the Bank Management in accordance with its past practices and by availing the policy guidelines of the RBI, is a routine business and the same at any state of imagination cannot amount to taking policy decision affecting the affairs of the society and the Bank.

22. The agenda no. 4 (a) deals with sanction / renew / enhance of loans and advances, which is a part of routine business of the bank and the same is not taking a policy decision affecting the affairs of the society and the Bank. The payment of salaries and allowances to the employees of the bank involves generation of renenue by the bank and it is only by way of employing its funds in the money market, Government Securities, Loans and Advances and various other permitted resources, that a Banking institution will earn money and the petitioner cannot expect a Bank to lock all its funds and still go on paying salaries and allowances to its employees."

27. There is no explanation to this sudden change of their

understanding on functioning of the bank. It has to be seen

whether this justification is valid or is a post facto exercise to

cover up what they have done though their understanding was

otherwise. It is to be noted that nowhere it is explained how

certain aspects are day-to-day functioning activities of the bank PNR,J CC No.353 of 2021

and are not core and form part of day to day activities. More so,

when earlier their understanding was otherwise.

28. Word 'policy' literally means a course of action adopted by

an organization. In normal parlance, it means formulating a

rule/ frame work that guides the administrator while taking day

to day decisions of an organization. The expression 'deal with'

literally means take measures concerning/cope with/to do

business with/ to act in regard to/to take action as in regard to

some problem or source of difficulty. The expression 'day to

day' literally means involving everyday routine. Putting these

words/terms together what is prohibited by the Court is taking

course of action in regard to business of the society/ the Bank

except day to day activity. Thus, it has to be seen whether the

decisions of the Board amount to taking course of action in

regard to business of the society which is not a day to day

activity. 'Core' literally means the most essential or vital part

of activity of the bank. 'Routine' literally means normal or

regular. Though respondents understood all the items listed in

the Annexure filed in W.A.No.21 of 2021 as core activities, later

on their own re-classified all those activities as routine business

of the bank.

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29. From the plain reading of the order in paragraph 42 (VI),

it is apparent that this Court directed the elected Directors of

the respondent bank not to take policy decisions affecting the

affairs of the society and the bank, including dealing with funds

of the society except for attending to day-today needs of the

society and the bank and payment of the salaries and

allowances of the staff. In plain terms, what was permitted by

the Court was to attend to day-today needs of the society and

the bank and beyond this i.e., day-to-day needs of the society

and the bank, no decisions can be taken by the Directors.

30. The scope and width of the order of this Court is well

understood by respondents as evident from the grounds urged

in the Writ Appeals and in the I.A.No.1 of 2021 in W.P.No.21795

of 2021.

31. From the admitted facts, though initially concern

expressed was that this direction of the Court was crippling the

functioning of the bank and various activities, placed before the

Division Bench in the form of an annexure, were treated to be

core activities of the bank which the Directors were not able to

deal with, they have changed their perception and

understanding of the purport of direction and treated every PNR,J CC No.353 of 2021

activity as routine activity. Change of perception do not alter

scope of the work.

32. Even assuming that several aspects which they were now

urging to be routine activities, from a plain reading of the order,

it is clear that the Court has not allowed to deal with any other

matter except attending to day-today needs. More particularly

the bar imposed was with regard to dealing with funds of the

bank in any manner.

33. From the narration of the events by the petitioner, which

are also not denied and in fact categorically admitted by the

respondents, several decisions are taken on dealing with the

funds, such as granting loans and investing in securities.

Further, appointment of Committees, cannot be called as a

routine day-to-day needs/ activity of the bank or the society.

34. On what constitutes disobedience of the order of the

Court, Division Bench of this Court in Sri K. Naveen Kumar,

Vijayawada, Krishna District (supra), reviewed the law on the

subject. The Division Bench held,

"9. Effective administration of justice would require some penalty to be imposed for disobedience of orders of the Court if disobedience is more than casual, accidental or unintentional. (Heatons Transport Ltd. v. Transport and General Workers Union; Court on its own motion v. N.S. Kanwar). In exercise of its contempt jurisdiction, the Court is primarily concerned with an enquiry whether the contemnor is guilty of intentional and wilful violation of the orders of the Court. (Maninderjit Singh Bitta v.

PNR,J CC No.353 of 2021

Union of India). The wilful element is an indispensable requirement to bring home the charge within the meaning of the Act. (Anil Ratan Sarkar v. Hirak Ghosh). 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 the purpose of either disobeying or disregarding the law. (Patel Rajnikant Dhulabhai v. Patel Chandrakant Dhulabhai; Ashok Paper Kamgar Union v. Dharam Godha). Wilful would exclude casual, accidental, bona fide or unintentional acts or genuine inability to comply with the terms of the order. Whether or not disobedience is willful depends on the facts and circumstances of each case. Even negligence and carelessness can amount to disobedience. (Kapildeo Prasad Sah v. State of Bihar).

