Contempt of Courts Act, 1971 – s.2(b) – Constitution of India – Art. 129 – Mere conduct of parties aimed at frustrating the court proceedings or circumventing its decisions, even without an explicit prohibitory order, constitutes contempt – However, power of contempt to be exercised sparingly and with caution – On facts, respondents demonstrated effort and willingness to purge themselves of their contemptuous conduct in violation of Court’s judgment – One last opportunity to them to abide by the judgment:
Held: 1. The contempt jurisdiction of this court cannot be construed by any formulaic or rigid approach – Merely because there is no prohibitory order or no specific direction issued the same would not mean that the parties cannot be held guilty of contempt. [Para 199]
2. Mere conduct of parties aimed at frustrating the court proceedings or circumventing its decisions, even without an explicit prohibitory order, constitutes contempt – Such actions interfere with the administration of justice, undermine the respect and authority of the judiciary, and threaten the rule of law – However, at the same time, the power of contempt ought to be exercised sparingly and with caution and care – It operates with a string of caution and unless otherwise satisfied beyond doubt, it would neither be fair nor reasonable for the courts to resort to such powers – The standard of proof required before a person is held guilty of committing contempt of court must be beyond all reasonable doubt – The courts while exercising its contempt jurisdiction must remain circumspect, more particularly, where there exists a possibility of the order being amenable to more than one interpretation. [Paras 201, 202 and 203]
3.1. On facts, it is true that this Court in its decision rendered in the Main Appeals had not issued any specific direction either to the Borrower or the Subsequent Transferee as regards the handing over of physical possession and the original title deed to the Secured Asset, or the proceedings pending before the DRT in S.A. No. 46 of 2022 – However, the same would not mean that the decision of this Court in the Main Appeal was bereft of any direction as to the outcome of its findings – This Court in the operative portion of the Main Appeals stated in unequivocal terms that the confirmation of the sale by Bank under Rule 9(2) of the SARFAESI Rules had vested the petitioner herein with a right to obtain the certificate of sale of the Secured Asset – It further held categorically that the Borrower herein could not have redeemed the mortgage upon publication of the 9th auction notice – Furthermore, this Court explicitly directed the Bank to not only issue the Sale Certificate to the petitioner herein in accordance with Rule 9(6) of the SARFAESI Rules but also directed the refund of the amount of Rs. 129 crore paid by the Borrower – Moreover, the impugned order of the High Court had been set-aside by this Court in toto. [Para 204]
3.2. Where a decision is rendered and the impugned order is setaside, it behoves any logic that an express direction to act must be given in respect of every aspect of the decision – The parties are duty bound to act in accordance with common sense – If at all the parties are in doubts over the judgment and order of a court, the correct approach is to prefer a miscellaneous application for seeking clarification rather than proceeding to presume a selfserving interpretation of the decision. [Paras 205, 206]
3.3. On facts, both the Borrower and the Subsequent Transferee made several attempts to prevent the effective implementation of the judgement and order dated 21.09.2023 passed by this Court and thereby thwart the attempts of the Bank to hand over the physical possession and the original title deeds of the Secured Asset to the petitioner – Both the Borrower and the Subsequent Transferee committed contempt of this Court’s judgment and order dated 21.09.2023 in the Main Appeals – The acts of the contemnors are nothing more than a gamble on their part to circumvent and undermine the findings and directions passed by this Court in the Main Appeals – Similarly, the lame excuses offered by them for explaining their conduct are also nothing more than a calculated attempt in the hope that they would get away with legitimizing the illegal Assignment Agreement even after the decision of this Court, and is equally contemptuous – However, on an overall conspectus of the facts of the present case, while the initial acts of the Borrower and the Subsequent Transferee are in violation of this Court’s judgment and order dated 21.09.2023, yet the efforts on their part to take steps and make amends by withdrawing the Special Civil Suit No. 5 of 2024 along with their belated unconditional undertaking to comply with any further order that this Court may deem fit and proper to pass, demonstrates their effort and willingness to purge themselves of their contemptuous conducts – Thus, this Court is inclined to provide one last opportunity to the Borrower herein and the Subsequent Transferee to abide by the judgment and order dated 21.09.2023 passed by this Court and further comply with the directions issued in the present contempt petition, and thus, deem it fit not to hold them guilty of contempt for the present moment. [Paras 207, 208, 209]
