Rama Narang vs Ramesh Narang and Others

Contempt of Court: Contempt proceedings – Nature and scope of – Held: The contempt proceedings are quasi-criminal in nature and the standard of proof required is in the same manner as in the other criminal cases – The alleged contemnor is entitled to protection of all safeguards/rights which are provided in the criminal jurisprudence, including the benefit of doubt –Punishment under the law of contempt is called for when the lapse is deliberate and in disregard of one’s duty and in defiance of authority. Contempt of Court: Contempt proceedings – Difference from execution proceedings – Held: Contempt proceeding is not like an execution proceeding under the Code of Civil Procedure – Before punishing the contemnor for non-compliance of 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 – The civil court however, while executing a decree against the judgment-debtor is not concerned and bothered as to whether the disobedience to any judgment or decree was wilful and once the decree had been passed, it is the duty of the court to execute the decree, whatever may be the consequences thereof – Code of Civil Procedure – Execution.

Jurisdiction: Jurisdiction of the Court to pass interim orders pending decision on question of its’ jurisdiction – Held: Even if objection is raised to the jurisdiction of a forum, it has jurisdiction to pass interim orders till it finally decides the issue of jurisdiction and such orders are binding on the parties till the issue of jurisdiction is decided – If the Court holds that it has no jurisdiction, it is open to it to modify the orders – However, while in force, the interim orders passed by such Court have to be obeyed and their violation can be punished even after the question of jurisdiction is decided against the plaintiff, provided violation is committed before the decision of the Court on the question of jurisdiction – Judgment /Order – Interim Order.

Civil Contempt: Wilful disobedience or wilful breach – Court has to record a finding that such a disobedience was wilful & intentional – There must be a clear cut case of obstruction of justice by a party intentionally – Where the court is satisfied that such disobedience is the result of some compelling circumstances, under which it is not possible for the contemnor to comply with the same, the Court may not punish the alleged contemnor.

Dismissing the contempt petitions, the Court

HELD:1. For bringing an action under the ambit of civil contempt, there has to be a wilful disobedience to any judgment, decree, direction, order, writ or other process of a court or wilful breach of an undertaking given to the court. [Para 48][422-G; 423-A]

2.1 Such action of a person which he takes in pursuance of his right to take legal action in a court of law, will not amount to interfering with the course of justice, even though that may require some action on the part of the other party in connection with his own judicial proceedings. The principle is, that a party is free to take action to enforce his legal right. A person does not commit contempt of court if during the pendency of certain proceedings, he takes recourse to other judicial proceedings open to him, even though the latter proceedings put the other party at a loss. [Para 68][432-D-F]

2.2 In the instant case, the respondents had legitimately approached the Company Law Board (CLB) invoking its jurisdiction under Sections 397, 398 and 403 of the Companies Act. The CLB had also passed interim orders in exercise of its powers under Section 403 of the Companies Act. Merely taking recourse to the statutory remedy available to the respondents would not amount to contempt. It appears, that after the order was passed by this Court holding the respondents guilty and thereafter finding, that the present petitioner is not co-operating with the respondents in running the affairs of the Company, but on the contrary making every attempt to stall the functioning of the Company; the respondents thought it prudent to approach the CLB by invoking its powers under Sections 397, 398 and

403 of the Companies Act. The respondents had to take recourse to that remedy in compelling circumstances to safeguard the interest of the Company and its stakeholders. [Paras 66, 71][431F-G; 433-D-F]

3. The contempt proceeding is not like an execution proceeding under the Code of Civil Procedure. Though the parties in whose favour, an order has been passed, is entitled to the benefits of such order, but the Court while considering the issue as to whether the alleged contemnor should be punished for not having complied with and carried out the directions of the Court, has to take into consideration all facts and circumstances of a particular case. That is why the framers of the Act while defining civil contempt, have said that it must be wilful disobedience of any judgment, decree, direction, order, writ or other process of the Court. Before punishing the contemnor 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. Though, the civil court while executing a decree against the judgment-debtor is not concerned and bothered as to whether the disobedience to any judgment or decree was wilful and once the decree had been passed, it was the duty of the court to execute the decree, whatever may be the consequences thereof. In a contempt proceeding before a contemnor is held guilty and punished, the Court has to record a finding, that such disobedience was wilful and intentional. If from the circumstances of a particular case, though the Court is satisfied that there has been a disobedience but such disobedience is the result of some compelling circumstances, under which it is not possible for the contemnor to comply with the same, the Court may not punish the alleged contemnor. [Para 73][435-D-H]

