The Supreme Court on 19.01.2021(Tuesday) comprising of a bench of Justices AM Khanwilkar and BR Gavai observed that before punishing a person for non-compliance of the decision of the Court, the Court must not only be satisfied about the disobedience of any judgment, decree, direction, writ or other process but should also be satisfied that such disobedience was wilful and intentional.( Rama Narang Vs. Ramesh Narang)

Background of the Case

A contempt petition filed in 2008 arising out of a family dispute between a father on one hand and his two sons from his first wife on the other hand. In the contempt petition, it was alleged that the party in his attempt to overreach an order passed by the Apex Court in an earlier contempt petition approached the Company Law Board and obtained an interim order. The contempt petitioner alleged that invoking the jurisdiction of the CLB and entertaining the said proceedings by the CLB, itself amounts to contempt.

The contention of the Parties

The Counsel onbehalf of the petitioner submitted, that the acts which are alleged to be contemptuous in nature, in the present proceedings, are identical with the acts which are found to be contemptuous in the judgment of this Court dated 15th March 2007. He submitted, that in spite of having been held guilty, similar acts have been continued by the respondents even after 15th March 2007. He submitted, that in view of the findings of this Court in its judgment dated 15th March 2007, for the reasons recorded therein, the present respondents are required to be held guilty for committing contempt of this Court and be punished in accordance with law.

With regard to the application for directions filed by the respondent No.1 herein, Shri Jaideep Gupta submitted, that such an application was not tenable in the contempt proceedings initiated by the petitioner. He submitted, that as a matter of fact, the CLB has no jurisdiction to pass an order of a nature as passed by it. It is submitted, that when there was settlement between the parties which has a seal of approval by this Court, the respondents could not have initiated the proceedings before the CLB. He submitted, that in any case, the petitioner had taken objection with regard to maintainability of the proceedings before the CLB and the CLB, without deciding the issue regarding tenability, had passed the interim orders. It is therefore submitted, that the reliance placed by the respondents on the orders passed by CLB is of no assistance totheir case.

Shri Kapil Sibal, the learned Senior Counsel made his submissions in reply to the contempt petition and in support of the application for directions. He submitted, that originally Narang’s family consisted of three brothers, namely Manu, Rama and Rohit. He submitted, that the Terms of Settlement between various members of the family was recorded by an order passed by theBombay High Court on 3rd July 1997. He submitted, that the proceedings arising out of the settlement had reached up to this Court. This Court vide order dated 4th May 1999, had called for a report from Justice Lodha, Judge of the Bombay High Court (as His Lordship then was) with regard to, Rama-petitioner herein committing contempt of Justice Dhanuka’s order. He submitted, that after perusal of the report, this Court vide order dated 2nd November 2001, held the present petitioner guilty for contempt.However, in view of the subsequent settlement between the parties, the order holding the present petitioner guilty was recalled.

Shri Akhil Sibal, the learned Senior Counsel supplemented the arguments on behalf of the respondents in the contempt petition/applicants in the application for directions. He submitted, that insofar as the allegations made by the petitioner with regard to the respondents unilaterally entering into labour contracts, grant of increments to the executives, contract of purchase of equipments etc. are concerned, the respondents, in order to keep the Company running, were required to take several decisions between September 2007 and March 2008, in accordance with the Company Manual.

He submitted, that at one point of time, the labourers went on strike and the contempt petitioner was not willing to cooperate in running the affairs of the Company, as such certain emergent decisions were taken during the said period. However, all those decisions have been ratified by the Facilitator and therefore, no case is made out to hold the respondents guilty of contempt.

Courts Observation & Judgment

The Supreme Court referred to the Section 2 (b) of the Contempt of Courts, Act, 1971, which defined the term ‘Civil Contempt’ as a “wilful disobedience to any judgment, decree, direction, order, writ or other process of a court or wilful breach of an undertaking given to a court.”

Thereafter, the Supreme Court considered its earlier Order dated 15.03.2007, whereby it held that according to the terms of undertaking, the Petitioner and the Respondents were under an obligation to run the company harmoniously with the participation of all but unfortunately, the Respondents had taken over absolute control with complete exclusion of the Petitioner. Therefore, the Supreme Court reiterated all of its earlier Orders passed in the matter to figure out the wilful, intentional, and deliberate disobedience or breach of the judgment, order or direction of the Supreme Court by the Respondents.

The Supreme Court observed that in the present case, the Respondents were entitled to invoke the jurisdiction of the CLB under Sections 397, 398 and 403 of the Companies Act, 2013. It further observed that due to compelling circumstances, which was disrupting the Company’s functioning, the Respondents had to approach the CLB to safeguard the interest of the Company and its stakeholders.

Further, the Supreme Court observed that merely taking recourse to the statutory remedy available to the Respondents would not amount to contempt. Therefore, the Supreme Court said that where an objection is taken to the jurisdiction to entertain a suit and to pass any interim orders therein, the court should decide the question of jurisdiction in the first instance. However, this does not mean that pending decision on the question of jurisdiction, the Court has no jurisdiction to pass interim orders as may be called for in the facts and circumstances of the case.

The Supreme Court dismissed the Contempt Petition and held that the Petitioner failed to make out a case of wilful, deliberate and intentional disobedience or acted in breach of the undertaking given to the Court of any of the directions of the Supreme Court and therefore were unable to satisfy the Court regarding contempt by the Respondents.

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Anshu Prasad