10. If a party who is fully in the know of the order of the Court, or is conscious and aware of the consequences and implications of the undertaking furnished by him to the Court, ignores it or acts in violation thereof, it must be held that disobedience is wilful. It may not be possible to prove the actual intention behind the act or omission. A Court can approach the question only objectively, and it may presume the intention from the act done as every man is presumed to intend the probable consequence of his act. (N.S. Kanwar3). To establish contempt of court, it is sufficient to prove that the conduct was willful and that the contemnor knew of all the facts which made it a breach of the order. It is not necessary to prove that he appreciated that it did breach the order. (St. Helens Ltd. v. Transport & General Workers Union; Adam Phones Ltd. v. Goldschmidt)."

11. While the jurisdiction exercised in cases of contempt is quasi- criminal in nature and the court must be satisfied, on the material before it, that contempt of court was in fact committed, such satisfaction may be derived from the circumstances of the case. (Ram Autar Shukla v. Arvind Shukla; Bank of India v. Vijay Transport). For the purposes of judging 'civil contempt', intention or mens rea is not relevant. The question is only whether the breach was on account of wilful disobedience i.e, whether it was not casual or accidental and unintentional. (V.C. Govindaswami Mudali v. B.Subba Reddy). Every person, be it a party to a lis before the court and even otherwise, must obey orders of the Court, in its true letter and spirit, with due respect for the institution. (Maninderjit Singh Bitta4).

(emphasis supplied)

35. In U.N.Bora, the Hon'ble Supreme Court extracted the

earlier decision in Ram Kishan Vs Tarun Bajaj9. In Tarun

Bajaj Hon'ble Supreme Court held that the word 'willful'

introduces mental element and hence requires looking into the

mind of a person/contemnor by gauging his actions, which is

(2014) 16 SCC 204 PNR,J CC No.353 of 2021

indicate of state of his mind. 'Willful' means knowingly

intentional, conscious, calculated and deliberate with full

knowledge of consequences flowing therefrom. The deliberate

conduct of a person means that he knows what he is doing and

intends to do the same. There has to be a calculated action

with evil motive. It is beyond pale of doubt that the respondents

were fully conscious on the scope and purport of the order,

understood its implications in clear terms as noted above and

therefore their subsequent actions certainly amounts to a

willful conduct to breach the order of this court. It cannot be

called as casual or accidental or unintentional or genuine or

inadvertent act or bona fide. As held by Hon'ble Supreme Court

in U.N.Bora 'knowledge' acquire substantial importance qua a

contempt order. Thus, by their actions/decisions, respondents

have willfully and deliberately disobeyed the orders of this Court

and therefore they are liable to be proceeded against under the

Contempt of Courts Act. Their actions/ decisions do amount to

obstruction of justice in true letter and sprit.

36. Once an order is passed by the Court, it is the bounden

duty and responsibility of the respondents to comply the order

in true letter and spirit. Every citizen, be it an officer of the PNR,J CC No.353 of 2021

State or otherwise must stand to uphold the majesty and dignity

of the Court. In no circumstance, respondents can ignore the

order of the Court or take a decision contrary to the order of the

Court. Court can not allow any person to subvert the order of

the Court. By their conduct, the respondents interfered with

due course of justice. When Court is informed of violation of

the order, it has to wield the power of Contempt and punish the

wrong doer to uphold the majesty of the Court.

37. After sticking to their decisions and justifying their

actions in a routine manner and without expressing any

remorse, the respondents casually offer apology. It is also not

unconditional. They leave it to the Court to decide whether

their actions / decisions were willful and if Court assumes that

they were willful, to accept their apology. Though, respondents

offer apology, it does not appear to be bonafide. It is not sincere

and spontaneous, but made as a matter of course and in a

casual manner just to overcome contempt proceedings.

38. On this issue the Division Bench in CC No. 1974 of 2016

reviewed entire case law. Division Bench observed as under:

"The next question which necessitates examination is whether the apology tendered by the respondent-contemnor merits acceptance. It is no doubt true that the respondent-contemnor has sought pardon, and has tendered his unconditional apology. Section 12(1) of the Contempt of Courts Act, and the Explanation thereto, enables the Court to remit PNR,J CC No.353 of 2021

the punishment awarded for committing contempt of court on an apology being made to the satisfaction of the Court. While an apology should not be rejected if the accused makes it bona fide a conduct which abuses, and makes a mockery of, the judicial process of the Court must be dealt with an iron hand. (Bal Kishan Giri v. State of U.P.,-(2014) 7 SCC 280). An apology can neither be a defence nor a justification for an act which tantamounts to contempt of court. An apology can be accepted in cases where the conduct, for which the apology is given, is such that it can be "ignored without compromising the dignity of the court", or it is intended to be evidence of real contrition. It should be sincere. Apology cannot be accepted in case it is hollow, there is no remorse, no regret, no repentance, or if it is only a device to escape the rigour of the law. Such an apology is merely a "paper apology". (Bal Kishan Giri).