Contempt of Courts Act, 1971 – s.2(b) – ‘Wilful disobedience’ in the context of s.2(b) – Expression “wilful” – Meaning of: Held: Wilfulness signifies deliberate action done with evil intent and bad motive and purpose – The expression or word “wilful” means act or omission which is done voluntarily or intentionally and with the specific intent to do something which the law forbids or with the specific intent to fail to do something the law requires to be done, that is to say with bad purpose either to disobey or to disregard the law – It signifies a deliberate action done with evil intent or with a bad motive or purpose. [Paras 184, 185] Contempt of Court – Principles governing the Rule of law must be extended to the party against whom contempt proceedings have been initiated. [Para 187]
Res judicata – Constructive Res Judicata – Abuse of Process of Court – Collateral challenge to judgments that have attained finality – Proposition of law laid down by English Court of Chancery in Henderson v. Henderson, [1843] 3 Hare 999 – ‘Henderson’ Principle as a corollary of Constructive Res Judicata – Discussed:
Held: 1. The ‘Henderson Principle’ is a foundational doctrine in common law that addresses the issue of multiplicity in litigation – It embodies the broader concept of procedural fairness, abuse of process and judicial efficiency by mandating that all claims and issues that could and ought to have been raised in a previous litigation should not be re-litigated in subsequent proceedings – The extended form of res-judicata more popularly known as ‘Constructive Res Judicata’ contained in Section 11, Explanation VII of the CPC originates from this principle. [Para 135]
2.1. ‘Henderson Principle’ is a core component of the broader doctrine of abuse of process, aimed at enthusing in the parties a sense of sanctity towards judicial adjudications and determinations – It ensures that litigants are not subjected to repetitive and vexatious legal challenges – At its core, the principle stipulates that all claims and issues that could and should have been raised in an earlier proceeding are barred from being raised in subsequent litigation, except in exceptional circumstances – This rule not only supports the finality of judgments but also underscores the ideals of judicial propriety and fairness. [Para 144]
2.2. There are, four situations where in second proceedings between the same parties doctrine res judicata as a corollary of the principle of abuse of process may be invoked: (i) cause of action estoppel, where the entirety of a decided cause of action is sought to be re-litigated; (ii) issue estoppel or, “decided issue estoppel,” where an issue is sought to be re-litigated which has been raised and decided as a fundamental step in arriving at the earlier judicial decision; (iii) extended or constructive res judicata i.e., “unraised issue estoppel,” where an issue is sought to be litigated which could, and should, have been raised in a previous action but was not raised; (iv) a further extension of the aforesaid to points not raised in relation to an issue in the earlier decision, as opposed to issues not raised in relation to the decision itself. [Para 145]
2.3. As part of the broader rule against abuse of process, the Henderson principle is rooted in the idea of preventing the judicial process from being exploited in any manner that tends to undermine its integrity – This idea of preventing abuse of judicial process is not confined to specific procedure rules, but rather aligned to a broader purport of giving quietus to litigation and finality to judicial decisions – The essence of this rule is that litigation must be conducted in good faith, and parties should not engage in procedural tactics that fragment disputes, prolong litigation, or undermine the outcomes of such litigation – It is not a rigid rule but rather a flexible principle to prevent oppressive, unfair, or detrimental litigation. [Para 146]
3. Although in the present case, the Borrower had raised the issue of the validity of the measures taken by the Bank under the SARFAESI Act and the legality of the 9th auction conducted by it in the earlier stages albeit in a different proceeding, yet its conduct of having conveniently abandoned the same in a different proceeding elected by it for the same cause of action and then later re-agitating it in the pretence that the two proceedings were distinct, is nothing but a textbook case of abuse of process of law. [Para 148]