4. The contempt proceedings are quasi-criminal in nature and the standard of proof required is in the same manner as in the other criminal cases. The alleged contemnor is entitled to the protection of all safeguards/rights which are provided in the criminal jurisprudence, including the benefit of doubt. There must be a clear-cut case of obstruction of administration of justice by a party intentionally, to bring the matter within the ambit of the said provision. Punishment under the law of contempt is called for when the lapse is deliberate and in disregard of one’s duty and in defiance of authority. [Para 75][437-C-E]

5.1 In the instant case, the petitioner has failed to make out a case of wilful, deliberate and intentional disobedience of any of the directions given by this Court or acting in breach of an undertaking given to this Court. On the contrary, the respondents had taken recourse to the legal remedy available to them under the statutory provisions. [Para 76][437-C-G]

5.2 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, that does not mean that pending the 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. A mere objection to jurisdiction does not instantly disable the court from passing any interim orders. It can yet pass appropriate orders. Though, the question of jurisdiction should be decided at the earliest possible time, the interim orders so passed are orders within jurisdiction, when passed and effective till the court decides that it has no jurisdiction, to entertain the suit. Those interim orders would undoubtedly come to an end with the decision that the Court had no jurisdiction. If the Court holds that it has no jurisdiction, it is open to it to modify the orders. However, while in force, the interim orders passed by such Court have to be obeyed and their violation can be punished even after the question of jurisdiction is decided against the plaintiff, provided violation is committed before the decision of the Court on the question of jurisdiction. [Paras 76-79][438-GH; 439-A-C]

6. In the facts and circumstances of the case, the CLB considered it appropriate, that till the petition is disposed of, as an interim measure, in the interest of the Company as well as more than 3000 employees/workers, there should be a mechanism by which day to day operations are carried out without any hitch. The said order has not been challenged by the petitioner before any forum. Any order passed by the CLB was appellable before the higher forums. The petitioner has not challenged the said order. Having not challenged the same, it is not open for the petitioner to argue, that since the petitioner has taken objection as to maintainability of the proceedings before CLB, the said orders are without jurisdiction and the initiation of the proceedings and the orders passed thereon, would amount to respondent’s committing contempt of this Court. Even if the objection is raised to the jurisdiction of a forum, it has jurisdiction to pass interim orders till it finally decides the issue of jurisdiction and such orders are binding on the parties till the issue of jurisdiction is decided. However, it should not be construed, that the proceedings under the CLB were maintainable in law. Since the proceedings are pending final adjudication, the parties would be at liberty to raise all issues available to them including the issue of jurisdiction. Also, this is not a case wherein directions as sought, should be issued under Article 142 of the Constitution. On Insolvency and Bankruptcy Code 2016, coming in force, the proceedings which are pending before the CLB, now stand transferred to the National Company Law Tribunal (NCLT). It would be appropriate for the parties to invoke the jurisdiction of NCLT for seeking such orders as deemed fit in the facts and circumstances in accordance with law. [Paras 81, 84][440-D-H; 441-C, F-H] Pratap Singh and Another v. Gurbaksh Singh [1962] SCR 2 Suppl. 838; Mehar Rusi Dalal (Mrs.) v. T.K. Banerjee and Others (2004) 5 SCC 119; Niaz

Mohammad and Others v. State of Haryana and Others (1994) 6 SCC 332 : [1994] 3 Suppl. SCR 720 ; Kanwar Singh Saini v. High Court of Delhi (2012) 4 SCC 307 : [2011] 15 SCR 972; Debabrata Bandopadbyay and Others v. State of West Bengal and Another AIR 1969 SC 189 : [1969] SCR 304 and Tayabbhai M.

Bagasarwalla and Another v. Hind Rubber Industries (P) Ltd. And Others (1997) 3 SCC 443 : [1997] 2 SCR 152– relied on.

Hrishikesh Sanyal v. A.P. Bagchi ILR 1940 All 710 and Radhey Lal v. Niranjan Nath AIR 1941 All 95 – held approved.

Rama Narang v. Ramesh Narang and Another (2006)

11 SCC 114 : [2006] 3 SCR 1068; Rama Narang (V) v. Ramesh Narang and Another (2009) 16 SCC 126 : [2007] 3 SCR 1099; Vijay Laxmi and Others v. Prabhu Devi and Others (2017) 11 SCC 169; State Bank of India v. Ajit Jain and Others (1995) 1 Suppl. SCC 683; Re: Vinay Chandra Mishra (The Alleged Contemnor) (1995) 2 SCC 584 : [1995] 2 SCR 638; Sangramsinh P. Gaekwad and Others v. Shantadevi P. Gaekwad (Dead) Through LRs and Others (2005) 11 SCC 314 : [2005] 1 SCR 624; and Kale and Others v. Deputy Director of Consolidation and Others (1976) 3 SCC

119 : [1976] 3 SCR 202 – referred to.