An apology tendered is not to be accepted as a matter of course, and the court is competent to reject the apology and impose the punishment recording reasons therefor. (Bal Kishan Giri). If the apology is found to be without real contrition and remorse, and to have been tendered merely as a weapon of defence, the court may refuse to accept it. 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. (Bal Kishan Giri; Debabrata Bandhopadhyaya v. State of W.B.; Mulk Raj v. State of Punjab- AIR 1972 SC1197, Hailakandi Bar Assn. v. State of Assam-AIR 1996 SC 1925, C. Elumalai v. A.G.L. Irudayaraj-AIR 1009 SC 2214 and Ranveer Yadav v. State of Bihar-(2010)11 SCC 493). A mere statement of apology by the contemnor before the court would hardly amount to his purging himself of contempt. The Court must be satisfied of the genuineness of the apology. If the court is so satisfied, and on this basis accepts the apology as genuine, it should pass an order holding that the contemnor has purged himself of contempt. (Pravin C. Shah v. K.A. Mohd. Ali-(2001) 8 SCC 650).

......

An apology is not intended to operate as a universal panacea. (M.Y. Shareef v. Judges of Nagpur High Court- AIR 1995 SC 19; Pravin C. Shah; T.N. Godavarman Thirumulpad (102) v. Ashok Khot(2006) 5 SCC 1). It is not a weapon of defence forged to purge the guilty of the offence, but is intended to be evidence of real contrition, the consciousness of a wrong done, of an injury inflicted, and the earnest desire to make such reparation as lies in the wrongdoer's power. (Delhi Development Authority v. Skipper Construction-(1995) 5 SCC 507 ). Only then is it of any avail in a court of justice. Unless that is done, not only is the tendered apology robbed of all grace but it also ceases to be a full and frank admission of a wrong done, which it is intended to be. (Hiren Bose, Re-AIR 1969 Cal 1; Patel Rajnikant Dhulabhai-(2008) 14 SCC 561). The apology tendered by the contemnor, to be accepted by the Court, should be a product of remorse. (M.C. Mehta v. Union of India- (2003) 5 SCC 376). Public interest demands that when a person has interfered with the judicial process, the judicial decision should not be pre-empted or circumvented merely by a conditional or an unconditional apology. While it is open to the Court, in an appropriate case, to accept an unconditional apology based on the factual position, dropping the proceeding of contumacious acts deliberately done, after accepting the apology offered, would be a premium for the flagrant abuse of the judicial process. (Ram Autar Shukla- 1995 Supp (2) SCC 130).

In L.D. Jaikwal v. State of U.P- (1984) 3 SCC 405., the Supreme Court observed:-

".........We are sorry to say we cannot subscribe to the "slap--say sorry--and forget" school of thought in administration of contempt jurisprudence.

PNR,J CC No.353 of 2021

Saying "sorry" does not make the person taking the slap smart less upon the said hypocritical word being uttered. 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......"

(emphasis supplied)

39. Having regard to the conduct noticed by the Court, it

cannot be said that there was no willful and deliberate

disobedience and apology offered by the respondents is

unconditional, merely because they mention the words

'unconditional apology'. Apology is lacking in sincerity and

remorse. There are no bonafides in the apology. This Court do

not appreciate the conduct of contemnors.

40. It is clear from the facts on record that apology is offered

only to escape the consequence of deliberate and willful

disobedience of the order of the Court. It does not amount to

full and frank admission of wrong done. It is a paper apology

made without any sincerity. It is hallowed. The conduct cannot

be ignored to purge the contemnors by accepting the apology.

As noted by Division Bench, the observations of Supreme Court

in Ram Autar Shukla Vs. Arvind Shukla10 dropping the

proceedings of contumacious act deliberately done after

accepting apology offered would be a permission for the flagrant

abuse of judicial process. Observations of Supreme Court in

1995 Supp (2) SCC 130 PNR,J CC No.353 of 2021

L.D.Jakmal Vs State of UP11 quoted by Division Bench aptly

apply to this case.

41. Having regard to the above, respondents are held guilty of

the contempt of Court and they are punished with Simple

Imprisonment for a term of fifteen days and fine of 2,000/-

(Rupees Two thousand only) each. The fine amount shall be

paid within four weeks from the date of receipt of this order.

42. The contemnors are entitled 500/- each as subsistence

allowance during the period of detention.

43. At this stage, learned senior counsel appearing for

respondents prays to suspend the sentence to enable the

contemnors to avail the remedy of appeal. Considering the said

request, the sentence is suspended for a period of thirty (30)

days.

44. Accordingly, Contempt Case is disposed of. No costs.

Miscellaneous applications, if any pending, stand closed.

__________________________ JUSTICE P.NAVEEN RAO Date: 26.08.2022 TVK/KKM

(1984) 3 SCC 405 PNR,J CC No.353 of 2021

HONOURABLE SRI JUSTICE P. NAVEEN RAO

CONTEMPT CASE NO. 353 OF 2021

Date :26.8.2022

Tvk/Kkm