4. Piecemeal litigation where issues are deliberately fragmented across separate proceedings to gain an unfair advantage is in itself a facet of abuse of process of law and would also fall foul of this principle – Merely because one proceeding initiated by a party differs in some aspects from another proceeding or happens to be before a different forum, will not make the subsequent proceeding distinct in nature from the former, if the underlying subject matter or the seminal issues involved remains substantially similar to each other or connected to the earlier subject matter by a certain degree, then such proceeding would tantamount to ‘re-litigating’ and the Henderson Principle would be applicable – Where a party deliberately withholds certain claims or issues in one proceeding with the intention to raise them in a subsequent litigation disguised as a distinct or separate remedy or proceeding from the initial one, such subsequent litigation will also fall foul of this principle – Similarly, where a plea or issue was raised in earlier proceedings but later abandoned it is deemed waived and cannot be re-litigated in subsequent – Parties must litigate diligently and in good faith, presenting their entire case at the earliest opportunity. [Paras 149, 150, 151]
5. The Henderson principle operates on the broader contours of judicial propriety and fairness, ensuring that the judicial system remains an instrument of justice rather than a platform for procedural manipulation – Both logic and principle support the approach that the judicial determination of an entire cause of action is in fact the determination of every issue which is fundamental to establishing the entire cause of action – The effect of a judicial determination on an entire cause of action is as if the court had made declarations on each issue fundamental to the ultimate decision. [Paras 152, 153] Doctrines / Principles – Doctrine of lis pendens – Doctrine of Pari Delicto – Property situated in Maharashtra – Applicability of lis pendens in absence of any registration as required under the State Amendment to s.52 of TPA – Even in absence of a registered notice of pendency in terms of amended s.52 of TPA the said provision will not be rendered ipso-facto inapplicable – Even otherwise, in peculiar facts of the present case, nonregistration of notice of pendency not fatal to application of the doctrine of lis pendens – Transfer of Property Act, 1882 – s.52 (as amended by State of Maharashtra) – Bombay Amendment Act, 1939:
Held: 1.1. The amended Section 52 sub-section (1) of the TPA casts upon a party who is claiming any right to a property which is a subject-matter of any pending suit or proceeding an additional duty to register a notice of pendency in respect of such property so as to caution and put to notice any third-party who might otherwise be unaware of such proceeding or litigation despite the best of due diligence either due to inadvertence or deliberate misleading by one of the parties to the lis and as result might be genuinely considering to purchase or acquire any right in the subject-matter proceeding – The requirement of registration of notice of pendency is to prevent any undue or unwarranted hardship to such third-parties who even after a reasonable due diligence have bona-fidely purchased the property believing it to be free from the encumbrances of any pending proceeding only to later face the adverse consequence of losing their rights by a mechanical application of lis pendens. [Para 171]
1.2. This additional requirement of registration of notice of pendency is for the benefit of the party claiming any right in such subjectmatter property and also for the benefit of any third-party interested in such subject-matter property by enabling the former to claim the benefit of lis pendens as an absolute right after having duly taken steps towards ensuring that the public is well-aware of the impeding litigation in respect of such property by registering a notice of pendency and to enable the latter to ascertain the veracity of title of such property by exercise of its due diligence – Although, the said provision is for the benefit of the third-party, yet such subsequent purchasers cannot as a matter of absolute right claim any title to such property solely on the ground of want of any notice of pendency being registered – To hold otherwise would undermine the object and purpose of the doctrine of lis pendens which is based on the principle of equity, good conscience, and public policy and discourage any thwarting or frustration of rights of the parties so litigating by unscrupulous and unanticipated transactions. [Para 172]
1.3. The vital essence of this additional duty imposed upon the party claiming a right to a property which is a subject matter of a pending proceeding, is only to aid a third-party to exercise its due diligence and obviate the possibility of any dishonesty, misrepresentation or fraud by a party in order to gain an undue advantage or benefit despite the pendency of proceedings – However, if the absence of notice registration were to render the doctrine entirely inapplicable, it would lead to exploitation of procedural gaps by parties who deliberately delay or avoid registering such notices to defeat substantive rights of the parties and undermine the very sanctity of judicial proceedings – Such an interpretation would lead to a very chilling effect whereby, third parties despite being expected to verify the title and status of the property would simply abdicate their duty to conduct thorough due diligence in transactions involving immovable properties or that despite being fully aware of the pendency of such proceedings would be able to deviously claim absolute rights to such property or worse, mischievously execute back-dated agreements in collusion with a party to a lis prior to registration of such notice of pendency to circumventing the very proceedings and render them infructuous. [Para 173]
2. Even in the absence of a registered notice of pendency in terms of the amended Section 52 of TPA the said provision will not be rendered ipso-facto inapplicable, at best it would preclude the party seeking benefit of this doctrine to claim it as a matter of right, but by no stretch would it mean that the third-party conversely would be able to as matter of absolute right claim inapplicability of this doctrine – It would be the discretion of the courts to see keeping in mind the peculiar facts of the case to ascertain whether such doctrine ought to be applied or not – Where the courts are satisfied that the third-party had genuinely purchased the subject-matter property after an exercise of a reasonable degree of care and caution and that it was otherwise unaware of the pendency of proceedings, the courts would be circumspect to displace the rights of such bona-fide third-party by a mechanical application of the doctrine of lis pendens – Even otherwise, in view of the peculiar facts of this case, more particularly the fact that the petitioner could not have registered the same being only an auction purchaser and that it was the duty of the Bank to register the notice of pendency which was not reasonably possible in view of the haste that was shown by the Borrower and the Subsequent Transferee in redeeming the mortgage and thereafter immediately transferring the Secured Asset, the non-registration of notice of pendency is not fatal to the application of the doctrine of lis pendens in the present case. [Para 174]
3. In the present case, it is not as if the Subsequent Transferee was not aware of what was happening however, when things went wrong, they now cry foul of not being impleaded as parties and heard by this Court in the Main Appeals – Even otherwise, assuming that the petitioner and the Bank herein deliberately chose not to implead the Subsequent Transferee herein in order to mislead this Court in the Main Appeals, the same is immaterial as the Subsequent Transferee too failed to implead itself despite being aware of the pendency of the proceedings before this Court – If at all they were so concerned about the transfer of the Secured Asset in their favour, either they ought to have themselves attempted to implead itself before this Court or requested the Borrower to do the same – In view of the Doctrine of Pari Delicto i.e.., ‘in equal fault, the law aids neither party’, the Subsequent Transferee cannot seek any benefit from the fault of the petitioner or the Bank when it is itself equally at fault – In view of the aforesaid, the execution of the Assignment Agreement dated 28.08.2023 and the transfer of the Secured Asset in pursuance thereto in favour of the Subsequent Transferee is hit by lis pendens despite the fact that no notice of pendency was registered in terms of the amended Section 52 of the TPA. [Paras 175, 176]
Auction – Sale of secured asset by auction or any other method under the SARFAESI Act – Circumstances when such sale may be challenged or set-aside after its confirmation – Any sale by auction or other public procurement methods once already confirmed or concluded ought not to be set-aside or interfered with lightly except on grounds that go to the core of such sale process – Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 – Security Interest (Enforcement) Rules, 2002: Held: 1. Any sale by auction or other public procurement methods once already confirmed or concluded ought not to be set-aside or interfered with lightly except on grounds that go to the core of such sale process, such as either being collusive, fraudulent or vitiated by inadequate pricing or underbidding – Mere irregularity or deviation from a rule which does not have any fundamental procedural error does not take away the foundation of authority for such proceeding – In such cases, courts in particular should be mindful to refrain entertaining any ground for challenging an auction which either could have been taken earlier before the sale was conducted and confirmed or where no substantial injury has been caused on account of such irregularity. [Para 218]
2.1. In the present lis, it is not the case of the Borrower herein that the 9th auction conducted by the Bank was a result of any collusion or fraud either at the behest of the Bank or the Successful Auction Purchaser herein – Aside from the lack of any 15-days gap between the notice of sale and the notice of auction, no other illegality has been imputed to the aforesaid auction proceedings – It is also not the case of the Borrower that due to the absence of the aforesaid statutory period, any prejudice was caused or that it was prevented from effectively exercising its rights due to such procedural infirmity – Despite a total of eight auctions being conducted by the Bank from April, 2022 to June, 2023, not once did the Borrower express its desire to redeem the mortgage – Even when the auction notice came to be issued on 12.06.2023, the Borrower never intimated that it was in process of redeeming the mortgage with the aid of the Subsequent Transferee and that the auction be delayed even though, as per the parties own submissions, they started exploring the possibility of redeeming the mortgage and thereafter transferring in June, 2023 itself – In such circumstances, given the fact that although the S.A. No. 46 of 2022 was still pending, yet since there was nothing before this Court to doubt the validity of the 9th auction, this Court in the Main Appeals confirmed the sale in favour of the petitioner and brought the auction proceedings to its logical conclusion by directing the issuance of the sale certificate – The Borrower never raised the issue of the validity of the 9th auction notice despite having sufficient opportunities to do so even after the pronouncement of the decision in the Main Appeals, and that such pleas are being raised only after the auction was confirmed in favour of the petitioner, there is no good reason to interfere with the 9th auction conducted by the Bank. [Para 217]
2.2. In the present lis, apart from the want of statutory notice period, no other challenge has been laid to the 9th auction proceedings on the ground of it being either collusive, fraudulent or vitiated by inadequate pricing or underbidding, thus, the auction cannot be said to suffer from any fundamental procedural error, and as such does not warrant the interference of this Court, particularly when the plea sought to be raised to challenge the same could have been raised earlier – Even if the 9th auction were to be held illegal and bad in law by virtue of the aforesaid S.A. No. 46 of 2022, it would not mean that the auction purchaser would by virtue of such finding lose all its rights to the secured asset, even after having the sale confirmed in its favour. [Paras 219, 220] Transfer of Property Act, 1882 – s.52 – s.52 does not render a transfer pendente lite void – However, the court while exercising contempt jurisdiction may be justified to pass directions either for reversal of the transactions in question by declaring the said transactions to be void or proceed to pass appropriate directions to the concerned authorities to ensure that the contumacious conduct on the part of the contemnor does not continue to enure to the advantage of the contemnor or anyone claiming under him. [Para 180]
Contempt of Court – Contumacious conduct – Duty of the court – To issue appropriate directions for remedying or rectifying the things done in violation of its orders – Power to take restitutive measures at any stage of the proceedings – Discussed. [Paras 221, 222]
Doctrines / Principles – Doctrine of election – Once a party has elected to choose remedy under one forum, again the same cause of action cannot be challenged before another forum: Held: On facts, the Borrower decided to move the High Court for seeking the very same relief that it had sought in the securitization application u/s.17 of the SARFAESI Act before Debt Recovery Tribunal – As there was virtually no difference between either the scope of proceedings or the prayer sought before the DRT and that before the High Court, once the Borrower had chosen to espouse the same matter already sub-judice in one forum before another, in this case the High Court, it was the duty of the Borrower to bring within the fold of its case all issues and grounds in respect of the 9th auction proceedings in the proceedings arising from the writ petition, by virtue of the Doctrine of Election – Furthermore, by virtue of the Doctrine of Election, the Borrower cannot be permitted to pursue two inconsistent remedies, once the Borrower had availed the remedy to redeem its mortgage and pay the dues sought to be recovered by way of the SARFAESI proceedings initiated by the Bank and having failed in doing so, it now cannot be permitted to challenge those very SARFAESI proceedings – A litigant cannot approbate or reprobate at the same time – Election is the obligation imposed upon a party by Courts of equity to choose between two inconsistent or alternative rights or claims in cases where there is clear intention of the person from whom he derives one that he should not enjoy both. [Paras 126, 127 and 154(iii)]
Maxims – Expressio Unius Est Exclusio Alterius – Expression of one thing is the exclusion of another – Where a court consciously and specifically grants certain reliefs but does not advert to other reliefs or rights, the relief so expressly provided necessarily leads to the implied exclusion of the other reliefs and rights. [Para 154(vii)]
As published in the Supreme Court Reports, Supreme Court of India. Headnotes prepared by: Bibhuti Bhushan Bose. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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